Julius Genachowski doesn’t regret killing the AT&T/T-Mobile merger one bit. The outgoing Federal Communications Commission chairman is beginning to look back on his legacy at the independent agency, and among the accomplishments he’s most proud of? Helping the mobile industry dodge a very large bullet, even though some of its biggest players aren’t likely to see it his way.
“Two and a half years ago, we were on the doorstep of duopoly,” Genachowski told Bloomberg’s Peter Cook this morning at the Bloomberg Washington Summit. “People thought [the AT&T/T-Mobile deal] was inevitable.”
Had the merger taken place back in 2011, the United States would have been left with only two dominant mobile carriers: Verizon and an effectively reconstituted Ma Bell. The merger’s critics worried that such an outcome would deal consumers a painful, anticompetitive blow. Then, under Genachowski’s watch, the FCC blocked the transaction. The chairman defended the call Tuesday.
“Look at the market now,” Genachowski said. “If you look at T-Mobile and Sprint, instead of moving down, they’re moving up.”
It’s hard to dispute what seems to be a renaissance for the nation’s third-largest carrier, at least spiritually if not financially. T-Mobile is still shedding customers amid falling revenue, but at its head is an aggressive new CEO intent on ditching the carrier-based phone subsidies that often lower the upfront cost of attractive devices but lock unwitting consumers into forking over more than the handset is ultimately worth. At a press event in March, CEO John Legere colorfully called the subsidy system “the biggest crock of s**t I’ve ever heard.”
Genachowski stood equally firm on his plans for next year’s spectrum auction, which is meant to encourage some TV broadcasters to give up their rights to the airwaves and sell them to the mobile carriers. What people don’t realize about the mobile industry, Genachowski said, is how much of a load our everyday devices put on network infrastructure. (Actually, we do have some idea: Downloading data on a 4G LTE network is incredibly energy-intensive.) At one point, he held up his iPhone.
“This thing puts a demand on spectrum that's not 10 percent or 20 percent or 100 percent more than the phone you had before,” he said, “but 25 times more. And tablets put a demand on spectrum that’s 150 times more. Well, nobody in the last 20 years of policymaking anticipated that—and that's OK—but now we really have to act.”