Two senior members of Congress announced their opposition to AT&T’s proposed acquisition of rival T-Mobile USA on Wednesday, saying it would be a “historic mistake.”
Rep. Ed Markey, D-Mass., a senior member of the House Energy and Commerce Committee, and House Judiciary ranking member John Conyers, D-Mich., both called on regulators to block the proposed $39 billion merger.
The Judiciary Intellectual Property, Competition, and the Internet Subcommittee will hold the first House hearing on the merger on Thursday, calling up AT&T Chairman, President, and CEO Randall Stephenson and Rene Obermann, the CEO of T-Mobile USA parent company Deutsche Telekom.
The tone of the hearing is already clear. “I believe it would be a historic mistake for this merger to be approved,” said Markey
Markey wrote legislation in 1993 requiring the release of 200 megahertz of spectrum for private-sector uses such as mobile phones. He said if the AT&T/T-Mobile merger is approved, it will return the country to a time when the nation’s wireless market was dominated by two players who had little incentive to innovate or lower prices.
Many critics also worry that if AT&T absorbs T-Mobile, Verizon Wireless, currently the top wireless provider, will seek to buy Sprint, the nation’s third-biggest wireless carrier, leaving just two national wireless providers. AT&T and Verizon are aiming to “divide the country up into Bell East and Bell West,” Markey said. “That’s the inevitable result that will occur if agreement is given to this proposed merger.”
AT&T proposes a $39 billion takeover of T-Mobile USA. Here’s our take on its prospects for success as regulators, consumer groups and Congress weigh in.
More coverage »
Conyers called for more hearings on the merger than just the one currently scheduled by Judiciary. He said he would like to hear from Sprint, which opposes the merger, and the Communications Workers of America, which has more than 40,000 AT&T wireless union members and is backing the merger. Both Sprint CEO Dan Hesse and CWA President Larry Cohen testified at a Senate Judiciary hearing last week on the merger but are not scheduled to testify at Thursday's subcommittee hearing.
The CWA’s Michigan representative, Mike Schulte, wrote Conyers earlier this month urging support for the merger, noting that AT&T has pledged to invest $8 billion in new infrastructure to achieve its goal of providing high-speed wireless access to 97 percent of Americans. “That’s great news for labor because this investment will create new jobs and encourage growth,” Schulte wrote.
Conyers and Markey, however, both voiced concern that the merger will result in job losses. “I have never seen a merger that didn’t lose jobs,” Conyers said.
Some consumer and public-interest groups joined the lawmakers in their concern that the merger will lead to higher prices for consumers and stifle innovation in the wireless space.
Andrew Jay Schwartzman with the Media Access Project said T-Mobile has been innovative by being the first to offer new products such as Google’s Android smartphone and offering lower-priced plans than the three other major carriers. He noted that mergers involving a “maverick” carrier like T-Mobile require extra antitrust scrutiny by the Justice Department.
Those urging regulators to block the merger have until May 31 to file comments with the Federal Communications Commission, which along with the Justice Department, must approve the merger.
AT&T strongly disputes merger critics’ claims that the deal will stifle competition and lead to higher prices. “In repeating the same unfounded claims, merger opponents simply ignore the realities of the dynamic wireless marketplace,” an AT&T spokesman said. “We are confident that when regulators fully review the facts and the evidence, they will conclude that our transaction with T-Mobile will continue to deliver significant benefits to U.S. consumers.”