AT&T”s pledge to expand LTE service to an additional 55 million Americans in rural areas of the country if regulators approve its merger with T-Mobile USA came under fire on Capitol Hill Thursday.
Lawmakers at a House Judiciary Committee hearing grilled AT&T CEO Randall Stephenson on why the company would choose to build out in rural areas post-merger, when it could choose to expand its network in rural areas even if the merger didn’t go through.
“The reason that the mountains of North Carolina don’t have any service is because it’s not profitable. What’s so hard to figure out about that?” Representative John Conyers, Jr. (D – Mich.) said in a series of pointed questions aimed at Stephenson. “You don’t make any money up in the country or in rural areas or in the small towns in the mountains. That’s why you don’t get any service. What makes me think that T-Mobile joining you is going to make that any different?”
Stephenson conceded that there were few financial incentives to expand its network into rural America but defended the company’s promise to deploy in remote areas if its merger with T-Mobile went through, saying the resulting economics would be better for an expansion into rural regions of the country.
“I would not argue with you that the profit motive does not drive us to invest in rural America. It’s been that way in this industry for quite some time,” Stephenson said. “What I believe this transaction affords is that there becomes a profit incentive to build out to 97 percent.”
AT&T’s promise to expand its LTE network to rural residents has been one of its top selling points to lawmakers as it lobbies to get its $39 billion takeover approved by the FCC and Department of Justice.
Like some other operators, AT&T owns spectrum in various rural areas where has not deployed wireless services because it would not be able to make a profit off the network expansion.