Sprint pled its case against AT&T’s mammoth $39 billion takeover of T-Mobile USA to the FCC on Tuesday, the last day to file petitions opposing the deal.
In a 377-page filing, Sprint excoriated AT&T over the management of its network, claiming the company wouldn’t need to buy out a competitor to better serve its customers if it had done a better job investing in its infrastructure in the first place.
“In effect, AT&T is seeking a bailout for problems of its own making, with the cost of the bailout paid by consumers in terms of higher prices, less innovation, and poor service,” Sprint said.
AT&T has said it needs T-Mobile’s spectrum assets to meet rapidly rising demand for its mobile broadband services. The company is still struggling to address network congestion issues in major cities including New York City, San Francisco and Los Angeles, and plans to use T-Mobile’s bandwidth to increase capacity.
If the FCC allows AT&T to acquire T-Mobile’s spectrum licenses and Qualcomm’s Flo TV airwaves, AT&T will hold more bandwidth than its nearest competitor, Verizon Wireless, and will own significantly more spectrum than Sprint.
Sprint also argued in its filing that the benefits of the merger between AT&T and T-Mobile for consumers were “illusory,” claiming AT&T did not need to acquire T-Mobile to improve the quality of its network and expand its planned LTE service.
“AT&T’s proposed takeover of T-Mobile would not produce any cognizable public interest benefits while giving rise to serious anti-competitive harms that cannot be remedied through divestitures or conditions,” Sprint said.
Free Press, Public Knowledge and the Rural Telecommunications Group joined Sprint in its opposition to AT&T’s merger with T-Mobile. Many of the groups’ arguments echoed those of Sprint, with similar critiques of the merger’s effect on competition, AT&T’s commitment to deploying LTE in rural areas and whether the deal will hold any benefit for consumers.
Groups opposed to AT&T’s merger with T-Mobile are comparing the deal to a return to “Ma Bell,” a reference to AT&T’s former monopoly over the landline telephone market. If regulators approve AT&T’s buyout with T-Mobile, AT&T and Verizon will have a near-duopoly hold on the U.S. wireless market, as well as significant control over backhaul, roaming and handset vendors.
AT&T’s supporters also turned out in favor of the deal, although petitions asking the FCC to approve the merger aren’t due until later this month. The Communications Workers of America (CWA) supports the deal on the grounds that it will increase union jobs, and told the FCC in a Tuesday filing it estimates 96,000 new jobs would be created if the merger goes through.
The NAACP, several state governors and a handful of small business groups have also asked the FCC to pass AT&T’s buyout of T-Mobile, citing the operator’s pledge to expand LTE to an additional 55 million Americans.
In a post on its public policy blog, AT&T legislative affairs executive Jim Cicconi suggested that Sprint was “confusing the public interest with their own particular corporate interest.”
“Even if combined with those few groups who routinely oppose every merger, this opposition pales in comparison with the scale of public interest support we are already starting to see… and which we have every reason to feel will continue to grow,” Cicconi wrote.
One of the main tenets of Sprint’s argument alleges that AT&T’s failure to invest in new cell sites and launch wide-scale upgrades to new network technologies failed to make the most efficient use of its spectrum resources.
Sprint based its claim that AT&T has not sufficiently invested in its network on UBS estimates calculating investment per subscriber. However, AT&T’s capital expenditures for the first quarter of this year paint a somewhat different picture.
Quarterly reports filed with the SEC by AT&T, Verizon and Sprint show that Sprint actually lagged behind its larger competitors in terms of capital expenditures on its network in the first quarter of 2011. Sprint spent just $525 million on its wireless network in the first three months of 2011, while AT&T spent $1.86 billion on its wireless network and Verizon Wireless spent $2.73 billion.
Now that the initial comment period for petitions against AT&T’s merger with T-Mobile has passed, interested parties in favor of the deal have until June 10 to rebut opposition to the merger.
