The more we dig into AT&T’s proposed acquisition of
T-Mobile, the worse the deal looks for all parties. As we’ve written before (here,
here,
here, and here)
if the merger is consummated consumers stand to lose out. Prices for mobile voice and broadband
Internet will rise once T-Mobile, the low-priced, “mavericky” alternative to
AT&T and Verizon is absorbed into the Death
Star. Customer satisfaction will fall, and innovation, typically spurred on
by robust competition, will be less vigorous.
Additionally, AT&T’s claims that the transaction will
increase coverage in underserved areas, reduce prices, ease network congestion,
and spur economic growth are patently false. Prices rise when there is lessened competition. The “efficiencies” and “synergies”
AT&T expects to achieve through the merger are code for “we can service the
T-Mobile customers without their employees,” which will result in job losses
and higher unemployment. Any
build-out to underserved areas will be delayed as AT&T has to integrate
T-Mobile’s operations and pay down it’s hefty loan from JP Morgan – not exactly
the best climate to also invest billions in the network. Finally, network congestion won’t be
eased. When you take two congested
networks and put them together you create one, large congested network. The benefits of this merger to
everyone but AT&T are a smokescreen.
But wait, there’s more on the network congestion issue. Last week Free Press, Media Access
Project, Public Knowledge, Consumers Union, and the Open Technology Initiative
of the New America Foundation asked
the FCC to combine its review of AT&T’s takeover of T-Mobile with its
review of AT&T’s $1.9 billion purchase of Qualcomm’s wireless
spectrum. On April 29 CNet posed
the question, Is AT&T a Wireless Spectrum Hog?
The specter of AT&T’s acquisition of both T-Mobile’s and
Qualcomm’s wireless spectrum, along with the mother load of spectrum it’s
already sitting on top of should be frightening to all consumers and quickly
rejected by the FCC. CNet’s
reporting last week noted that AT&T already owns more wireless spectrum
than any other network.
Nationwide, AT&T already owns 1,290 MHz of 3G spectrum and 832 MHz
of 4G spectrum (which it hasn’t even begun to use), for a total of 2,122
MHz. Verizon, currently the number
one networks has 1,938 MHz at its disposal – in other words, less spectrum to
service more customers, which it does more reliably than AT&T . The question is begging – if AT&T
has the most spectrum resources to serve its customers, why does it
consistently offer the worst service?
By acquiring T-Mobile, AT&T will add approximately 1,160
MHz of new spectrum, and the Qualcomm purchase will add 12 MHz. All told, a post-merger bigger, badder
AT&T would have 3,294 MHz of wireless spectrum. Spectrum is often described as the lifeblood of the wireless
industry. CCIA wonders how the
wireless industry can keep growing and innovating if its least competent, least
efficient, and least innovative user of spectrum owns such a disproportionate
amount of this vital resource.
Free Press and other groups said last week the FCC should
examine AT&T’s acquisition of T-Mobile in combination with the purchase of
Qualcomm’s spectrum. In its public
interest review of these transactions the FCC should ask if effective stewardship
of spectrum resources is in the public interest. If it is, allowing a company that manages to do the least
whilst holding the greatest amount of spectrum is a non-starter.
Additionally, the FCC is expected to release its 2011 report
on competition in the wireless industry in the coming weeks. This year’s report is expected to echo
last year’s findings that the wireless market is not competitive. If the FCC hopes to increase
competition in the wireless market, how does allowing the least innovative firm
to swallow the most innovative achieve that goal? How does allowing AT&T to suck up the industry’s vital
resources promote new market entrants?
How does removing T-Mobile from the market make it more likely for
broadcasters to willingly put their valuable spectrum up for auction? After
all, an auction with a spectrum-fat AT&T and no T-Mobile would produce
fewer dollars for potentially willing sellers.
The FCC should ask all these questions in its analysis of
the proposed AT&T/T-Mobile transaction. CCIA believes the answers to each weigh strongly against the
merger and that the FCC should reject the merger in short order.
