AT&T Posts Statement Regarding T-Mobile Buyout

Today’s AT&T/T-Mobile merger news comes via AT&T herself with a post on their Public Policy Blog titled “It is Much Easier to be Critical than to be Correct.” The blog post starts right off with a one two punch from AT&T promising this deal is necessary in order to give AT&T the necessary network capacity to work within the “broadband revolution.” AT&T of course claims that the capacity of the combined company will exceed that of the two companies working separately. AT&T promises that the winners will be the American consumer with extra capacity allowing for faster data speeds and fewer blocked/dropped calls.

AT&T continues to emphasize their efforts to let everyone know this deal will allow them to bring their LTE network to 97% of Americans. That’s over 55 million more people than they would be able to do on their own. AT&T continues to push the rural coverage message which remains a big part of their lobbying effort to gain government approval.

As we move further into AT&T’s lengthy blog post they work in some digs at Sprint all but calling their claims ridiculous. AT&T believes that while Sprint claims their opposition is due to a concern over a cut in output, raising prices and stopping innovation it’s actually for much different reasons. AT&T believes Sprint’s real motive in opposing the merger is to continue to compete against a “capacity-strained AT&T and a standalone T-Mobile USA that lacks financial backing from its parent and has no clear path to LTE.”

Furthermore AT&T plans to lay out in a Joint Opposition filing with the FCC tomorrow the details of each major complaint lobbied against them:

1) Network Capacity Crunch — AT&T says that contrary to the idea that their capacity issues can be solved without this transaction, they claim that they couldn’t make any kind of moves that would give them the same kind of capacity additions without this deal.

2) Duopoly Myth — It is here that AT&T continues to claim the “duopoly” myth is exaggerated with at least 3/4 of Americans living in an area with a choice of at least 5 wireless providers.

3) Contriving Conditions and Concessions — AT&T says that the proposals for possible concessions AT&T has to make in order to achieve regulatory approval such as concessions related to pricing, 700MHz handset interoperability, bill shock and early termination fees should not just be addressed in relation to their merger approval but as an industry.

The entire post is an interesting read and a good look at the continued arguments AT&T will continue to provide while lobbying for government approval.



Full Blog Post:

There is one overarching imperative that drives this merger:  giving AT&T and T-Mobile USA customers the network capacity they need to enjoy the full promise of the mobile broadband revolution.  The combination of these two companies, and their uniquely complementary networks and spectrum holdings, will create new capacity – the functional equivalent of new spectrum – to handle rapidly escalating mobile data traffic.  Indeed, the capacity of the combined company will exceed that of AT&T and T-Mobile operating separately.

The winners will be America’s consumers because the extra capacity will enable us to offer them better service — faster data speeds and fewer dropped and blocked calls.

And with the scale, spectrum, and other resources generated by this transaction, the combined company will be able to offer Long Term Evolution, or LTE — the premier next-generation wireless broadband technology — to an extra 55 million people and more than 97 percent of the U.S. population, all without reliance on government funds.  And that is a big win for rural America because it gives those communities the same high quality broadband service that consumers in urban areas will receive.  It also means more jobs and more investment.

That investment will also be a win for the innovators in the high-tech industry, who need the bulked up infrastructure to support their next generation of bandwidth intensive applications and other innovative products and services.

For these reasons, the transaction has drawn tremendous support from across the political and industrial landscape.  Among the many supporters are labor unions, including the CWA, the AFL-CIO, the Teamsters and others representing nearly 17 million workers.  No transaction before the FCC in recent memory has ever garnered such broad support from organized labor.

This transaction has also received tremendous support from a broad cross-section of the high-tech community.  These are the innovators whose very businesses depend on the availability of robust wireless platforms – and their support is a direct repudiation of claims that the transaction will harm competition, innovation and consumers.  Indeed, the members of the high tech community are among the most sophisticated and informed users of wireless platforms; and they have a unique ability to speak to the merits of this transaction.  They are the ones in the trenches every day investing, inventing and innovating.  That so many of them voiced such strong support is compelling evidence of the transaction’s enormous economic and consumer benefits.

Opposing this transaction are Sprint and a few other wireless competitors, along with the same inside-the-beltway special interest groups that reflexively oppose all mergers.  They tried gamely last Tuesday to spin the transaction’s enormous benefits as anti-consumer, anti-innovation and anti-competition.  But the fallacy of their opposition is easily unmasked.  Why do Sprint and other wireless competitors oppose this transaction?  Because they are worried, as they claim, that the combined company will cut output, raise prices and stop innovating?   I don’t think so.  Those consequences could only benefit these carriers as well as their shareholders.

The reason they oppose the merger is because they would prefer to compete against a capacity-constrained AT&T and a standalone T-Mobile USA that lacks financial backing from its parent and has no clear path to LTE.

But it’s not just that their arguments are transparently inconsistent with their motives.  Motives aside, their arguments don’t stand up to scrutiny.  In the Joint Opposition we will file tomorrow at the FCC, we dissect in detail each of the straw men they advanced.

1)      Network Capacity Crunch – Contrary to claims that our network capacity issues can be solved without this transaction, we detail the engineering principles that make the extraordinary capacity gains that the combination will yield possible – and nothing close to those gains would be possible without this transaction.   In fact, AT&T is not only already doing the very things they claim we should be doing, but we are the industry leader in them.  We have more Wi-Fi hotspots, for example, than any other carrier.  And we are the only carrier that has created Wi-Fi hot zones in heavy use urban areas, like Times Square, to off-load traffic from our network.  And when merger opponents say in one breath that we are not migrating our customers fast enough to LTE and in the next that we should repurpose the spectrum we are using for LTE to relieve congestion on our legacy networks, they lose all credibility.

The bottom line is that the combined company will be able to offer more output and higher quality service – and that’s a good thing for consumers even if our competitors don’t like it. We also demonstrate that, by relieving AT&T and T-Mobile from capacity constraints, the merger will expand output, which economists recognize means lower, not higher, prices.

2)      The Duopoly Myth – From the beginning, merger opponents have ramped up the rhetoric, claiming, for example, that if this merger is approved, the wireless market will become a “duopoly.”  The truth is that a “duopoly” signifies a market with only two sellers, and that is a flatly inapt description of the post-transaction U.S. wireless marketplace.  Commission data shows that today ¾ of Americans have a choice of five or more wireless providers, so, at worst, after this merger they will have a choice of four.  That is not a duopoly.  And it is particularly ironic that Sprint is the leading proponent of the duopoly theory given that Sprint is boasting to Wall Street of its marketplace resurgence, including its recent largest number of net ads (over 1 million) in five years.

The duopoly myth can be exploded with a single fact:  MetroPCS and Leap together added a remarkable 1.057 million net retail subscribers in the first quarter of 2011 for cell phones, smartphones, laptop USB adaptors, and other personal computing devices.  That figure is greater than the combined net retail additions (postpaid and prepaid) by both AT&T and Verizon for these same types of subscribers (1.026 million) – all in the same quarter that Verizon debuted its version of the iPhone.

3)      Contriving Conditions and Concessions – Of course there is the expected wish-list of non-merger-related “conditions” designed to extract regulatory concessions that the opponents have not been able to otherwise achieve.  These include proposals to condition merger approval on concessions relating to pricing, mandatory resale, 700 MHz handset interoperability, special access, privacy, receipt of universal service funding, early termination fees, bill shock, and other broad policy issues.  As the Commission has consistently found, such issues should be addressed, if at all, in industry-wide proceedings – not a company-specific merger proceeding.

In the end, opponents’ submissions are long on rhetoric and short on substance.  As Benjamin Disraeli wisely said, “It is much easier to be critical than to be correct.”  After a close review of the facts and evidence presented in this proceeding, we are confident that the Commission will agree that this merger will generate enormous benefits for consumers, workers and the economy, with no significant harm to competition.

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  • Anonymous

    Mergers are never a good thing. Look at the Banking business. Kinda hard to get a loan right now.

    • pzo

      In the 80’s we were told how good it is for consumers to break up monopolies.  Remember MCC biting the original AT&T’s ass?  Suddenly telecom was exploding with new ideas, lower rates, cheaper services.  (And lots of dishonesty, slamming, etc.  But we lived through that.)

      Now we are being told that that was wrong.  Not in words, but in actions and deeds at the federal level.  The Justice Department has no qualms anymore about mergers.  

      So which is it, you rich Republican capitalists?  This is your area of ideology.  Oh, whatever’s convenient?  And more profitable? 

  • Anonymous

    AT&T please list 5 carriers (You may include either ATT or Tmo but not both) in an urban setting that arent reselling Sprint/ATT/Verizon/TMO service. Now try to do it in a suburban setting.

    Good luck with the list.

  • Not if I can help it

    Still doesn’t explain or help their crappy customer support. Twice I’ve moved carriers because of AT&T taking over. Each time they have messed up my billing and service, taking months to correct and have had to deal with one of the worst customer services teams as a whole. I don’t have a choice on which phone company I can go with (if I don’t want all digital), so I’m stuck with AT&T & their customer service still sucks. For this reason alone I rather not give them my business, not to mention all the other great reasons we have all voiced time and time again. I think the deal will go through, but I really hope it doesn’t. No AT&T for me, if I can help it.

  • Joseph Singer

    But of course AT&T is putting a rosey picture on their acquisition.  You really didn’t expect them to do otherwise now did you? :)

  • Anonymous

    AT&T customer service = Advantage Consumer…. now that’s an oxymoron, lol!

  • Pantect73

    Yes it might be good for AT&T, but they still doesn’t say how it will help the consumers, We are the one’s who will end up paying higher prices in the end.  They will start out by saying that nothing will change but then a few months or even a year later, it will be said that it is viable to increase the the price.  And yet their service will still be crap.

  • xarophti

    The problem with AT&T’s assertion that they will not be a monopoly is that it is nearly patently untrue. If/when the merger goes through, they will effectively be the only GSM option for most of the US. There are small regional and pay-as-you-go carriers that are using GSM, but most of them are re-selling AT&T’s network. Some people prefer or even need GSM to be their phone technology, particularly world travelers. Except for certain pockets of Asia, the US is the only country that has whole-heartedly embraced CDMA. The offering of dual technology “world phones” by certain CDMA carriers helps, but just try to get the phone unlocked so you can use a locally purchased overseas SIM instead of the carrier’s own expensive “international” service.

  • Andrew A

    I am currently writing a letter, yes writing a letter to the FCC. Against this deal.

    • pzo

      Too late.  The public comment period was in April.

  • Knox4512

    Question? Will they be bringing back the unlimited data usage once the merger is finalized?

    • Tony

      AT&T is money hungry I don’t thing they will get
      the t unlimited data plans aver that is a good way of making money for them!

  • Zackefron7

    I cant wait for this to happen!

  • Zackefron7

    I cant wait for this to happen!

  • Zackefron7

    I cant wait for this to happen!

  • Mrwhite 13

    nah, being a t-mobile customer i will probably go to a pager and phone card when this goes through, IF it goes through, because they will screw all who where t-mo customers