AT&T, T-Mobile Execs Defend Merger

By Josh Long

The merger of AT&T and T-Mobile USA will benefit consumers, enabling AT&T to reach nearly the entire country with a state-of-the-art mobile broadband network, AT&T CEO Randall Stephenson said Wednesday on Capitol Hill.

Thanks to “the scale, resources and synergies this transaction provides,” AT&T will build out a 4G LTE network to more than 97 percent of the American population, said Stephenson before the Senate Judiciary Committees Subcommittee on Antitrust, Competition Policy and Consumer Rights.

AT&T’s plans represent “nearly 55 million more Americans than our pre-merger plans and millions more than any other provider has committed to serve,” Stephenson said.

Such a deployment will benefit small towns and rural communities in education, health care and economic development,” said Stephenson, who also serves as AT&T’s chairman and president.

Stephenson also reiterated his companys previous comments that the merger will solve the need for additional spectrum, and he denied that the merger would lead to reduced competition and higher prices.

The combination of AT&T and T-Mobile could not possibly derail the powerful forces of competition in one of the nations most competitive industries,” he said.

The vast majority of American consumers have a choice of at least five facilities-based wireless providers and that does not even count new mobile broadband providers like Clearwire and LightSquared that are building nationwide 4G networks or the many successful wireless resellers,” Stephenson added. Certain critics may attempt to create a myth that only a few national competitors exist, but wireless competition occurs primarily on the local level.”

Competitors include prepaid providers like Leap and MetroPCS, regional carriers like U.S. Cellular and Cellular South and incumbent cable television and telephone companies like Cox Communications and Cincinnati Bell, Stephenson said.

Any concerns that the wireless industry is or could be dominated by AT&T, Verizon and Sprint merely because they have the largest subscriber bases today should be put to rest by 1Q 2011 results recently reported by MetroPCS and Leap, which together gained more than a million net customers in the last quarter alone,” Stephenson said.

T-Mobile USA CEO Philipp Humm also defended the merger, noting that it would benefit T-Mobile customers in several ways, including resulting in better network coverage and fewer dropped or blocked calls.

T-Mobile USA, the fourth-largest U.S. mobile operator, has been struggling with subscriber losses.

But Humm said T-Mobile USA doesnt just need to grow in order to succeed: It needs spectrum and its parent Deutsche Telecom is not in a position to finance the necessary large scale investments in the U.S. for T-Mobile to remain competitive.”

Humm indicated that the merger would result in greater competition and lower prices for customers.

By contrast, without the deal, a spectrally constrained AT&T and a spectrally and capital constrained T-Mobile would be able to provide much less vigorous competition separately than would the more efficient, combined company,” he said. 

During the hearing Wednesday, critics of the merger called on U.S. regulators to reject the transaction.

With this transaction, policy-makers face a clear choice: Either (1) allow the wireless industry to continue down a path toward a duopoly made up of MaBells two behemoth descendants or (2) reverse course and lay the foundation for a new era of competition in this industry,” said Victor H. Hu” Meena, president and CEO of Cellular South Inc., a privately-owned wireless carrier serving about 875,000 subscribers in Mississippi and four other southeastern states.

Gigi Sohn of Public Knowledge a Washington, D.C.-based public interest group said the merger would leave AT&T and Verizon with nearly 80 percent market share, well ahead of the nations third largest mobile operator, Sprint Nextel (16 percent market share).

Sohn asked U.S. regulators to block the merger and said no remedies can alleviate the level of anticompetitive harm the merger represents.”

There is nothing in the merger of AT&T and T-Mobile that will benefit consumers and it will lead to less competition, higher prices and less innovation,” said Sohn, who is President of Public Knowledge.