AT&T files statement with FCC in support of T-Mobile acquisition

On Friday, AT&T announced that it has officially filed a public statement with the Federal Communications Commission in support of its planned $39 billion acquisition of T-Mobile USA from Deutsche Telekom. AT&T argues five main pillars in its statement:

  • The transaction will generate jobs and economic growth.
  • The transaction will preserve and promote competition and innovation.
  • The wireless market will remain vibrantly competitive.
  • The network capacity of the combined company will far exceed the sum generated by its pre-merger parts.
  • Numerous competitors will have ample spectrum to maintain the vibrantly competitive U.S. wireless market.

In a clear response to claims from Sprint’s CEO Dan Hesse that the acquisition would “stifle innovation,” AT&T also argued “nothing about the combination of AT&T and T-Mobile USA could possibly keep Sprint or any other provider from acting on the same incentives it has today to keep innovating in this unusually dynamic ecosystem.” Hit the jump for AT&T’s full release.

AT&T Files Public Statement with FCC Supporting T-Mobile Acquisition

Dallas, Texas, June 10, 2011

AT&T Inc. (NYSE: T) today filed with the Federal Communications Commission its statement supporting its proposed acquisition of T-Mobile USA and responding to critics. The filing demonstrates the overarching imperative that drives this transaction:  giving AT&T and T-Mobile USA customers the network capacity they need to enjoy the full promise of the mobile broadband revolution. With the scale, spectrum and other resources generated by this transaction, the combined company will deploy Long Term Evolution – the premier next-generation wireless broadband technology – to more than 97 percent of the U.S. population. The synergies of this transaction will create immense new capacity that will provide enormous benefits to consumers.  That new capacity will provide a more robust platform for the next generation of bandwidth-intensive mobile applications while improving consumers’ overall service quality through faster data speeds and fewer dropped and blocked calls.  In the process it will create jobs and investment, help bridge the digital divide, and help achieve the Administration’s rural broadband objectives, all without the expenditure of government funds.

For these reasons, the transaction has unparalleled support from across the political and commercial landscape. This significant support includes the governors of 17 states; labor unions representing 20 million workers; minority and disability rights advocates; rural and environmental groups; venture capitalists; and a broad swath of the high-tech community’s apps developers, device manufacturers, and equipment vendors. Companies such as Avaya, Brocade, Facebook, Microsoft, Oracle, Qualcomm, RIM, Yahoo! and many others, support this merger because the widely available LTE platform it makes possible will help fuel the entrepreneurship, innovation and investment that is critical to U.S. leadership in high-tech industries. In addition, they recognize that the transaction will use spectrum more efficiently, improve service quality, and deploy an expanded LTE network, all of which will in turn drive a virtuous cycle of technology deployment, job creation, and economic growth.

Commenting on the contents of the filing, Wayne Watts, AT&T Senior Executive Vice President and General Counsel, said: “This merger is about adding capacity and improving existing voice and data services while simultaneously enhancing the capabilities of the combined companies to roll out next generation wireless broadband services to 97% of Americans.  Ultimately, the capacity and efficiency gains this merger will create are a public interest benefit, and will create the ability to provide enhanced services at lower cost. These benefits underscore why this transaction should be promptly approved. Our opponents aren’t really concerned about competition or prices. The posturing of rivals such as Sprint is about one thing: their desire to compete against a capacity-constrained AT&T and a T-Mobile USA that has no clear path to LTE.”

Highlights of the filing concerning the merger’s benefits include:

The transaction will generate jobs and economic growth

As a result of the merger, AT&T will make an additional investment of more than $8 billion to expand LTE deployment and to integrate the AT&T and T-Mobile USA networks.  That investment will directly produce work within the combined company and externally for engineers, equipment manufacturers, construction firms, and a host of others. Expanding the advanced LTE platform to an additional 55 million more people will also have job-creating ripple effects throughout the economy, particularly in rural areas. As Lawrence Summers, then head of the President’s National Economic Council, concluded, “[e]ach dollar invested in wireless deployment is estimated to result in as much as $7 to $10 higher GDP,” and, as wireless investment grows, “the benefits for job creation and job improvement are likely to be substantial.”

The transaction will preserve and promote competition and innovation

Nothing about the combination of AT&T and T-Mobile USA could possibly keep Sprint or any other provider from acting on the same incentives it has today to keep innovating in this unusually dynamic ecosystem.  In fact, in the past couple weeks we have seen incredible support for AT&T’s merger with T-Mobile come from a large and broadly diverse number of high-tech companies that recognize the need for robust capacity to support further growth and innovation in mobile broadband.

The wireless market will remain vibrantly competitive

As anyone who watches television or reads the newspaper knows, the wireless market is one of the most competitive in the entire U.S. economy, with wireless providers aggressively marketing a vast array of products and services. This is demonstrated in the basic competitive realities in markets throughout America, including the resurgence of Sprint and the fact that roughly three-quarters of Americans have a choice of five or more facilities-based wireless providers. Furthermore, other major providers posted record gains in the first quarter of 2011 which confirms that they can fill any competitive gap T-Mobile USA might leave after this transaction is complete.

The network capacity of the combined company will far exceed the sum generated by its pre-merger parts

Over the past four years, AT&T has invested more than $75 billion to upgrade its wireline and wireless networks—more than any other public company has invested in the United States, despite opponents’ claims of underinvestment.  Contrary to opponents’ arguments, neither this massive investment, nor piecemeal technology “solutions” can solve the macro-level, system-wide constraints confronting AT&T, and they cannot, alone or together, provide the capacity relief on anything approaching the scale of this transaction, let alone in the same time period.  Benefits from T-Mobile cell sites (which are densest in urban centers), cannot be achieved by AT&T on its own, and because AT&T and T-Mobile USA have uniquely complementary networks and spectrum positions, the network capacity of the combined company will far exceed the sum generated by its pre-merger parts.

Numerous competitors will have ample spectrum to maintain the vibrantly competitive U.S. wireless market

The combined spectrum position of Sprint and Clearwire (in which Sprint currently owns a majority stake) is far stronger than AT&T’s today. Clearwire has the best spectrum position in the industry, on average, 160-megahertz of spectrum in the top markets. This is more than the combined AT&T/T-Mobile company would have if their merger is approved,[1] and does not even include the additional spectrum Sprint holds directly.

The full publicly available filing, with certain portions containing competitively confidential information redacted, is available at http://www.mobilizeeverything.com/.

[1] Conference Call Tr., CLWR – Q1 2011 Clearwire Corp. Earnings Conference Call, Thomson StreetEvents, at  (May 4, 2011) (“Clearwire May 4, 2011 Earnings Call Tr.”); see also Fourteenth Report, 25 FCC Rcd at 11570 Chart 40.*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

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