WASHINGTON – AT&T Inc. formally asked regulators on Thursday to approve its $39 billion purchase of T-Mobile USA Inc., saying the transaction to form the largest U.S. mobile phone company would benefit consumers.
The deal will help meet escalating demand for advanced wireless services and consumers will suffer fewer blocked calls, AT&T said in papers filed in Washington at the Federal Communications Commission, which is to vet the transaction along with the Justice Department in a review that could take a year.
The purchase announced March 20 would combine the second- and fourth-largest U.S. wireless carriers into a new market leader, ahead of Verizon Wireless.
The merger would bring less competition and higher prices, according to critics including rival Sprint Nextel Corp. and Consumers Union. Concentration has increased in the wireless industry, with Dallas-based AT&T and Verizon having 60 percent of both subscribers and revenue, the FCC concluded last year.
“No amount of AT&T spin can change the facts: approval of the AT&T/T-Mobile merger would create a wireless duopoly, with two companies sharing 80 percent of the market,” Andrew Jay Schwartzman, senior vice president and policy director of Media Access Project, a Washington-based public policy law firm, said in an email. “It would raise prices, while stifling economic growth and innovation.”
AT&T would gain leverage to “strangle competition,” Sprint Senior Vice President Vonya McCann said in an email. “This transaction must be blocked.”
Public Interest
The merger presents “a clear and present danger” to competition and innovation and should be blocked, the Washington-based Computer & Communications Industry Association said in an email on Thursday. Its members include Google Inc., EBay Inc. and Yahoo! Inc.
The wireless market would remain competitive after the merger, featuring strong competitors including Sprint, Clearwire Corp. and regional operators such as Cincinnati Bell Inc., AT&T said in its filing at the FCC, which will judge if the deal is in the public interest. The agency began accepting comments April 14, ahead of the company’s filing.
AT&T filed earlier at the Justice Department, where antitrust experts will consider whether the combined company would improperly dominate markets.
Promotes Competition
“It will promote, not diminish, competition” and bring more jobs as AT&T builds high-speed networks to 97 percent of the American population, more than now planned, Joan Marsh, AT&T vice president of federal regulatory, said at a news conference on Thursday in Washington.
The advanced network will help meet the Obama administration’s goal of extending high-speed mobile Internet service to 98 percent of the population, AT&T said in its FCC filing.
“The transaction will promote America’s global leadership in mobile broadband innovation” and “will leave the wireless marketplace fiercely competitive,” the company said in the filing.
AT&T didn’t propose any divestitures in its FCC filing on Thursday, Marsh said. AT&T executives on March 21 said they may have to discuss divestitures.
In previous wireless industry mergers, applicants have agreed to divest airwaves in response to regulators’ concerns about increased market concentration.
“This proposed takeover cannot be fixed with conditions or divestitures,” said McCann, the Sprint executive.
‘Very Steep Climb’
The deal for the Deutsche Telekom AG unit also is to face hearings in Congress, including one set for May 11 before the Senate’s antitrust subcommittee.
The transaction needs three votes on the five-member FCC, which has a Democratic majority.
Commissioner Michael Copps, a Democrat, on March 31 said the merger faces “a very steep climb” to win his approval and Commissioner Mignon Clyburn, a Democrat, said April 8 the FCC needs to keep in mind the need to “encourage competition” as it weighs mergers. FCC Chairman Julius Genachowski, a Democrat, has declined to comment.
Tower companies, advertisers and wireless network builders are among industries that stand to be affected by the proposed merger.
ATT, the worst is buying up the competition. Hmm… jus like Comcast, the worst, doing the same. Now there’s a business model message.