News Analysis: AT&T took the next official step in its bid to acquire T-Mobile by filing a license-transfer application with the FCC. However, the road to approval is unlikely to be smooth.
The Federal Communications Commission announced April 21 that it had received a request from AT&T and Deutsche Telekom
to transfer the licenses currently used by T-Mobile
to AT&T. This is a necessary step in moving forward with its $39 billion bid to take over its smaller competitor. Predictably, Sprint Nextel objected strongly.
Sprint's strongly worded objection, provided to the media in a prepared statement from Sprint Senior Vice President for government affairs Vonya B. McCann, said that the filing would create an entrenched duopoly with control of nearly 80 percent of the wireless industry.
"Today's filing only reinforces the significant risks presented by AT&T's proposed acquisition on the U.S. consumer and the wireless industry overall," McCann said in her statement.
Sprint is unlikely to be the only party objecting to the proposed acquisition, which has angered customers
and has raised questions from consumer groups. The consumer opposition, as well as what is certain to be a long and painful review by both the U.S. Department of Justice and the Federal Communications Commission is likely to make the merger approval process last at least a year, assuming it is approved-something that is far from certain
AT&T has attempted to temper the FCC's view of that opposition by assuring the commission that T-Mobile customers would continue to be able to keep their existing rate plans and that they would be able to keep their existing phones and other devices. There is no word on whether AT&T still plans to move forward with killing off T-Mobile's 3G and 4G frequencies to gain more space for its nascent LTE (Long-Term Evolution) build-out.
While AT&T predicts that acquiring T-Mobile would provide customers of the smaller carrier better signal quality and more reliable communications, its filing fails to mention AT&T's long-term problems with call quality, dropped calls or the inconsistent coverage of its existing 3G network. AT&T also doesn't explain how it would support T-Mobile's 4G customers who currently have significantly faster connections than they would under AT&T. You can see AT&T's filings on the FCC Website.
AT&T also suggests that the merger would foster innovation, a fact Sprint disputes. "This kind of leverage could strangle competition and give AT&T the power to increase prices, threaten innovation critical to this industry and eliminate American jobs," Sprint's McCann said in her statement.
While AT&T does claim that the merger would foster innovation, AT&T history has shown that this is not the case. Until the original version of AT&T was forcibly broken up by the U.S. government, the company enjoyed a monopoly position in communications and did little to innovate in the consumer market.