ATandT Files Statement with FCC, to Chagrin of Sprint, RCA
AT&T has filed a document with the FCC, arguing for its proposed purchase of T-Mobile. Sprint and the Rural Cellular Association, meanwhile, ferociously oppose the deal.As AT&T gets the lengthy regulatory process underway, opposition to its $39 billion bid for rival T-Mobile continues to mount. The same day AT&T filed a Public Interest statement with the Federal Communications Commission, taking a next step in its controversial bid for T-Mobile, another voice-the RCA, or Rural Cellular Association-joined the chorus of naysayers who believe the deal would harm competition in the industry and negatively impact consumers. At the same time, a newspaper report indicated that Sprint, another vocal opponent, has begun lining up lobbyists to fight the deal in Washington D.C.
All that comes as AT&T officials on April 21 filed the company's Public Interest statement with the FCC, kicking off a regulatory process that analysts say could take a year to complete. In the document, AT&T outlined the benefits that it believes will result from the deal's approval.
"This deployment will help fulfill this Administration's pledge to connect every part of America to the digital age, and it will create new jobs and economic growth in the small towns and rural communities that need them most," AT&T said in a statement. However, the RCA, which represents wireless carriers in rural areas of the country, announced its strenuous opposition to the deal, stating-as Sprint CEO Dan Hesse and others have-that it would be bad for competitors and consumers alike. "RCA is absolutely, unyieldingly opposed to the AT&T/T-Mobile merger as presented. We do not view this merger as beneficial to consumers or to the wireless market in the United States. As proposed, it is a horizontal merger that will significantly reduce consumer choices and provide fewer partnering options for smaller carriers, and will strike a devastating blow to an already increasingly consolidated industry that competition may never recover from," RCA president and CEO Steven K. Berry said in a April 21 statement. "This is a seminal moment for the concept of wireless competition. This will mean higher prices and fewer choices for consumers, job losses in the industry, and for many smaller GSM carriers it could mean extinction. This clearly moves to a monopoly if you are a GSM provider." Following AT&T's announcement of the deal, Sprint responded that it planned to fight back, saying in a March 28 statement that the acquisition "would reverse nearly three decades of actions by the U.S. government and the courts that modernized and opened U.S. communications markets to competition." Sprint is currently the nation's third-largest carrier; should the deal go through it would remain so, though as a far smaller fish in the pond. It's estimated that the deal would leave AT&T and Verizon controlling approximately 70 percent of the U.S. market.
Taking its fight a step further, Sprint has reportedly hired a fleet of lobbyists to act on its behalf. According to an April 25 report in the Kansas City Star, Sprint last year spent $2.5 million lobbying the federal government, and in the first three months of this year has already spent $1.5 million. According to the Star, "Sprint has dropped one lobbying firm and added three others: Thorsen French Advocacy, Franklin Square Group and The Fritts Goup." The report added that in the first quarter of 2011, AT&T spent more than $15 million on federal lobbying. Also not boding well for Sprint and the RCA, "Seven members of Congress own more than $100,000 in AT&T stock," reported the Star. "Sen. John Kerry, a Massachusetts Democrat, owns more than $1.2 million. No one in Congress owns more than $65,000 of Sprint stock." While it's unlikely to prevent the deal from going through, the report adds, Sprint's money is more likely to help push regulators to demand that AT&T sell off greater chunks of assets - which according to analysts could be scooped up by Sprint, to its benefit - and "perhaps [influence] which clusters of subscribers and spectrum land on the auction block." Earlier this month the FCC began procedures to review AT&T's proposed purchase. An FCC commissioner, explaining the process to journalists during a conference call, said that burden of proof will be on AT&T and T-Mobile to prove whether "granting the requested approval to transfer control T-Mobile's Commission-issued licenses serve the public interest, convenience and necessity." RCA, in its statement against the deal, added the AT&T's filing is more than 380 pages long, and it will take some time for regulators to understand the impact the deal will have on the wireless marketplace.
"On behalf of competitive carriers, we call on the DOJ, FCC and Congress to apply utmost scrutiny to this fundamental restructuring of the telecom world," said Berry. "There is nothing in this merger that provides a pathway to competition."