California, following Louisiana, may be the second state to open an inquiry into AT&T's proposed $39 billion purchase of T-Mobile.
California may become the second state to review AT&T's
proposed $39 billion purchase of T-Mobile from parent company Deutsche Telekom.
The California Public Utilities Commission voted 5-0 May 26 to prepare a
potential review of the deal, Bloomberg
reported May 27, adding the review would follow another vote set for June 9.
The Louisiana Public Service Commission also voted to open
an inquiry May 17, according to the report. To pass, the deal needs the
approval of the Federal Communications Commission and the Justice Department.
Sprint, the nation's third-largest carrier, is strongly
opposed to the deal, which would merge the nation's second- and fourth-largest
carriers, boosting AT&T into the number-one spot ahead of Verizon.
Combined, AT&T and Verizon would then control an estimated 80 percent of
the market, which Sprint has argued would prevent it and other smaller carriers
from effectively competing for customers, as well as deal a blow to the current
pace of innovation.
"We believe a thorough investigation will reveal the
negative implications for pricing, choice and innovation, critical to
California's economy," a Sprint spokesperson told Bloomberg.
On May 2, Sprint requested that the West Virginia Public
Service Commission also review the deal, and in a May 12 filing, AT&T
requested that the Commission reject that request, Bloomberg added.
Members of the Internet Innovation Alliance have come out in
favor of the deal. In a May 26 statement IIA Co-Chair Jamal Simmons backed
AT&T's argument that its acquisition of T-Mobile would give it the spectrum
it needs to extend high-speed mobile broadband technologies to 97 percent of
U.S. consumers, calling it an assurance of "equal opportunity."
"The combination of AT&T and T-Mobile should
increase access to reliable mobile broadband services for many Americans who
use their cell phones as their primary way to get to the Web without a spike in
prices," Simmons continued. "More reliable access to broadband at a
fair price means more economic opportunity for more Americans."
Honorary IIA Chairman and former Virginia Congressman Rick
Boucher added, "Broadband is the bridge that links rural areas - like many
communities in my home state of Virginia - to the economic
In a May 26 blog
post, T-Mobile shared the written testimony that Deutsche Telekom CEO Ren??Â«
Obermann presented to the Senate Subcommittee on Intellectual Property,
Competition and the Internet that same day. Obermann argued that deal "is
the best possible outcome - not only for DT, T-Mobile USA and AT&T - but
for our customers and for wireless competition and innovation in the United
States," as well as outlined the ways a struggling T-Mobile could use
rescuing from AT&T (which is arguably a source of its woes).
T-Mobile has been caught in the middle of this
dynamic marketplace and has had an increasingly difficult time competing.
We have steadily lost market share over the past two years. In the most
recent quarter alone, we lost 471,000 contract customers, while other
competitors are growing rapidly. While other competitors are moving
quickly to build out and develop their LTE networks, T-Mobile lacks a clear
path to LTE deployment. To meet the exponential growth in demand for
bandwidth, T-Mobile will need to move to LTE to remain competitive but the
Company simply does not have access to the spectrum needed to deploy LTE effectively.
While some believe federal regulators should take a
hands-off approach to the matter, Sprint argued in its initial
statement opposing the deal that its approval 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 urges the United States government to block this
anti-competitive acquisition," Vonya McCann, Sprint senior vice president of government affairs,
said in the March 28 statement. "This transaction will harm consumers and harm
competition at a time when this country can least afford it."
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.