Sprint CEO Hesse Calls ATandT Acquisition 'Disastrous'

Sprint CEO Dan Hesse told eWEEK that AT&T acquiring T-Mobile would be harmful to consumers and competition.

Sprint CEO Dan Hesse has a bone to pick with AT&T's proposed T-Mobile acquisition.

"This is just a bridge too far," Hesse told eWEEK after a June 16 speech at Stanford University's Graduate School of Business as part of a CTO Forum. "A takeover of T-Mobile by AT&T would be absolutely disastrous for consumers and the U.S. economy. It would lead to less competition; as a result, the marketplace would have a lot more regulation than we have now."

AT&T has argued for months that absorbing T-Mobile's infrastructure would help extend 4G technology to more Americans, including those in rural areas. In April, CEO Randall Stephenson insisted to USA Today that the wireless industry would remain "fiercely competitive" even after his company finished the deal.

Hesse disagrees, countering that the acquisition would result in few tangible benefits for consumers. AT&T "got big guffaws from all of us in the industry when they said: 'Acquiring T-Mobile will help us build 4G in rural areas,'" he added. "What the heck does that have to do with it? They're already sitting on a ton of unused spectrum in rural areas, just like all of us are."

Hesse's forthrightness over what he sees as a competition-crushing acquisition is a bit of a sea change from March of this year, when he appeared relatively quiet about AT&T's freshly announced plans. During the executive roundtable that opened this year's CTIA 2011 conference in Orlando, Fla., he told an audience, "My opinion [about the deal] doesn't matter," while leaving the more critical comments to Sprint's public relations team.

As federal regulators continue to pore over the intricacies of AT&T's acquisition, though, Hesse has been steadily ratcheting up the intensity of his campaign. According to Bloomberg, Sprint's CEO even has a whiteboard-filled "war room" at the carrier's headquarters, a nerve center from which he apparently plans to do everything in his power to help scuttle AT&T's plans.

AT&T, of course, has no choice but to react.

"Dan Hesse's facts are totally wrong in nearly every area. They've been refuted thoroughly in the ample record compiled by the government in our merger," Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, wrote in an emailed statement to eWEEK. "In fact, the FCC's wireless competition report released just this week also contradicted a number of the things Mr. Hesse says.  Yet he keeps making the same wild assertions as if repetition will somehow make them true."  

Cicconi then took things a step further: "We also can't help but feel that Sprint's shareholders would be better served if Mr. Hesse focused on a strategy for Sprint rather than continue a Queeg-like obsession with AT&T and its decisions."

(Captain Queeg, a main character of the Pulitzer Prize-winning novel The Caine Mutiny-played by Humphrey Bogart in the 1954 film adaptation-has a personality marked by paranoia and anger.)

However, Sprint does stand a chance of blowing a hole in AT&T's waterline, according to some analysts. "Four or five years ago, rivals' lobbying wouldn't have counted for much," stated Charles King, principal analyst of Pund-IT. "But we're in a far more proactive regulatory environment under the Obama administration than we were then." In light of that, "I think regulators will be paying close attention to comments from various constituencies, including competing vendors."

Competition is a real issue with regulators these days. "All carriers lobby, so everyone has a shot," according to Ray Wang, principal analyst and CEO of Constellation Research Group. "Take data plans. The elimination of unlimited data from Verizon to usage-based is proof that without competition customers will pay a hefty price."

Hesse can only hope the anti-competition argument resonates with federal regulators.