Sprint Files Papers Stating Opposition to ATandT-T-Mobile Merger

 
 
By Wayne Rash  |  Posted 2011-05-03
 
 
 

Sprint Files Papers Stating Opposition to ATandT-T-Mobile Merger


Sprint Communications has filed a petition for intervention with the West Virginia Public Service Commission, which would allow it to formally present its arguments against AT&T's proposed $39 billion buyout of T-Mobile.

In a copy of the petition made available to eWEEK, Sprint lays out the arguments that company insiders say will likely make up the gist of the response to the U.S. Department of Justice's letter sent to wireless carriers this week requesting details from wireless carriers, including Sprint, on how the merger would affect their business.

While Sprint has acknowledged receiving the request from the Justice Department, it has not yet formulated its response. However the response to the Justice Department request is expected to contain similar points to the request for intervention sent to the West Virginia PSC. The Sprint filing is now available on the West Virginia Public Service Commission's Website.

West Virginia reserves the right to review and approve mergers or acquisitions by any public utility that does business within the state. In its petition, Sprint notes that West Virginia law states that any "assignment, transfer, lease, sale or other disposition of the whole or any part of the franchises, licenses ... or any other property of any public utility or any merger or consolidation thereof ... shall be void to the extent that the interests of the public in this state are adversely affected."

Sprint also notes that AT&T and T-Mobile have petitioned the PSC to either approve the merger or exempt the transaction from having to follow the law. Sprint also notes that AT&T is claiming that T-Mobile has a limited presence in West Virginia, while at the same time claiming that buying T-Mobile will allow it to provide statewide LTE service. This seeming contradiction is enhanced by claims in the AT&T filing that merging with T-Mobile would somehow improve its ability to provide coverage in West Virginia and improve innovation.

The points Sprint raises to the West Virginia regulatory authorities include the threat to Sprint from an effective duopoly with the combined AT&T-T-Mobile and Verizon Wireless having nearly 80 percent of the market. This will limit consumer choice and innovation while restricting competition to a degree that will negatively affect service plans and pricing. Sprint's petition also points out AT&T's consistently poor ranking in customer service versus T-Mobile's top rankings and the reduced competition that will result.

Sprint Warns Merger Will Harm Consumers


 

Sprint also mentions opposition by Public Knowledge, a Washington, D.C., public interest group that has taken a stand against the merger. In its statement, Public Knowledge asserts that every benefit that AT&T claims will come from the merger is already available to the company without the merger. Consumers Union, a New York-based consumers advocacy group and publisher of Consumers Reports, has also taken a stand against the merger and is quoted in the Sprint petition expressing the group's concern that the merger would eliminate a consumer-friendly and low-cost carrier from the market.

In summing up its opposition, Sprint says that the merger of AT&T and T-Mobile would adversely affect pricing, device availability, innovation, networks and the ability of competitors such as Sprint to compete. Sprint also points out that it is a CLEC (Competitive Local Exchange Carrier) in West Virginia, and as a result has an interest in the case and requests the Commission to allow the intervention and to provide further relief that the Commission may find reasonable.

This document formally lays out the arguments that Sprint CEO Dan Hesse has been making in a number of forums and which he reiterated on his earnings call in April. The reality, of course, is that if the various regulatory agencies involved allow the AT&T-T-Mobile merger to go through, Sprint will be effectively marginalized. The company will be at the mercy of much larger competitors that can freeze it out of whatever market they wish, when they wish.

Verizon Wireless is expected to receive a similar request from the Justice Department; however, a Verizon Wireless spokesperson declined to comment. It's unclear exactly what position Verizon Wireless is likely to take. On one hand, having a competitor even larger than itself is sure to be unsettling to the company. On the other hand, being able to neatly divide the U.S. Wireless business between it and AT&T with little credible interference may be tempting.

Sprint, of course, sees the danger in such an arrangement and is making its concerns known in every forum available. In addition, a company source also pointed out that there are dozens of small, regional wireless carriers throughout the United States and explained that if this merger goes through, the continued existence of those carriers is at the pleasure of AT&T and Verizon Wireless.

One has to wonder how long it would take for the Big Two to decide that there's no pleasure in having small competitors underfoot, and simply stomp them out.


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