AT&T and Deutsche Telekom filed their replies to motions calling on the government to deny their proposed $39 billion merger application on July 10, the deadline for filing such motions with Federal Communications Commission.
The 229-page document, prepared jointly by AT&T and T-Mobile, asserts that the opponents to the merger are wrong in their claims that the proposed merger will hurt consumers. The merger is opposed by consumer groups and competing carriers, particularly Sprint, which claims it is in danger of getting priced out of the mobile carrier market if the merger is approved.
In a press release that announced the filing, T-Mobile asserted that the merger would reduce dropped calls, provide better in-building coverage and improve service to millions of consumers. The press release also claims that the merger will ease the transition to LTE. T-Mobile also said that the demand for data services was increasing four-fold each year and that without the merger the company would have trouble meeting customer demand.
In the actual document that was filed by the two companies, the primary focus seems to be on the number of groups that have voiced support for the merger, including some technology companies and labor unions. The document also classifies merger opponents as Sprint and other wireless competitors and special interest groups that “reflexively oppose all significant mergers.”
In the document, AT&T does promise that T-Mobile customers will be able to keep their existing rate plans, even if they upgrade their handsets. This promise, if carried through, does seem to take the wind from the sails of opponents who claim that T-Mobile customers will suffer from “bill shock.”
On the other hand, the document also confirms that AT&T plans to dismantle T-Mobile’s existing 3G network, and redeploy that as LTE. This, in turn, will make the 3G devices currently owned by T-Mobile customers useless for anything beyond very slow data service and voice calls.
It’s unclear whether some devices unique to T-Mobile, such as the G2 (reviewed last fall in eWEEK), will be reissued as AT&T devices. Users of other devices that are common between the two carriers, such as BlackBerrys, can get basically the same device that will support AT&T’s 3G or perhaps the eventual 4G service, but they’ll need to get a new contract with AT&T. The AT&T-T-Mobile document seems to indicate that they’ll be able to keep their existing rate plan if they do this.
AT&T also says that coverage maps indicate that the two wireless networks complement each other and says it has proof, although those maps were not made available to eWEEK. But according to the motion, a combined AT&T and T-Mobile network would eliminate coverage holes experienced by customers of both companies. T-Mobile, for example, is focused heavily on urban and high-traffic areas where AT&T historically has had trouble with such coverage.
ATandT-T-Mobile Deny Sprint’s Claims on Spectrum Holdings
Still, the claims by Deutsche Telekom seem slightly skewed. Currently, it’s not T-Mobile customers that complain about dropped calls, while AT&T’s dropped call problem is legendary. Likewise, T-Mobile claims in its advertising that it has the largest 4G network in the United States, while the FCC motion claims that it doesn’t. One has to wonder which side of its mouth DT is talking out of at any given time.
For the most part, the motion by DT and AT&T is a litany of counters to the various claims made by each of the opponents of the merger. Mostly, however, the dispute is about Sprint’s opposition filing a few days earlier. The document takes issue with the duopoly claims by Sprint (and pretty much everyone else) and says that most users have access to four or five alternate carriers. This claim is probably true in some places, but my experience at least has shown that it’s by no means true everywhere.
Potentially the most important part of the DT-T&T motion is the part about pricing. The companies say that the efficiencies of scale are such that pricing to customers should drop and that AT&T has no incentive to raise prices just so that its “archrival” Verizon Wireless can get more customers.
While the motion document itself in its entirety is a mind-numbing compilation of stilted prose to put it mildly, AT&T and DT have revealed some new parts of the plan. But they have also kept a large part hidden. One of the areas they won’t discuss in public is what happens to T-Mobile’s employees. Is it perhaps because AT&T is a union shop and T-Mobile isn’t (thus explaining the support of the labor unions that stand to either gain lots of new union members or get the satisfaction of seeing lots of non-union employees fired).
Perhaps the most remarkable part of the motion is the direct attacks on Sprint CEO Dan Hesse and his earlier remarks about AT&T’s spectrum availability. The motion basically accuses Hesse of not telling the truth. Then it then claims that Sprint, if you include Clearwire, really has the most spectrum.
It should be noted that there’s nothing terribly surprising in the DT-AT&T motion except the detailed promise that T-Mobile customers will get to keep their existing pricing, even with upgraded handsets. This will certainly ease the concerns of the bulk of the existing T-Mobile customers who went with T-Mobile because they couldn’t afford the other carriers. Otherwise, the contents of the document are predictable and as much as it may sound like mutual name calling such things are common in contested mergers.
Although one would have hoped that we’ve reached the point in the wireless industry where mergers don’t devolve to the point that they sound like school-yard arguments.