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AT&T filed its official response Sept. 9 to the antitrust lawsuit filed by the U.S. Department of Justice that seeks to prevent the company’s merger with T-Mobile. In the response, AT&T states the same arguments that it has been making all along-that the merger would be good for consumers, that it wouldn’t create higher prices, and that AT&T needs T-Mobile’s spectrum to be able to grow its 3G and 4G coverage. The company also said that the merger would result in greater efficiencies, higher-quality service and even fewer dropped calls.
However, in its response, AT&T also charged that the Justice Department’s complaint “fails to come to grips with the significant efficiencies this transaction will generate.” AT&T also charged that the DOJ failed to depict accurately the state of competition in mobile telecommunications today. The company said that the complaint ignores competition from Sprint and Verizon Wireless and said that “innovative upstarts such as MetroPCS and Leap/Cricket, and strong regional providers like U.S. Cellular and Cellular South” provide significant competition.
In its complaint, AT&T points out that the company has spent $30 billion in spectrum and infrastructure, but it denies that it competes with T-Mobile on a national basis, claiming instead that all competition is really local, despite the fact that both companies set their rates and their marketing approaches nationally.
ATandT Hopes Bluster and Obfuscation Will Sway the Court
Meanwhile, AT&T also responded to Sprint’s antitrust lawsuit by issuing a press release. The AT&T press release said, “This simply demonstrates what we’ve said all along-Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers.” At this point, AT&T has not issued a formal response to Sprint’s antitrust suit.
In effect, AT&T’s official response is a continuation of the claims the company has been making since it first discovered there was opposition to the merger. In addition, it attempts to obfuscate those things that it hopes the U.S. District Court for the District of Columbia won’t notice. For example, it lists companies such as Cricket or Metro PCS as being significant competitors to AT&T, when in reality these companies are small and, for the most part, depend on the ability to work out roaming agreements on networks owned by Verizon Wireless and Sprint.
What AT&T does not admit is that among its internal papers, and revealed during the discovery process, were memos that stated that its biggest concern was over T-Mobile and its lower prices and better service. It’s also worth noting that AT&T isn’t mentioning any of the smaller, regional GSM companies as being companies that are bringing innovation and competition to mobile communications. Might this be because AT&T has every intention of wiping out the likes of Cincinnati Bell by refusing to offer roaming agreements to them?
Instead, AT&T continues its claims that it needs T-Mobile’s spectrum to grow its 4G network, despite the fact that the company already has more spectrum available than any other wireless carrier. That $30 billion that AT&T references was mostly money spent on buying spectrum. The company has a long history of failing to invest in its infrastructure. In fact, in 2009, AT&T sued Verizon Wireless over a series of ads in which Verizon Wireless compared the 3G coverage of both companies by simply showing their respective coverage maps by saying “There’s a Map for That.”
At the time, the Verizon Wireless response was simply that the ads were true and that the truth hurts. That failure was to spend money on supporting its existing networks. Even if AT&T’s claim of spending $30 billion on spectrum and infrastructure was really on infrastructure, that amount pales in comparison to Verizon Wireless’ investment of over twice that amount, despite the fact that its network is only slightly larger in claimed customers. As a number of critics have pointed out, AT&T could have upgraded its infrastructure faster, and for far less money simply by spending on infrastructure. The $39 billion that it wants to spend to eliminate T-Mobile far exceeds what it needs to spend its existing network into the spectrum it already owns.
The statement that the Department of Justice effectively doesn’t know what it’s doing flies in the face of reality. The DOJ has spent the time since the merger was announced doing discovery, taking statements, collaborating with the Federal Communications Commission and getting depositions from witnesses. AT&T’s own documents call its veracity into question, as do T-Mobile’s documents and public statements from before the merger was announced. AT&T’s claims that T-Mobile was dying conflict with statements made by T-Mobile the month prior to the merger that the company had turned around and had begun to grow again. And, of course, there are the internal AT&T memos calling T-Mobile AT&T’s biggest threat.
In its official response to the DOJ antitrust lawsuit, AT&T is clearly hoping that the court will be swayed by bluster and obfuscation. It’s hoping that proof by repeated assertion will trump proof through evidence. However, in this case, the court is smarter than that.