The Federal Communications Commission has asked AT&T for evidence to back up its claims that it doesn’t have enough spectrum to provide future service as it claimed in its request to transfer T-Mobile’s licenses to itself.
The FCC also directed that AT&T back up its claims that no jobs would be lost by providing information that AT&T gave to Wall Street analyst and others. In addition, the FCC requested information on whether AT&T would keep the T-Mobile brand and whether it would keep its pricing plans. The basic request is available on the FCC’s Website.
It its April 21 filing with the FCC, AT&T claimed that it faces spectrum shortages more severe than any other carrier. The FCC request of May 27 asks AT&T to provide evidence of that assertion. FCC officials have previously told eWEEK that they don’t plan to “rubber stamp” the AT&T merger request and instead plan to give it very detailed scrutiny. Once AT&T provides the evidence that the FCC requested, the Commission can ask for additional information or it can require testimony from AT&T and T-Mobile executives.
Groups opposing the merger of AT&T and T-Mobile have made statements supporting the FCC’s request for further information. One group, Public Knowledge, said in a Capitol Hill press conference hosted by Rep. John Conyers (D-MI), the senior Democrat on the House Judiciary Committee, that it would be hard to imagine a takeover that would do more harm to consumers. The group’s president and co-founder, Gigi Sohn, said that the merger would lead to higher prices, less innovation and ultimately an unregulated duopoly.
Eventually the FCC will hold hearings on the proposed transfer of licenses, which is an essential part of the merger. Without FCC approval, the merger can’t take place. Also standing in the way of the merger are the public utility commissions of states that assert regulatory authority over communications companies.
The Louisiana PUC has already announced that it has voted to open an inquiry into the merger. California’s PUC is considering an inquiry. Earlier in May, Sprint requested a similar inquiry to the West Virginia Public Utilities Commission. The commission there has yet to act on the request.
One item that’s certain to come up in these inquiries and perhaps in the FCC hearings is the apparent conflict between what AT&T claims in its license application versus what’s been said in other arenas. For example, in its request to the West Virginia PUC to reject Sprint’s petition for an inquiry into the merger, AT&T claims that acquiring T-Mobile will give it a vast improvement in statewide coverage.
ATandT Must Prove It Needs T-Mobile Spectrum
However T-Mobile has very little coverage of its own in West Virginia and depends in many cases on roaming agreements to allow its customers to make calls while in the state.
Likewise, AT&T is claiming that it needs T-Mobile’s spectrum holdings in order to deliver LTE to its customers, but Deutsche Telekom CEO Ren??« Obermann told the U.S. Senate Subcommittee on Intellectual Property, Competition and the Internet that T-Mobile, “simply does not have access to the spectrum needed to deploy LTE effectively.”
The question that opponents are sure to ask, of course, is if DT’s statements to the Senate are correct, then how is it that AT&T will get enough spectrum through the merger to build out its LTE network. The answer provided by AT&T so far (but lost in much of the discussion) is that it will not continue to operate T-Mobile’s existing 3G and 4G networks. Instead, it will dismantle those networks and use the infrastructure and operating permits to replace it with its own LTE infrastructure.
It’s possible that all of T-Mobile’s data network, plus AT&T’s data network might provide enough space to allow the growth of AT&T’s LTE network. However, because T-Mobile has so little suitable spectrum, the question that arises is how it is that AT&T doesn’t have enough already. This is why the FCC is asking for the evidence of a spectrum shortage. One would presume that they will also ask T-Mobile for information about its LTE-capable spectrum to see if AT&T’s claims about the post-merger landscape pass the giggle test.
But even if AT&T is able to pass that test and demonstrate that somehow T-Mobile’s spectrum will allow it to do something that T-Mobile says it can’t do, then there’s the question of what will happen to T-Mobile’s customers. While T-Mobile phones will continue to offer voice and 2G service even after the merger, once AT&T starts dismantling the 3G and 4G networks, T-Mobile customers will have nothing else. Their smartphones-all of them-will be rendered useless for anything except voice phone calls and low-speed data.
The solution, of course, is one that is typical of AT&T. T-Mobile’s customers would have to upgrade to AT&T phones, with their limits on 4G data, their higher prices, more expensive monthly plans and customer service that is so bad it’s the stuff of legends.
At this point, all that’s happening is that government agencies on the state and federal level are asking questions and asking for proof that this acquisition would be good for consumers. Once that’s done, it’s time for public hearings and I suspect that the regulators will get an earful when those start.