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AT&T was sadly mistaken if it was counting on the FCC to just quietly approve the deal to buy 700 MHz spectrum from Qualcomm for $1.9 billion before it separately reviewed its proposal to buy all of T-Mobile for $39 billon.
Why did this prove a forlorn hope? Because AT&T’s primary rationale for buying T-Mobile is that it needs T-Mobile’s spectrum. Considering that AT&T already has more spectrum assets than any other wireless company, and stands to gain more when it buys up Qualcomm’s holdings, you can see why AT&T would rather the FCC did not examine both deals at the same time.
But the FCC did notice and told the company Aug. 8 that it was putting approval on hold until the deal with Qualcomm could be considered along with the deal to buy T-Mobile. This means the FCC is going to decide whether AT&T really needs so much spectrum that it must buy a competitor to make it happen.
If everything that AT&T wants were to be approved, its spectrum holdings would be vast. The company would control far more available radio spectrum than any other company and would effectively marginalize its competitors. Sprint would be constrained, and even Verizon Wireless could find itself bumping into AT&T as it tries to grow. In effect, AT&T would rise again to become the Ma Bell of the wireless industry.
Of course, the FCC wasn’t the only group to notice. Sprint, the wireless company that’s sure to be marginalized if the T-Mobile deal goes through, added its own comments. “When AT&T announced its proposed $39 billion takeover of T-Mobile in March, the Federal Communications Commission was already reviewing AT&T’s $1.9 billion offer for Qualcomm’s 700 MHz spectrum, which AT&T had announced just three months earlier,” said Vonya McCann, senior vice president for Government Affairs.
“Given the complexity of the regulatory review of both proposed transactions, it’s a reasonable step for the FCC to coordinate the two reviews. The proposed transactions would produce game-changing effects on consumers and on competition in the wireless market. Over the next few months, we look forward to working with the FCC and other interested parties as the FCC conducts a coordinated review of the two transactions. Such a review makes abundant good sense and clearly is in the public interest.”
Shining a Light on the Elephant in the Living Room
It’s typical that wireless companies praise the actions of the FCC only on those occasions when the agency is doing something that is in the interests of the wireless company offering the praise. In this case, however, McCann makes sense. AT&T is busy accumulating as much spectrum as it can get its hands on, and the FCC wants to look at the overall impact.
As you’d expect, AT&T and Qualcomm don’t agree. Qualcomm wants the spectrum sale to go through because it wants its money. AT&T doesn’t want the two deals considered together because it’s still hoping that the FCC will not closely study the impact the two deals together will have on the wireless industry. But the FCC is considering the two deals together and the reasoning is fairly simple. If AT&T already has a lot of spectrum and gains even more with the purchase from Qualcomm, why does it need T-Mobile?
Therein lies the issue. AT&T has been (as we who live in the South call it) poor-mouthin’ on the issue of spectrum. Its claim that it absolutely, positively must buy T-Mobile is based on its position that it doesn’t have enough spectrum to deploy LTE. But if it gets all of that highly desired 700 MHz spectrum from Qualcomm, what does buying T-Mobile bring?
But all this just shines a spotlight on the elephant in the living room. AT&T really doesn’t need T-Mobile’s spectrum. What it wants is a return to the good ol’ days when Ma Bell was a monopoly and could do anything it wanted. And what it wants to do is restrict customers’ choices so that they end up a docile, captive group that has no choice but to pay nice high prices for their wireless telephone service.
Without T-Mobile out there providing service at lower costs with more innovation to provide choice and competition in the wireless industry, AT&T would own the GSM market in the United States. It would no longer need to enter into roaming agreements with small, regional carriers and it would no longer need to put up with competition with Sprint and its (so far) unlimited data plans.
So AT&T’s intentions are even more clear than they were. This isn’t about spectrum, it’s about control and eventually a duopoly, which in some ways is better than the monopoly it once had, because that way it can keep up the pretense of competition even when there really won’t be any meaningful competition. And that’s why the company wants to avoid talking about that big, fat elephant in the living room.