AT&T faces uphill battle in T-Mobile acquisition case

Posted by Lydia Leavitt

In March, AT&T announced plans to purchase T-Mobile and almost immediately ran into problems from the FCC due to potential antitrust matters.

In a hearing of the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights yesterday, senators grilled wireless bigwigs from AT&T, T-Mobile, and Sprint on a number of outstanding and controversial issues.

Opening the proceedings, chairman Senator Herb Kohl (D-WI) argued that AT&T’s acquisition of T-Mobile would give the company far too much power, considering that this would mean a merge between the fourth largest and second largest wireless companies in the United States.

“Four competitors are better than three," said Senator Kohl, who advised AT&T to spend its money on improving the network rather than buying an additional network. 

Kohl added that AT&T is facing an uphill battle to prove that this merger will indeed be beneficial for American consumers.

In the hearing sat AT&T CEO Randall Stephenso and T-Mobile CEO Philip Humm in defense of the acquisition with Sprint Nextel Dan Hesse on the opposing side.

Defending the plan, AT&T’s Stephenson chalked the purchase up to a joint effort that will ultimately be good for consumers and help keep prices down.

"This transaction is all about consumers,” said Stephenson. "It’s about keeping up with consumer demand and having the capacity to drive innovation and competitive prices for consumers."

Stephenson referred to the "spectrum crunch" that will cause prices to soar as the market is flooded with more and more bandwidth-eating smartphones (like the iPhone). 

Stephenson denied that the motivation behind the acquisition was based on competition to band together against Apple and the uber-successful iPhone, stating that AT&T did not consider T-Mobile an important competitor.

"Is it really credible to come up here and sit here and tell us that you and T-Mobile are not close competitors?" retorted Senator Kohl.

T-Mobile’s Humm defended the acquisition because he claims the company does not have enough wireless spectrum to compete with bigger brands and will ultimately be shut down if not bought out.

As expected, Sprint’s Hesse slammed the acquisition idea, terming it a destructive duopoly with 80 percent market share. He added that it would probably be the end of Sprint as the company will be forced to sell itself either to bigger fish AT&T or Verizon when faced with such competition.

"If the Justice Department and Federal Communications Commission decide to permit the takeover, the wireless industry would regress to a 1980s-style duopoly," added Hess.

“Just say no to this takeover,” he added.

(Via Digital Trends