Industry heavyweights support AT&T's T-Mobile acquisition

Posted by Lydia Leavitt

AT&T is  on a mission to garner support from industry heavy hitters to help sway opinion in favor of its proposed $39 billion T-Mobile purchase.

Eight technology bigwigs, including Facebook and Microsoft, have already expressed support for the deal, and AT&T hopes it can convince legislators the purchase is indeed good for the mobile industry.

To be sure, both companies, along with ten prominent VC firms filed letters with the Federal Communications Commission (FCC) late Monday in support of the acquisition. The corporations claim the acquisition will help AT&T implement its next-generation data network to meet the growing demand for wireless broadband.

AT&T’s CEO Randall Stephenson said in the past that the merger is ultimately about the customers who are requiring more bandwidth in the context of what he calls the "spectrum crunch."

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

Promod Haque, a managing partner of Norwest Venture Partners, supported AT&T’s stance when he told the New York Times network capacity constraints were harming new mobile applications and innovation.

"The lack of adequate spectrum is killing the quality of users’ experience," he explained. "Customers say, ‘I can’t even get a phone call and can’t get adequate reception. So you want me to use this new service?’"

Allowing AT&T to consolidate its network spectrum with T-Mobile’s is easier and more cost-effective than alternatives, added Haque.

Similarly, in its letter to the Senate, Microsoft wrote, "Many policy-related efforts will not be able to quickly address near-term capacity needs. The F.C.C. must seriously weigh the benefits of this merger and approve it.”

AT&T hopes the letters from industry players will help it win approval from the Senate for the proposed acquisition of T-Mobile. Of course, corporations like Sprint Nextel heavily oppose the deal, citing (potenial) higher prices and reduced service.

Dan Hesse, CEO of Sprint Nextel, stated in a hearing last month, "If the Justice Department and Federal Communications Commission decide to permit the takeover, the wireless industry would regress to a 1980s-style duopoly."

The "1980s-style" situation Hesse is referring to is the "Ma Bell" organization (led by AT&T) that was deemed a monopoly almost thirty years ago. If AT&T and T-Mobile were to merge, it would make Verizon Wireless and AT&T a duopoly.

At the Senate hearing last month, Hesse added, "I am here because Sprint believes in competition, which goes hand in hand with innovation."

Taking a similar approach to AT&T, Sprint is gathering supporters of its cause who are against the merger, and both sides have sought out political leaders to articulate their respective positions.

The letters filed Monday show the deal has support in Silicon Valley from the likes of Yahoo, Oracle, VC firms Kleiner Perkins, Caufield & Byers and Sequoia, as well as BlackBerry maker Research in Motion. No word from Apple which side it plans to support, if any.