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AT&T: Competition In U.S. Wireless Market Plentiful

The U.S. wireless industry is among the most competitive markets in the U.S. economy, AT&T told the Federal Communications Commission in its application seeking approval to acquire T-Mobile USA for $39 billion in cash and stock.

And thats wont change when AT&T and T-Mobile USA merge, AT&T asserted in the filing.

Citing an FCC report adopted last year, AT&T said that roughly three in four Americans live in places where at least five facilities-based wireless providers offer service. 

AT&T said the FCCs figure excludes new entrants like LightSquared and so-called mobile virtual network operators like TracFone that have their own brand and resell wireless service from a facilities-based operator.

But that same FCC wireless report noted that AT&T and Verizon controlled 60 percent of subscribers and revenues as of 2009. And some observers note that AT&T and Verizon Wireless will control nearly 80 percent of all U.S. mobile subscribers if federal regulators give AT&T permission to buy T-Mobile USA.

Make no mistake, this deal is about eliminating a competitor and nothing more,” said S. Derek Turner, research director of the nonprofit organization Free Press, last week.

But AT&T said it does not consider T-Mobile USA a close” competitor.

In the FCC filing, AT&T notes that other providers already fill or could easily move to fill the competitive role T-Mobile USA occupies today.”

Although T-Mobile USA is the nations fourth-largest wireless operator with 33.73 million subscribers, the company is reportedly losing ground to smaller rivals.

AT&T estimates that MetroPCS now has more subscribers than T-Mobile USA in several major markets. 

T-Mobile USA has faltered because, among its other challenges, it occupies an uncomfortable position between higher-end providers and value competitors,” AT&T said.

The FCC is expected to closely scrutinize the combination of AT&T and T-Mobile USA to determine whether the transaction is in the public interest. The U.S. Department of Justice will be examining the merger under federal antitrust law to discover its effects on competition.

U.S. regulators often assert conditions on large mergers to protect competition. Its also possible regulators would move to block the transaction or, as some analysts in Washington, D.C. have pointed out, impose onerous conditions that would kill the deal.

In the FCC filing, AT&T asserted that blocking a transaction such as the merger of AT&T and T-Mobile USA would produce lower output, worse quality, and higher prices.”


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