In a statement before federal lawmakers Wednesday, Sprint Nextel Corp. CEO Dan Hesse called on U.S. regulators to block AT&Ts $39 billion acquisition of T-Mobile USA and reiterated critics observations that the merger would leave market power largely within the control of just two U.S. mobile operators.
If U.S. regulators approve the merger, the wireless industry would regress toward a 1980s-style duopoly,” said Hesse in a prepared statement before the Senate Judiciary Committees Subcommittee on Antitrust, Competition Policy and Consumer Rights. AT&T would become the largest wireless carrier in the country with over 94 million subscribers and approximately 43 % of the post-paid market. Coupled with Verizons over 87 million subscribers and 38 percent of the postpaid market, the scope and scale of the resulting duopoly, controlling more than 80 percent of all U.S. contract customers and approximately 80 percent of all wireless industry revenues would be prohibitive to viable competition from other carriers.”
Hesse said U.S. regulators would not solve the problems that would arise from such a merger by imposing conditions or divestitures, and he called on the FCC and Department of Justice to block the transaction.
The only remedy that can preserve competition and a vibrant wireless marketplace is for the Department of Justice and the Federal Communications Commission to Just Say No to this transaction,” Hesse said.
Hesse disputed AT&Ts assertions that the T-Mobile USA acquisition would give it spectrum to expand service to rural America, and he said the merger would not solve the fundamental problem with serving rural areas: the high costs of building out service to areas with few people.
Even without this transaction, with the Qualcomm spectrum it is purchasing, AT&T has the largest, licensed spectrum holdings of any wireless carrier. But it does not use that spectrum efficiently,” Hesse said. Specifically, AT&T is not using on average 40 MHz of its spectrum across the nation spectrum that could be used to improve service for its customers but that AT&T has chosen instead to warehouse for future services.”
AT&T has pointed to regional carriers as evidence of robust competition in the U.S. wireless market. But Hesse said regional and local competitors such as prepaid carriers MetroPCS and Cricket provide a viable option for a limited number of customers, principally those who want a low cost phone and fewer options and features, and whose usage is primarily in a limited geographic area.”
However, these smaller prepaid companies will not be able to keep the Twin Bells from raising prices for the vast majority of customers who want robust wireless device options, a national footprint and continued innovation,” added Hesse, who was referring to AT&T and Verizon, which both own vast wireline telephone networks and have roots to the Bell monopoly.
Asked Hesse: If this takeover is allowed, on what pretence would Verizon not be allowed to acquire remaining competitors?”
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