AT&T-T-Mobile Merger Would Almost Meet Obamas Broadband Goal

The merger of AT&T and T-Mobile USA will nearly achieve President Obamas goal of bringing broadband to 98 percent of Americans within five years, said Rick Boucher, the former U.S. Representative for Virginias 9th congressional district.

The union marks a very important step” in achieving universal broadband in the near future,” said Boucher, a Democrat who left office in January after serving in the House for 28 years.

Within six years, AT&T will bring broadband to 97 percent of the nations population, said Boucher, who now serves as honorary chairman of the Internet Innovation Alliance (IIA) and heads up the government strategies practice group of Sidley Austin, a powerful law firm with offices around the world.

In his State of the Union Address earlier this year, President Obama set the goal of enabling businesses to provide high-speed wireless services to at least 98 percent of Americans within five years. In a recent report to Congress, the Federal Communications Commission found that roughly 26 million Americans still dont have access to high-speed Internet service.

AT&T has said that its $39 billion acquisition of T-Mobile USA will enable the company to reach roughly 97 percent of the population with its fourth-generation LTE network. AT&Ts plans represent nearly 55 million more Americans than our pre-merger plans and millions more than any other provider has committed to service,” AT&T CEO Randall Stephenson said last month before the Senate Judiciary Committees Subcommittee on Antitrust, Competition Policy and Consumer Rights.

Dallas-based AT&T has cited its broadband plans as one of the main public benefits of a merger that would knock out T-Mobile USA, the nations fourth-largest wireless provider with 33.63 million customers. AT&T has said the merger will solve its need for additional spectrum.

In a letter sent this week to FCC Chairman Julius Genachowski, several high-profile companies including Avaya, Brocade, Facebook, Microsoft, Oracle, Qualcomm, Research in Motion and Yahoo! have lined up to support the deal.

In the letter, the companies noted that wireless networks are struggling to keep pace with the” escalating demand for wireless broadband.

Given the network capacity challenges, policymakers must give meaningful consideration to AT&Ts acquisition of T-Mobile as a means of addressing their near term wireless broadband capacity needs,” the letter states.

The FCC is reviewing the transaction to determine whether it is in the public interest, and the Department of Justice is examining the merger under antitrust law.

Consumer groups and other critics contend the transaction would leave AT&T and Verizon Wireless with far too much power, potentially resulting in fewer choices and higher prices. AT&T and Verizon would control 82 percent of post-paid subscribers and roughly 78 percent of all wireless revenues, according to Sprint Nextel in a filing with the FCC.

In a telephone interview, Boucher noted that AT&T and Verizon compete with each other, functioning as a check on prices.”

After this combination is approved, 18 of the largest cities in the nation will still have five or more wireless providers for those cities,” said Boucher, echoing AT&Ts remarks in response to criticism that the merger will limit consumer choices. There will be ample choice for consumers who do not want to subscribe to Verizon or AT&T.”

But critics of the merger contend smaller providers dont have the leverage to negotiate agreements to distribute popular devices like the iPhone, which both AT&T and Verizon Wireless sell.

The merger would not be creating that condition,” Boucher said. It doesnt resolve it but it certainly doesnt create it.”

Some analysts have speculated that the merger could pave the way for further industry consolidation, potentially involving the nations third-largest wireless provider: Sprint.

If Sprint acquires other wireless providers and thereby increases it reach and the penetration of its service, that would make it an even stronger provider and therefore serve the national interest,” said Boucher, whose IIA includes AT&T as a member.

Over the last decade, the number of wireless subscriber connections has nearly tripled in the United States. As of December 2010, the United States was home to nearly 303 million wireless connections, according to CTIA-The Wireless Association.

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