AT&T says its needs T-Mobile spectrum

The proposed deal would help AT&T better deliver mobile broadband to customers, officials say

AT&T will be able to significantly improve its mobile network capacity and give better service to its customers because of its proposed acquisition of rival T-Mobile USA, company officials said Thursday.

Critics of the deal, including competitor Sprint Nextel, are incorrect in asserting that AT&T is sitting on mobile spectrum, said Bob Quinn, AT&T's senior vice president for federal regulatory affairs. The proposed US $39 billion deal, announced in March, is a "very clean and quick way to deal with some of the spectrum issues that are facing this country and this company in particular," he said during a press briefing.

The deal is necessary because AT&T is facing a spectrum shortage as mobile broadband use continues to skyrocket, the company has argued. While critics have suggested AT&T is hoarding spectrum, the company is using its 700MHz spectrum, acquired in 2008 auctions, and its AWS (advanced wireless services) spectrum to roll out 4G LTE (long-term evolution) service, Quinn said.

Sprint has questioned why AT&T, with the largest spectrum holdings of any U.S. carrier, needs T-Mobile. "AT&T has repeatedly reassured investors that it has the spectrum and network capacity it needs to meet the growing demand for data services," Sprint said in a May 31 filing at the U.S. Federal Communications Commission. "If AT&T has capacity constraints, they are the result of its failure to upgrade and invest in its network. AT&T has lagged significantly in network investment."

Dozens of groups have voiced opposition to the merger between the second-largest mobile carrier in the U.S. and the fourth-largest. The merger would reduce competition in the mobile market and likely drive up prices, said critics including Public Knowledge, the Rural Telecommunications Group and the NoChokePoints Coalition, a coalition of telecom customers, consumer groups and small carriers concerned with mobile backhaul rates.

The merged company would be "contrary to the express policies of Congress and the Commission to rely on competition rather than regulation to protect consumers and spur deployment of new services," Public Knowledge and the Future of Music Coalition wrote in a May 31 filing to the FCC.

The combined company would be the largest mobile provider in the U.S. and would be able to assert control over mobile handsets, applications, equipment and protocol development, Public Knowledge and the Future of Music Coalition said in their filing.

But AT&T, in a response filing to be sent to the FCC on Friday, will argue the merger will be good for mobile customers. By combining networks, AT&T will be able to increase its mobile capacity by 60 percent in New York City in the short term, and by more than 80 percent in the long term, Quinn said.

Los Angeles and San Diego would both see short-term spectrum gains of more than 45 percent, Quinn said.

The merger would give AT&T more spectrum and cell tower coverage, giving customers better mobile data service, he said. AT&T has tried other ways to improve capacity, including distributed antenna systems and Wi-Fi hotspots, Quinn said.

"We are not stupid," he said. "We've been in the wireless business for a long time. We've tried all of these as short-term methods ... to fix and provide for more capacity. While they give you some short-term benefit, they're not long-term benefits to address the kind of bandwidth demands that we're seeing."

AT&T, in its FCC filing, will also note support for the merger from dozens of groups, including 15 state governors, 10 labor unions, nine venture capital firms and several tech firms, including Microsoft, Facebook, Oracle and Yahoo, Quinn said.

Many groups supporting the merger see the potential for AT&T to bring mobile broadband to more corners of the nation, he said. AT&T has said it plans to cover 97 percent of the U.S. population with 4G service if the merger is approved by the FCC and the U.S. Department of Justice. Right now, the company plans to cover 80 percent of the population with 4G service.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags antitrusttelecommunicationFuture of Music CoalitionFacebookPublic KnowledgeOracleYahooNoChokePoints CoalitionMicrosoftat&tRural Telecommunications Grouplegalsprint nextelU.S. Federal Communications Commissiongovernmentbroadbandbusiness issuesU.S. Department of JusticeMergers / acquisitionsregulationBob QuinnT-Mobile USAmobile

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Grant Gross

IDG News Service

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