Expert: Gov't should approve T-Mobile sale with conditions

U.S. agencies could force AT&T to build out its mobile broadband network as part of the deal, a consultant says

Instead of rejecting AT&T's proposed acquisition of T-Mobile USA, U.S. regulators should approve the deal with conditions that require AT&T to build out its mobile broadband network to more rural areas, said one telecom consultant and liberal activist.

The U.S. Department of Justice and U.S. Federal Communications Commission should require AT&T to roll out its mobile broadband service to 97 percent of the U.S. population, as its executives have promised to do if the deal goes through, said Nathan Newman, principal with Economic and Technology Strategies and former executive director of the Progressive States Network.

In addition, the agencies should require AT&T to offer a new, low-cost broadband service, and should prohibit AT&T from entering into exclusive handset and feature deals, Newman said at a Tuesday forum at the Economic Policy Institute in Washington, D.C. The agencies should also require AT&T to disclose more information about its broadband speeds, he said.

The acquisition, along with conditions requiring AT&T to expand its network, represent the best opportunity for mobile broadband to reach many rural areas in the U.S., Newman said. "The gain for this is a new set of rules on a dominant [mobile] player," he said. "It gives a chance for the public to get the long-term commitment to affordable access to high-speed for nearly everyone."

The merger conditions would create back-door regulations for AT&T that wouldn't otherwise be possible, Newman added. Merger conditions would force AT&T to deliver broadband to areas that won't otherwise get it, he said.

More government funding for broadband isn't likely, Newman said. "It's just expensive to serve people in rural areas," he added. "There is no current path to universal broadband."

AT&T has opposed conditions on the acquisition. A company spokesman, asked about Newman's proposal, pointed to AT&T's June 10 filing with the FCC. The FCC should reject a "grab-bag" of conditions being proposed, AT&T's lawyers wrote. The FCC has limited merger conditions to problems caused by the specific merger under review, AT&T argued.

Groups proposing conditions "share one objective: using this merger proceeding to gain regulatory advantages that they have been unable to obtain on an industry-wide basis," AT&T said in the filing. "Merger reviews are not the proper forum for resolution of industry-wide policy issues."

Newman's call for the agencies to approve the US$39 billion acquisition puts him at odds with many consumer groups. The deal would drive up prices for mobile service and lead to a major loss of jobs as AT&T eliminates redundant positions, said Parul Desai, telecom policy counsel at Consumers Union.

If the deal is approved, AT&T and Verizon Wireless would share about 80 percent of the U.S. mobile market, giving the two companies little incentive to lower prices, she said. Many mobile customers have smaller choices, but those companies may have limited handset offerings, and their customers may have to pay large roaming fees, Desai added.

Desai discounted merger conditions as an alternative to the DOJ and FCC rejecting the merger. "Conditions are not regulation," she said. "Conditions expire."

But most U.S. residents now have several choices of mobile providers, and the acquisition won't reduce competition significantly, said Debbie Goldman, a research economist with the Communications Workers of America. The FCC, in a mobile competition report released Monday, found that nearly 90 percent of U.S. residents have a choice of five or more carriers, she noted.

AT&T would also allow T-Mobile workers coming into the company to join unions, Goldman said. AT&T is the largest unionized company in the U.S., she said.

Without the merger, T-Mobile has no path to offer 4G LTE (Long-Term Evolution), she added. Parent company Deutsche Telekom has stopped investing in the U.S. branch, Goldman said. "T-Mobile is going to be sold, whether it's in part or in whole," she said. "What's the best result?"

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 business managementmobileregulationMergers and acquisitionstelecommunication3g4gat&tU.S. Department of JusticeCarriersU.S. Federal Communications CommissionVerizon WirelessT-Mobile USAConsumers UnionCommunications Workers of AmericaParul DesaiDebbie GoldmanEconomic Policy InstituteEconomic and Technology StrategiesNathan Newman

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