The Federal Communications Commission is asking AT&T for more details on the company’s proposed T-Mobile acquisition, increasing scrutiny of the merger in light of leaked information that the carrier may be able to increase spectrum without the purchase and for one-tenth the price.
AT&T could reportedly supply high-speed wireless service to most Americans by other means, namely by expanding the network to cover 97 percent of the U.S., at a cost of $3.8 billion. This is one-tenth the cost of the pending $39 billion T-Mobile acquisition, undercutting a major reason cited by the carrier to justify the purchase.
AT&T’s lawyers accidentally leaked this information while corresponding with the FCC about the merger.
The full, unredacted version of the leaked document suggests AT&T considered and rejected a less-expensive plan than the T-Mobile merger in January, when AT&T executives concluded there was “no viable business case for the proposed expansion,” according to the letter.
In light of the divulged information, the FCC is refocusing on one of the central issues in the proposed merger — whether it would benefit consumers enough to overcome concerns over limiting wireless competition and possibly hurting consumers and innovation.
FCC officials are already taking a closer look at AT&T’s argument that the merger won’t hurt consumers economically, and parties on both sides of the argument have been speaking out since the deal was announced.
The loudest opposition comes from Sprint’s CED Dan Hesse, who has reportedly been working day and night to persuade regulators to squash the deal. Hesse is joined by politicians, advocacy groups, and private citizens in voicing their concerns.
In its defense, AT&T asserts federal regulators should approve its deal to acquire T-Mobile from Deutsche Telekom AG because it would allow the Dallas-based carrier to expand its LTE next-generation wireless network to 95 percent of the population. This expansion of networks is one of FCC Chairman Julius Genachowski’s top priorities.
“We look forward to providing the commission with this additional information, which will further confirm that we would not be able to deliver 4G LTE to 55 million more Americans without our merger with T-Mobile,” stated AT&T spokesman Michael Balmoris.
AT&T, in a partially redacted version of the same filing posted on the FCC’s website, said the “scale and scope of the larger combined wireless business will permit the additional capital investment to be spread over a larger revenue base than would be the case absent the merger,” as further information on what the purchase is warranted.
Whatever the impact of this recent news on the regulatory approval process, both the FCC and the Justice Department hint they may increase regulation in the telecommunications industry if they do approve the merger. In other words, the government may exercise control so that AT&T and Verizon Wireless keep prices from rising and possibly help prevent a duopoly.