Although we cannot think of a single recent instance where regulators flat-out refused a merger, Sprint is arguing that they should do so with the proposed AT&T/T-Mobile union. On Tuesday, Sprint filed a formal, 130-page request asking the FCC to block the merger, saying that even if AT&T divested itself of key assets, consumers would still be harmed.
Sprint used a lot of harsh language in its request to the FCC and its press release. It said that the merger would create a "duopoly" -- meaning AT&T and Verizon -- which would own 76 percent of the wireless market between them. This so-called duopoly, would "stunt investment and innovation. No divestitures or conditions can remedy these fundamental anti-consumer and anti-competitive harms. AT&T’s takeover of T- Mobile must be blocked."
The carrier went onto to say that this merger was tantamount to a "government bailout" of AT&T: "In effect, AT&T is simply seeking a government bailout for problems of its own making and expects the cost of the bailout to be shouldered by American consumers. Instead of paying Deutsche Telekom $39 billion, AT&T could invest a fraction of that amount to expand its LTE deployment to nearly all Americans. But rather than respond to the market demands of a competitive industry, AT&T has chosen to eliminate competition and transform a competitive market into a duopoly."
We hate to point out pesky little things called details, but AT&T spending its own money to buy an already built network is not the same thing as the United States giving Goldman Sachs $12 billion to keep it afloat ... just sayin'.
Sprint says it fears that AT&T and Verizon will set prices like dueling mafia families coming to agreement on how to divvy up their territories. Sprint insists that this imagined price setting would drive up costs for the consumers and allow the two to increase rates for backhaul services, the fees that allow carriers to pass traffic on each other's networks. Bigger still, Sprint argues that the two would lockout access to the handsets makers, who would be forbidden from allowing other carriers to sell their latest, greatest devices.
"AT&T’s spectrum position is the envy of the industry." Sprint says.
As for AT&T's argument that it needs T-Mobile to increase access to wireless spectrum, Sprint says pshaw. The company argues, "AT&T has the largest licensed spectrum holdings of any wireless carrier. AT&T also is the largest holder of unused spectrum, with 40 MHz, on a population-weighted nationwide basis, of unused or underutilized AWS, 700 MHz, and WCS spectrum. AT&T could use this reserve of spectrum to improve service for its customers, but has chosen instead to warehouse it for future services. Moreover, 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 makes some valid points. Then again, while less competition isn't good for consumers, it's still hard to feel sorry for Sprint. The company is forced to note in the footnotes of the formal document that "Clearwire holds rights to more than 100 MHz of 2.5 GHz spectrum" and that Sprint sells Sprint-branded capacity from Clearwire’s network and "holds an ownership stake in Clearwire."
We also find it funny that Sprint didn't feel the same need to protect the consumer against potential of rising prices when it bought Nextel, which, ironically enough, was the last big telecom merger regulators reviewed.
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