Commission Has Duty to Prevent Harm to Consumers, Innovation and U.S. Economy
Comments Underscore Risks of Twin Bell Control of Approximately 80 Percent of Wireless Industry Revenue
WASHINGTON (BUSINESS WIRE), May 31, 2011 - Sprint (NYSE:S, news, filings) announced today it has formally requested the Federal Communications Commission (FCC) to block AT&T's proposed $39 billion takeover of T-Mobile USA, noting the Commission’s responsibility to protect consumers and the industry against precisely the kind of anti-competitive market control that will result from this transaction. Sprint made the request in a “Petition to Deny” filed at the FCC this afternoon.
In its filing, Sprint concluded the proposed acquisition cannot be remedied through divestitures or conditions, and urged the FCC to block the proposed transaction on the following grounds:
- The proposed T-Mobile takeover would harm the broadband economy, competition and consumers. It would reverse two decades of successful U.S. government wireless competition policy and result in higher prices for consumers in the absence of marketplace choices.
- The proposed T-Mobile takeover would harm innovation and investment. Approval of this transaction would uniquely position the Twin Bell duopolists of AT&T and Verizon as the gatekeepers of the digital ecosystem, stifling innovation and choice in new devices and applications, and the capital markets that fund them.
- The proposed T-Mobile takeover has no public interest benefit. The transaction would do nothing to relieve AT&T’s purported spectrum congestion. AT&T is already the largest holder of licensed spectrum and unused spectrum and has simply failed to upgrade or invest sufficiently in its network. Moreover, AT&T does not need T-Mobile to expand its LTE network to reach 97 percent of all Americans, because its current spectrum holdings and network already reach approximately 97 percent of the population.
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.
“This proposed takeover puts our mobile broadband future at a crossroads," said Vonya B. McCann, senior vice president of Government Affairs for Sprint. “We can choose the open, competitive road best traveled, and protect American consumers, innovation and our economy, or we can choose the dead end that merely protects only AT&T and leads the rest of us back down the dirt road to Ma Bell.”
In its filing, Sprint states that the choice is very clear: The proposed transaction must be blocked. The transaction would harm consumers, competition and the American economy as the Twin Bells would not be deterred from increasing prices and reducing consumer choice in wireless devices, applications and services where they control approximately 80 percent of the wireless industry revenue. The proposed transaction would produce no tangible public interest benefits and would impose serious anti-competitive harms that cannot be remedied through divestitures or conditions. The Commission should reject the acquisition outright.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 51 million customers at the end of 1Q 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Newsweek ranked Sprint No. 6 in its 2010 Green Rankings, listing it as one of the nation’s greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
John Taylor, 703-592-8530