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Sprint outlines just what is wrong with the AT&T T-Mob merger deal

So far the statements about AT&T’s proposed merger have all been anodyne and fail to address the fundamental legal issue which are at stake

By PETER WHITE

Published: 2 June, 2011

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So far the statements about AT&T’s proposed merger have all been anodyne and fail to address the fundamental legal issue which are at stake. But the 377 page broadside from Sprint Nextel filed with the FCC this week shows that it is not only fighting for its life (common opinion says that Verizon MUST move for Sprint if the deal is successful) but also for the US cellular public.

In its Petition to Deny Sprint made all the usual noises about stifling competition and innovation but also made a couple of key arguments. It addressed the AT&T spectrum famine and showed quite clearly that it is hoarding spectrum, Across 700 MHz, 850 Mhz, PCS, AWS, WCS and BRS spectrum it showed that AT&T has 107 MHz of spectrum, significantly more than any other player, and that T-Mobile would add a further 50 MHz. Verizon has 88 MHz and Sprint just 55. AT&T has about 40 MHz across all of the US which is not built out.

This shows that even if Verizon bought Sprint, it would still have substantially less spectrum than AT&T. So all the AT&T arguments about needing more spectrum to bring LTE to the US are fake and that’s been much of the campaign it has run on.

The problem, points out Sprint, is that AT&T doesn’t use much of this spectrum and of the spectrum it does use, it does not use it well. If, instead of buying T-Mobile, AT&T was to invest about 25% of what it plans to spend on the deal, on its networks, it would achieve almost as much as buying T-Mobile, Sprint said.

The other major statistic is that it demonstrated that across all US cellular carriers (not counting AT&T) the average annual network spend per customer is $91 since 2006. For AT&T it is just $81.

Sprint adds that AT&T does not need T-Mobile’s spectrum to bring LTE to the reach 97% of Americans, because its current spectrum holdings and network already reach 97% of the population, which with a little earlier investment it could do right now.

In the end if says that AT&T is seeking a government bailout for problems of its own making and expects the cost of the bailout to be shouldered by American consumers. And from there it goes on once again about a Bell duopoly being bad for the US consumer.

If all this is correct and the FCC is to somehow allow this merger, to make it work out for consumers we assume it should 1) take away some of the spectrum that AT&T acquires and force it to be auctioned and 2) force it to invest in its networks at a rate in line with other US cellular players. These two concessions would soon have AT&T trying to negotiate its way out of the proposed deal and the $6 billon penalty payments that would be due back to T-Mobile.

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