Earlier this week, Kansas-based Sprint Nextel Corp. filed a 337 page petition with the Federal Communications Commission opposing the $39 billion AT&T/T-Mobile USA merger. According to Sprint, simply requiring divestitures or imposing conditions will not solve the acquisition’s detrimental effects on competition.
If the merger is approved, AT&T and Verizon Wireless would control most of the nation’s wireless market. In the public filing, Sprint stated that the acquisition would make AT&T the biggest wireless carrier in the United States with 43% of the postpaid market and 118 million subscribers. Sprint went on to say that alongside Verizon Wireless’s 39% of the postpaid market and over 94 million subscribers, it would produce “a Twin Bell monopoly” with more than 78% of all wireless revenues, 82 percent of post-paid subscribers, and 88 percent of all wireless operating profits.
Currently the nation’s third-largest wireless provider, Sprint finds it difficult to believe one of AT&T’s chief justifications for the merger – the need for spectrum – declaring that among all carriers AT&T holds the largest licensed spectrum holdings and does not face network capacity restraints for existing and future escalating demand. Moreover, Sprint says that AT&T has the same opportunity as any other carrier to meet customer’s demand for spectrum, but they simply just made the conscious decision not to.
AT&T defended the acquisition in a series of blog posts, one of them addressing the spectrum issue specifically. AT&T disputed Sprint’s claims that AT&T is the industry leader in regards to spectrum, calling it “odd” considering the fact that Dan Hesse, the CEO of Sprint has continuously bragged that his company “has the best spectrum position in the industry.”
Claiming the acquisition would suppress innovation, Sprint argued that it would give AT&T and Verizon “far greater leverage to demand exclusive arrangements or rights of first refusal” in regards to handset manufacturers partnering with other wireless providers.
The Federal Communications Commission will examine the merger to ensure it is in the public’s best interest. Sprint is confident it won’t pass that test, saying that the proposed takeover would do more than fail to fabricate any cognizable benefits in the public’s interest – it would give rise to severe anticompetitive problems that could not be resolved via conditions or divestitures.
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