The FCC on Wednesday asked AT&T for evidence to justify its view that its $39 billion buyout of T-Mobile was necessary for its LTE network. Following an inadvertent leak by AT&T’s lawyers that revealed it only needed $3.8 billion to reach its touted 95 to 97 percent coverage of the US population, agency officials wanted to know what the T-Mobile merger would do that the much cheaper proposal would not. Concerns exist that AT&T is using rural 4G expansion as a pretext for an ultimate goal of eliminating a major competitor.
In the leaked copy, AT&T had said there was “no viable business case” for spending $3.8 billion in January but, just two months later, was willing to spend over ten times as much. Even when confronted with its own evidence to the contrary, the carrier has insisted that the deal was necessary. It has pointed to additional benefits that it claims would be passed on to customers, such as denser coverage in existing areas and rolling out 4G faster than it would otherwise.
Critics have raised the possibility of a cost discrepancy from the start. Without much publicly accessible information, however, most arguments have focused on the clearer competition issues. AT&T has insisted that the market would remain competitive and pointed to smaller carriers like US Cellular or Cricket as proof. Most of these, however, are regional carriers that often just have a small fraction of AT&T’s share and have no realistic opportunity to compete.
Sprint, which would immediately stand to lose from the AT&T deal, has gone so far as to propose a solution for AT&T that would tap its unused spectrum and move faster to 4G to avoid the crunch without requiring T-Mobile. The data hasn’t been tested and might be a shorter-term fix.
AT&T is already facing tighter FCC and DOJ scrutiny over the move. It has tried to rally support from companies and advocacy groups to help get through the approval process. Opponents have called these into question, since virtually all of these groups have received contributions from AT&T or otherwise have a financial motivation to back the deal. GLAAD’s leader very publicly resigned after members criticized him for backing the AT&T deal when it has no bearing on the organization’s causes and when AT&T contributions biased the endorsement.
