SellTower Signals

AT&T’s New Way to Fix Network Quality

The FCC received a request this week to transfer T-Mobile’s licenses to AT&T.  By requesting to transfer T-Mobile’s licenses to AT&T, the companies kick off the FCC’s review of the deal. The FCC will consider whether combining AT&T’s and T-Mobile’s wireless licenses will comply with the agency’s regulations. Both the FCC and the Department of Justice will also consider how combining the licenses will affect competition.

This FCC filing brings to light one approach that AT&T is taking to garner regulatory approval.  In the FCC filing, AT&T and T-Mobile are portrayed as facing significant network challenges that can only be fixed by merging.  Using AT&T’s own words in the filing:

  1. T-Mobile has “declining market shares and no clear path to Long Term Evolution (LTE), the gold standard for advanced mobile broadband services,” the companies wrote.
  2. “AT&T faces network spectrum and capacity constraints more severe than those of any other wireless provider, and this merger provides by far the surest, fastest, and most efficient solution to that challenge,” they said.

They go on to assert that the agreement will benefit consumers by reducing the number of dropped calls, boosting data speeds and expanding the deployment of next-generation technologies.

Apparently the traditional methods to reduce or prevent network congestion – invest in new technology platforms, develop more cell sites, and purchase more spectrum – are no longer necessary.  Simply acquire the next biggest competitor and all of your problems are solved!

Suffice to say, I remain skeptical that network needs will provide adequate justification for FCC and DOJ approval.  Both agencies will concentrate more on competition and customer impacts.  Certainly, consolidation does not increase competition.  The customer experience can be improved by investing in the networks.

This seems to be tact taken by the deal’s chief opponent, Sprint.  “It is an indisputable fact that this takeover would create an entrenched duopoly with control of approximately 80 percent of wireless industry revenues,” said Vonya McCann, senior vice president of government affairs at Sprint. “This kind of leverage could strangle competition and give AT&T the power to increase prices, threaten innovation critical to this industry and eliminate American jobs.”

Stay tuned to see how well the network improvement argument is received by the FCC and DOJ.

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