AT&T’s Newly Proposed Economic Model For Merger Riles Opposition

FCC, Media ownership, Mobile Broadband, Wireless July 28th, 2011

, Reporter,

WASHINGTON, July 28, 2011 – Sen. Al Franken (D-MN.) sent a filing to the Federal Communications Commission and Department of Justice Tuesday requesting the denial of the merger between wireless carriers AT&T and T-Mobile.

Less than 24 hours after AT&T submitted its most recent economic model to the FCC and DOJ for the proposed merger with T-Mobile, the junior senator from Minnesota weighed in on the conflict, stating that the merger would drive up prices for consumers and likely cost thousands of jobs.

“This transaction is not in the public interest,” Sen. Franken said in his filing.  “T-Mobile offers consistently lower prices than AT&T and is a strong competitive force that keeps AT&T’s consumer retail prices from creeping ever higher. By eliminating T-Mobile from the market, AT&T removes a crucial ‘maverick.’ T-Mobile pressures the larger providers both to offer better products and to do so at a lower price.”

Sprint released a statement critical of AT&T’s new economic model the same day, calling it an attempt to “distract regulators, politicians and consumers” from the negative consequences of the proposed merger.

“Its latest model, clearly constructed with predetermined results in mind, does nothing to change the negative consequences of the takeover for consumers in the form of higher prices, reduced innovation and decreased investment,” said the carrier through the release.

Rick Kaplan, Chief of the FCC’s Wireless Telecommunications Bureau, seemed to agree with Sprint’s assertions in a July 20 letter to one of AT&T’s attorneys.

“Indeed, AT&T is now expressly relying on these models to bolster its arguments concerning the size of the efficiencies made possible by the merger as weighed against the potential anti-competitive effects,” wrote Kaplan.

AT&T’s new economic models, submitted to the FCC and DOJ on July 25, showed the impact the merger would have in 15 markets, including Washington, D.C. AT&T argues that the proposed merger would broaden currently strained network capacity, improving user experience on smart phones and wireless tablets.

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