Wednesday, September 3, 2014
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Sprint's latest shot at AT&T's T-Mobile takeover

AT&T continues to argue that knocking off - excuse me, merging with - one of its last remaining national competitors will somehow help competition. Sprint begs to differ.

Sprint's latest shot at AT&T's T-Mobile takeover

AT&T continues to argue that knocking off - excuse me, merging with - one of its last remaining wireless competitors will somehow help competition. Sprint begs to differ.

In one of its recent filings with the Federal Communications Commission, AT&T argues that its latest economic models show the benefits of its T-Mobile takeover based on an analysis of "output and quality-adjusted price."  A key part of the analysis is that gaining T-Mobile assets - in particular the wireless spectrum it owns - will enable AT&T to offer better service at the same price in 15 markets it examined.

The result: the holy grail of "net consumer benefit":

In each market, the merger simulations project that industry output will rise and average price adjusted for quality will fall as a result of the transaction. [AT&T's italics]

Sprint's Vonya B. McCann, senior vice president, offered this response:

AT&T's "do-over" submission is a last-ditch attempt to distract regulators, politicians and consumers from the fact that it has failed to provide any evidence that its proposed takeover of T-Mobile yields meaningful benefits. 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. The facts do not justify allowing that to happen, and we believe the ongoing investigations by the Department of Justice, the Federal Communications Commission and 11 state attorneys general and various state regulatory commissions will reach the same conclusions.

Nothing has really changed since May, when Sprint filed its broad objections to merger deal, which it summarized this way to the FCC:

The Commission faces a stark choice in this proceeding. It can reject AT&T’s bid to take over T-Mobile and extend the last two decades of robust competition in the wireless industry – competition that has promoted economic growth and advanced U.S. global leadership in mobile communications. Or the Commission can approve the takeover and let the wireless industry regress inexorably toward a 1980s-style duopoly. A duopoly of the two vertically-integrated Bell companies would result in less choice for consumers and higher prices. A Twin Bell duopoly would stunt investment and innovation. No divestitures or conditions can remedy these fundamental anti-consumer and anti-competitive harms.

Jeff Gelles Inquirer Business Columnist
About this blog

Jeff Gelles, who writes the Inquirer's weekly Consumer 14.0 and Tech Life columns, takes a broad look at the marketplace of goods, services, and ideas.

Reach Jeff at jgelles@phillynews.com.

Jeff Gelles Inquirer Business Columnist
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