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Sprint's Hesse Slams AT&T/T-Mobile Merger

5/12/2011 08:59:47 AM Eastern
Washington - Sprint CEO Dan Hesse pulled no punches during a Senate subcommittee hearing on the proposed merger of AT&T and T-Mobile.

Hesse contended that rates would rise because the merged entity and Verizon Wireless would jointly account for about 80 percent of wireless industry revenues.

He also warned Congress that the resulting duopoly would limit the selection of handsets and tablets available to consumers and retard innovation by content and applications developers.

Device suppliers "would be discouraged from partnering with any company other than AT&T or Verizon because of their massive scale, limiting choice to consumers and opportunity for manufacturers," Hesse contended. Content and application developers, he continued, "would lack incentive to create content for companies other than the Twin Bells, diminishing innovation and harming developers as well as the capital markets that fund them. "

Hesse also argued that a merger "offers the duopolists the ability to raise competitors' costs, reduce their network quality and quash competitive alternatives." That's because Verizon and AT&T control "most of our nation's vast wireline infrastructure," which connect cellular base stations to the nation's wireline voice and data networks, he said.

Hesse also disputed AT&T's claims that the merger would overcome the network's spectrum constraints and expand service to a greater number of rural markets. AT&T, Hesse claimed, has been warehousing its largest, most desirable spectrum holdings rather than deploy them to solve its customer needs. He was referring to AT&T's AWS-band holdings and 700MHz band holdings.  In addition, he said, T-Mobile's congested spectrum won't give AT&T the relief it says it needs.

 As for claims the merger will improve AT&T's rural reach, he said T-Mobile would extend AT&T's reach to only 1 percent more of the population.

The fundamental problems of the merger, Hesse warned, can't be fixed by imposing conditions or requiring the merged entity to divest itself of spectrum.
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