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Al Franken urges rejection of AT&T T-Mobile deal

By Reuters
Wednesday, July 27, 2011 13:03 EDT
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WASHINGTON (Reuters) – Senator Al Franken called on federal regulators on Tuesday to reject AT&T Inc’s proposed buy of rival T-Mobile, saying it would mean pricier wireless and could cost thousands of jobs.

AT&T, the No. 2 U.S. mobile provider, is seeking regulators’ approval to buy T-Mobile USA, a unit of Deutsche Telekom AG, for $39 billion.

Franken, a Minnesota Democrat, said in a letter to the heads of the Federal Communications Commission and Justice Department, which are reviewing the merger, that the transaction was not in the public interest and could not be fixed by putting conditions on it.

“The competitive effects of a merger of this size and scope will reverberate throughout the telecommunications sector for decades to come and will affect consumer prices, customer service, innovation, competition in handsets and the quality and quantity of network coverage. These threats are too large and too irrevocable to be prevented or alleviated by conditions,” wrote Franken.

The letter dated Tuesday was sent to FCC Chairman Julius Genachowski and three fellow commissioners, as well as Attorney General Eric Holder.

The other giant in the wireless space is rival and market leader Verizon Wireless, a joint venture of Verizon Communications Inc and Vodafone Group Plc.

Franken quoted economists from third place Sprint Nextel Corp as estimating that, if AT&T buys T-Mobile, then AT&T and Verizon would control 82 percent of the postpaid wireless market nationwide.

He also expressed skepticism AT&T would live up to its promise to deploy LTE broadband to more than 97 percent of Americans after the merger.

Last, the deal would also allow the giant wireless companies to stifle competition by closing off new companies’ access to popular handsets, roaming and other needed services, with the inevitable result that wireless prices would go up, wrote Franken.

Franken, while acknowledging union support for the deal, said he feared its approval would lead to thousands or tens of thousands of layoffs.

“I … urge you to compel AT&T to publicly release its plans for job cuts in the first, second, and third years following the merger approval,” wrote Franken. “Many proponents of this merger have acknowledged that short-term job losses may occur, but I think it is important for the American public to understand exactly what those numbers will be, especially given the weak state of the U.S. job market.”

AT&T and T-Mobile said it had strong support for the merger.

“While we respect Senator Franken, his analysis of our pending transaction is just wrong,” Tom Sugrue, T-Mobile senior vice president of government affairs, said in a statement. The merger should be approved because it will deliver consumers “speed, service quality and reduced costs,” he added.

Jim Cicconi, AT&T’s senior executive vice president-external and legislative affairs, said in an email: “It is very clear that the few opposing voices are far outweighed by the enormous depth and breadth of support we are seeing.

“And, as more officials and organizations learn about the major benefits of this merger, that support continues to grow.”

U.S. Senator Herb Kohl, chairman of the Senate’s antitrust subcommittee, has also urged regulators to block the deal, and other lawmakers also expressed concern. A rejection would cost AT&T about $6 billion in breakup fees.

Despite criticism from many quarters, AT&T said recently it still expected to close the deal in the first quarter of 2012.

(Reporting by Diane Bartz; editing by Andre Grenon)

Reuters
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