Today, we filed some paperwork with the FCC – our official applications to transfer licenses from T-Mobile USA, Deutsche Telekom ’s U.S. subsidiary, to AT&T. We also filed a public interest statement and some other supporting documents. It’s certainly a lot to read so we tried to break it down into key points. You can check out a comprehensive executive summary of our filing on our MobilizeEverything website.
The bottom line is that our merger with T-Mobile USA will offer significant benefits to American consumers. It will address capacity constraints that both of our companies face, which will enable the combined company to provide improved services in the many urban, suburban, and rural markets where the enormous surge in broadband usage is fast consuming available capacity. What this means is fewer dropped calls, fewer failed call attempts, and better data throughput.
Our subscribers have the highest percentage of data hungry smartphones among all U.S. wireless providers. We’ve seen mobile data volumes on our network skyrocket by a staggering 8000% from 2007 to 2010…and we expect to see accelerating growth going forward.
We’ve been working tirelessly to address this data explosion through a wide variety of means. We have purchased additional spectrum on the secondary market; we have added thousands of cell sites and additional backhaul capacity to our network grid; we’ve deployed distributed antenna systems, we’ve built WiFi hot zones in heavy usage areas like Times Square and others, and we’ve set up more than 24,000 WiFi hotspots to off-load traffic from our mobile network. Since 2008, AT&T has invested $21.1 billion in capital expenditures to upgrade its wireless network – $15 billion of it in the past two years alone.
But it’s not enough. AT&T faces severe spectrum and capacity constraints and cannot simply wait for the next major auction to address them. T-Mobile USA also faces spectrum exhaust in certain markets. If unaddressed, the network limitations and constraints confronting both of our companies would lead to more dropped and blocked calls, slower speeds, and access to fewer and less advanced technology platforms and applications.
The merger will not literally create new spectrum but it will allow efficiencies in the use of spectrum that are the functional equivalent. And those capacity gains translate into better service than either company could provide by itself.
The merger will also give the combined company the scale, resources and spectrum that will enable it to commit to deploy LTE to more than 97 percent of Americans. To put this in perspective, approximately 55 million more people will reap the benefits of mobile broadband than under our current network deployment plans. This means new jobs and economic growth in the small towns and rural communities that need them most.
With sharply declining prices, dazzling innovation, soaring output, enormous product differentiation, new entry, and fierce advertising, the intensity of the competition in the U.S. wireless marketplace is extraordinary. And the market will remain every bit as dynamic and competitive after this merger.
Indeed, by alleviating capacity constraints and expanding output, the transaction will increase competition. Among the many providers that will continue to compete vigorously are Verizon Wireless, Sprint, MetroPCS, Leap, U.S. Cellular, Cellular South, Cincinnati Bell Wireless, Cox Communications. And let’s not forget Clearwire, and that LightSquared plans to deploy a 4G LTE network covering 100 million people by the end of 2012, and 260 million by the end of 2015.
With all of this competition, the absence of T-Mobile USA from the marketplace will not have a significant competitive impact. In fact, as an independent competitor, T-Mobile USA would face serious challenges. It has been losing market share the last two years, is confronting spectrum exhaust in certain markets with no ready means to acquire significant additional spectrum in the near term, and lacks a clear path to LTE. At the same time, Deutsche Telekom must devote significant capital to its core business in Europe. It was because of this difficult path that DT decided to look for new strategic options.
To sum up, this merger will address serious capacity challenges on our networks; it will significantly advance this country’s wireless broadband goals; it will promote competition; and it will keep America on the cutting edge of wireless broadband technologies. All of this will be good for consumers, for workers, for the economy and for both of the companies involved.