A few weeks ago, AT&T announced an agreement to acquire T-Mobile USA. While some people were surprised by the announcement, the main reason for the deal was obvious to anyone who has been following the rapid growth of the wireless industry – we need more capacity to address the surging demand for mobile broadband.
AT&T’s wireless broadband networks continue to carry a tremendous amount of data traffic. You’ve heard the stats: wireless data traffic on our network is up over 8000% in the last four years and we anticipate it will be 8 to 10 times greater by 2015. The surest, fastest and most efficient path by far to addressing the capacity limitations we face in the near term is to acquire T-Mobile and its highly complementary spectrum portfolio and network assets. It was the deal hiding in plain sight.
The result of the combination will be extraordinary: the denser network of cell sites will drive capacity improvements and speed gains; spectral efficiencies will be gained by the combinations of two 2G networks into one, including less spectrum used for call set up and control, and more opportunities to migrate bands to support mobile broadband services.
The T-Mobile spectrum holdings will also give us a more robust spectrum footprint for LTE deployment, which will benefit directly many rural and under-served communities that risked being left behind in this country’s migration to the broadband future. In fact, this additional spectrum, when combined with added scale and other resources, will enable AT&T to expand its LTE deployment plan in pretty dramatic fashion.
But while this deal will mean better service, fewer dropped calls, and a more robust and ubiquitous wireless broadband infrastructure, I can’t emphasize enough that this deal does not solve the longer term wireless broadband spectrum shortage faced by the industry. As Chairman Genachowski noted earlier this week, one market transaction is not going to address the spectrum crunch the entire industry is grappling with. The T-Mobile deal will allow us to drive significant network and spectrum efficiencies into the two companies’ existing asset portfolios, but current spectrum assets alone will not always be sufficient to accommodate the industry-wide tidal wave of mobile data traffic on the horizon. On that score, the industry’s work has only just begun.
The same urgencies that drove the T-Mobile transaction will keep our longer-term efforts focused on the spectrum goals outlined in the National Broadband Plan. Our support for the plan and the reallocation of 500 MHz of additional spectrum for the wireless broadband industry has not changed.
The work underway by the FCC to address rational spectrum reallocation is critical to the industry’s long-term economic growth and vibrancy. And we will continue to work for enactment of spectrum reform legislation, including incentive auction authority for the FCC. More flexible auction authority is an essential tool that will help ensure that spectrum can be efficiently reallocated to its best and highest use.
The T-Mobile deal will allow us to use our current spectrum assets most efficiently in the near term, driving capacity gains on our networks and supporting a deep mobile broadband deployment. But only new spectrum allocations will define how effectively the industry will meet the challenges of the mobile broadband future. We remain firmly committed to the spectrum goals of the National Broadband Plan and will continue to work toward achieving them.