By Wayne Watts, AT&T Senior Executive VP and General Counsel
In my 28 years as a lawyer with AT&T, I have been involved in a number of major transactions. Each has presented different issues, involved different competitive landscapes and was reviewed by different Administrations. One constant, though, is that all of them were subjected to a thorough, fact-based review.
I have no doubt that this will be the case again as the FCC and DOJ review the AT&T/T-Mobile transaction. It is for that reason that AT&T and T-Mobile USA have gone to great lengths to support our merger with facts. We have produced millions of pages of documents and extensively detailed pleadings supported by 19 sworn declarations.
On the other hand, final comments were filed yesterday at the FCC and merger opponents like Sprint continue to base their opposition on hyperbole, not fact.
A Strong Sprint
While Sprint now claims it would be marginalized to the point of irrelevance by the merger, the facts demonstrate that Sprint is experiencing a remarkable resurgence and will continue to be a competitive force after the merger.
- Sprint added 1.1 million net new wireless subscribers in the first quarter of 2011 – its “best [performance] in five years[.]”
- According to Sprint, this performance made the Sprint brand “the fastest growing national post-paid wireless brand in the country as measured by net subscriber growth.”
- Sprint further reported “its best postpaid churn number ever” and its “thirteenth consecutive quarter of improvement in customer care satisfaction.”
- Sprint also touted its “innovative device line up,” which includes “the largest 4G portfolio of any wireless carrier in the United States.”
- And it reconfirmed its forecast for 2011.
Notably, Wall Street has not been fooled by Sprint’s talk of gloom and doom. Since the AT&T/T-Mobile merger was announced, Sprint’s stock has substantially outperformed the Dow – rising by about ten percent, a result one would not expect to see of a company that faces competitive irrelevancy.
Sprint’s Spectrum Position
Likewise, while Sprint now claims that its spectrum holdings will be dwarfed by those of AT&T and that, post-merger, it “will be unable to meet its capacity needs.” The fact is that Sprint and its affiliate, Clearwire, have more spectrum than AT&T and T-Mobile combined.
- Indeed, Sprint has boasted that the Sprint/Clearwire spectrum position is “the largest wireless spectrum portfolio of any company in the country,” and it told the Financial Times last year, “[w]e have the spectrum resources where we could add LTE if we choose to do that, on top of the WiMAX network. … The beauty of having a lot of spectrum is we have a lot of flexibility.”
Sprint’s sudden about-face on spectrum reflects Sprint’s failure to take Clearwire’s spectrum into account. But given that Sprint holds a majority interest in Clearwire and uses Clearwire’s spectrum to provide 4G service, its attempt to disassociate itself from that spectrum is neither convincing nor likely to pass regulatory muster.
Sprint also argues that higher-frequency spectrum bands “are not as advantageous for mobile broadband deployment” even though on Wall Street, Sprint boasts that its bountiful 2.5 GHz spectrum “allows us to use advanced OFDM technology at a low cost because wide channels let us put more data through the same amount of physical equipment at a substantial cost savings over today’s 3G networks.”
In its FCC filing, Sprint further claims that it will be unable to obtain attractive handsets at reasonable prices post-merger. But just this month, Nokia, the world’s largest handset manufacturer, refuted this assertion, noting that “the proposed transaction is unlikely to have any effect on innovation in the device market or the availability of a wide range of devices with the most attractive features to all carriers[.]”
- And Sprint itself provided further confirmation of this by signing an agreement with Motorola under which Sprint “will launch more than 10 new Motorola wireless devices in 2011, bringing revolutionary performance, speed and design to Sprint customers.” According to Sprint, “[t]his new deal depicts the company’s commitment to offer customers advanced devices with industry-leading features, including smartphones, tablets and best-in-class Push-to-Talk.”
Sprint: “A Lot of Retail Competition”
In its FCC filing, Sprint tries to exclude Metro PCS, Leap and others from the FCC’s competitive analysis by claiming that prepaid services do not compete with postpaid services.
- But in April 2010, Sprint told Wall Street that “prepaid as a whole is beginning to cannibalize postpaid,” and the following month the President of Sprint’s prepaid segment acknowledged that the no-contract market, now almost 60 million customers strong, has moved well beyond “the lower income segments.” And in September 2010, Sprint’s then-CFO identified MetroPCS and Leap, along with traditional post-paid carriers, to support his statement that there is “a lot of retail competition out there . . . .”
Unfortunately for merger opponents like Sprint, facts matter. We have presented a detailed fact-based showing of the enormous benefits of this transaction to consumers, workers, rural Americans, and others. It is for that reason that I am confident that we will win approval of this transaction. And as we move forward with the process, we will continue to focus on the facts.