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AT&T issues fierce rebuttal to FCC's report on T-Mobile buy: 'the document lacks all credibility'

AT&T issues fierce rebuttal to FCC's report on T-Mobile buy: 'the document lacks all credibility'


AT&T has blasted the FCC in a new statement rebutting the Commission's report on AT&T's proposed purchase of T-Mobile from Deutsche Telekom.

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Released earlier this week, the FCC's report on AT&T's scuttled application to pick up T-Mobile USA for $39 billion called out the carrier at almost every opportunity. AT&T had already made it crystal clear that it didn't appreciate the report being released — it had attempted to withdraw its application last week, perhaps partly in an effort to stave off the release — but now it's going into more detail in a lengthy, angrily-worded rebuttal of some of the FCC's claims, bordering on outright sarcasm in places. Here's what we've got:

The highlights

  • In response to the FCC's claim that AT&T would be forced to expand LTE beyond 80 percent population coverage through competitive forces, even without the acquisition: "...the report apparently assumes a high enough level of competition exists in rural areas to compel billions of dollars in investment. Yet the report elsewhere argues that the level of wireless competition in more populated areas of America is so fragile that the merger must be disallowed. At the very least, these conclusions show a logical inconsistency."
  • One of the snidest comments in the entire statement relates to LTE deployment rates, too — specifically, President Obama's statement that mobile broadband should be accessible by 98 percent of Americans within five years: "It appears the FCC did not inform the President that in their view this was not a needed or worthy objective because it was apparently going to happen anyway."
  • The FCC had effectively refused to take into consideration AT&T's claims that rural broadband would spur job growth as part of its net job gain / loss (and, thusly, public interest) analysis. AT&T argues that "makes no sense," especially in light of the Commission's recently-announced $4.5 billion broadband fund that promises to create some 500,000 jobs.
  • AT&T reiterates that T-Mobile "has no clear path to LTE," but doesn't directly address the FCC's claim that T-Mobile could find a way to do it, particularly with the assistance of the additional AWS spectrum AT&T owes T-Mobile should the acquisition bid ultimately fail. AT&T does say that Deutsche Telekom can't afford to invest the amount of capital needed for T-Mobile to develop LTE and that T-Mobile "must develop into a self-funding platform," but that's assuming DT doesn't find another buyer with whom the FCC and DOJ are more comfortable.
  • AT&T really turns up the heat on the potential for a spectrum crunch on T-Mobile's network, saying "the report's authors find this evidence inconvenient, and simply claim it does not exist." There's no mention of Cablevision's prior statements that it had been investigating a wholesale deal with T-Mobile — a deal that would require excess capacity — or the other wholesale projects T-Mobile is said by the FCC to be pursuing, but unfortunately, there's way too much redacted detail in this part of the FCC report for an outside party to weigh in with much authority.
  • Regarding the back-and-forth about the viability of regional carriers as legitimate AT&T competitors, AT&T says that the FCC's decision not to assess individual markets in rendering its decision ignores "among others, US Cellular, Leap, and MetroPCS, all of which have a higher market share than T-Mobile in numerous major markets across the US."
  • AT&T says that the FCC report understates spectrum holdings by regional players "an obvious attempt to manipulate data to support the report's conclusion" by averaging the holdings across markets that the regional players don't serve. Of course, AT&T's rebuttal ignores the FCC's claim that regional carriers tend to service customers of different needs and demographics than the national carriers do — and thus it's not an apples-to-apples comparison, particularly considering the costs that the regionals incur to support national roaming.
  • AT&T also disputes the FCC's branding of T-Mobile as a "disruptive force" in the industry, echoing the "no clear path to LTE" verbiage and pointing out that it's been losing customers over the last two years.
  • Regarding the threat of increased backhaul pricing by taking T-Mobile out of the market, AT&T points out that the DOJ didn't even bother to include that in its own report. (Not to say the FCC guys can't think on their own.) AT&T goes on to say that Sprint's own announcements reveal that it has access to 25 to 30 providers of backhaul, a number which should presumably be sufficient to generate competitive pricing.

AT&T concludes by saying that it is "still ready" to make the merger happen, but this language in particular caught our eye:

In this circumstance, we understood the issues such a combination might raise, and we made clear, publicly and privately, our readiness to address those concerns.

If you read between the lines, it sounds like AT&T is saying that it's ready and willing to play ball at the bargaining table, where proposals like the rumored divestiture to Leap could be fair game. Of course, AT&T points out in its own statement that the FCC report has no legal standing — it wasn't voted on by the Commission and AT&T doesn't have an application in for review anymore — but it'll be interesting to see how long this posturing continues and how (or if) it'll translate into hard negotiations.