FCC Pushes AT&T To Back Up Merger Claims

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The Federal Communications Commission on Thursday asked AT&T to provide more substantive evidence to back up company managers’ claim that only a merger with T-Mobile would enable it to blanket the country with its next generation wireless network.

Renata Hesse, a FCC legal staffer involved in overseeing the transaction, insisted in a letter to AT&T’s lawyer that AT&T provide actual evidence to back up the claim that covering the country with its next-generation wireless LTE technology wouldn’t make sense financially unless they are allowed to acquire T-Mobile and its extended customer base.

“Although AT&T has stated that it has not quantified the transaction-related changes in the business case for extending its LTE footprint, we ask that you supplement your filing with any documents or analyses explaining why the changes in cost, revenue, and/or profitability are likely to be large enough to change the overall business case for the additional deployment,” Hesse wrote in a note dated August 24.

Last week, AT&T lawyers filed an insufficiently redacted document with the FCC relating to the merger with T-Mobile. The document showed that AT&T wasn’t willing to spend $3.8 billion to extend its LTE network to cover 97% of the U.S. population (including sparsely inhabited areas of the country) but was willing to spend 10 times the amount if it were allowed to acquired T-Mobile.

That filing raised eyebrows among critics, who said that the numbers don’t make sense.

But AT&T has argued that the merger would provide it with a bigger customer base for its LTE network. The technology allows network providers to provide more service to more customers with the same amount of wireless spectrum.

The merger of the second and fourth largest wireless carriers would vault the entity above Verizon to become the nation’s largest carrier with 130 million subscribers.

The question about the extensive coverage is important because it’s one the main reasons that politicians in Congress have cited in support of the deal. But critics worry that AT&T won’t follow through on its promise, and that the acquisition would simply reduce competition.

On of the main criteria the FCC is using to evaluate the merger is whether it would benefit consumers, and not stifle competition.

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