June 18, 2024

AT&T and T-Mobile Chiefs Field Skeptical Questions on Capitol Hill

The two companies did not show up as rivals on Wednesday, however, at a Senate hearing on the proposed acquisition of T-Mobile by ATT.

Instead, the executives of ATT and T-Mobile, after standing with hands raised vowing to tell the truth, warned that without ATT buying T-Mobile, the growth potential of both companies was limited and their ability to meet customer demand for wireless Internet service was lacking.

Actually, the two companies said, they are not really competitors — an assertion that one senator finally found too much to bear.

“I mean, please,” said Senator Herb Kohl, the Wisconsin Democrat who is chairman of the judiciary subcommittee for antitrust and competition issues.

“You both sell the same service, cellphone service, on a national basis,” Mr. Kohl said, looking at Randall L. Stephenson, the chairman and chief executive of ATT. “Is it really credible to come up here and sit here and tell us that you and T-Mobile are not close competitors?

Mr. Stephenson replied: “They’re not our competitive focus. I can tell you that.”

While forecasting their misfortune as unmerged entities, the chief executives of the both companies parried skeptical questions from other Democrats and competing telecommunications executives.

The proposal, which faces a nearly yearlong review from the Justice Department and the Federal Communications Commission, would create a carrier that controls an estimated 43 percent of the cellular-phone market.

Together with Verizon, the two companies would control close to 80 percent of the national market.

Those who looked skeptically on that potential dominance included Daniel R. Hesse, chief executive of print Nextel, a company that T-Mobile and ATT say is, in fact, a competitor.

Mr. Hesse repeated the argument he has voiced almost since the day ATT announced its purchase of T-Mobile. If regulators approve the deal, he said, “the wireless industry would regress toward a 1980s style duopoly.”

Mr. Hesse said he believed that the combination of the two companies would reduce to three, from four, the number of major national wireless carriers, a group that also includes Verizon. That would be only a prelude to a further consolidation to two companies, as his own company would find it difficult to compete with the reach of ATT/T-Mobile and Verizon.

“I am not here to ask for a special break or to seek any conditions in connection with this takeover,” Mr. Hesse said. “I am here because Sprint believes in competition, which goes hand in hand with innovation.”

Mr. Stephenson and Philipp Humm, chief executive of T-Mobile USA, said that they also believed in competition, and that the merger of their companies would do nothing to ease the battle for mobile phone subscribers.

“We expect increased competition and lower prices for all customers,” Mr. Humm told the subcommittee.

Republicans on the subcommittee expressed support for the deal. “I favor market approaches rather than government funding and intervention to build a national wireless network,” said Senator Michael S. Lee of Utah.

Regulators, Mr. Lee added, “must be guided by what is best for consumers in prices, in service, in quality and ultimately in the range of choice” for customers.

Several subcommittee members from Iowa, Minnesota, Vermont and Wisconsin asked the executives to explain the effect of the acquisition on rural cellphone service.

Senator Patrick Leahy, a Democrat from Vermont, asked if it were true, as critics have said, that both companies had large blocks of unused spectrum — the airwaves on which mobile phone traffic travels — in rural areas, where there is often spotty service.

Mr. Stephenson replied that without the merger, his company would not be able to expand its wireless broadband service to rural areas.

Mr. Stephenson also made several references to President Obama’s goal of expanding wireless broadband service to as many Americans as possible in the next few years, saying that the combination of the two companies would allow his company to do just that.

“This is a private market solution for a public policy objective,” Mr. Stephenson said.

The president’s goal, he said, “could become a reality purely with private capital.”

Mr. Kohl, in turn, scoffed at Mr. Stephenson’s repeated appeals to public policy goals.

“You would almost argue to us today that what you are doing is in national interest,” Mr. Kohn said.

“This is a business deal to make your company more successful and more profitable.”

While Mr. Kohl said he did not have any problem with a profit-making company looking out for its own interest, “we should discuss it in that context, not as what is in the national interest.”

Article source: http://feeds.nytimes.com/click.phdo?i=fe778ed5db02f536e134923164feb6d3

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