T-Mobile chimes in on the acquisition debate

T-Mobile has broken its silence. When AT&T first announced its intention to acquire Deutsche Telekom’s U.S. wireless arm, T-Mobile largely receded to the background while AT&T sold its case for regulatory approval. On Tuesday, though, T-Mobile Senior Vice President of Government Affairs Tom Sugure took aim at the merger’s critics.
Here’s the full text of Sugure’s statement:
The opponents of the AT&T-T-Mobile merger have had their final say as part of the FCC’s formal pleading cycle and, not surprisingly, they have failed to offer any credible arguments to support their view that the Commission should deny the transaction. What is surprising, however, is their repeated head-in-the-sand insistence that no spectrum crisis exists. As part of their application, AT&T and T-Mobile provided a compelling showing of their need for more spectrum to continue to provide quality service to customers and roll out new technologies in the future. And the two companies have demonstrated that a combination of their networks and spectrum holdings is by far the best way to solve this problem and ensure improved service and enhanced innovation. The FCC has long acknowledged the harmful consequences of ignoring the spectrum crunch, and we are confident it will approve our proposed market-based solution.
Though for a few of the deals critics might be making the misguided argument that a spectrum crisis doesn’t exist, Sugure seems to making the equally bizarre argument that the combination of T-Mobile and AT&T would somehow help solve that spectrum crunch. The merger wouldn’t create any more spectrum of capacity, it would simply put more spectrum in the hands of a single operator rather than leave it distributed among competitors (CP: Analysis: Why Microsoft, Qualcomm and Facebook in favor of the AT&T-T-Mobile merger).

AT&T has argued that by merging the two operators advanced wireless service (AWS) license holdings, it could deploy a 40 MHz long-term evolution network, more powerful and more efficient than the sum of two separate networks the operators are deploying today. While true, it’s because T-Mobile and AT&T currently aren’t using their spectrum in the most efficient ways possible, not because combining assets would create some sort of super network. T-Mobile is using its AWS spectrum for high-speed packet access plus (HSPA+) which, depending on whom you ask, is between 0% and 40% less efficient than the equivalent LTE configuration. Meanwhile AT&T hasn’t deployed anything over AWS at all—which is as inefficient as you can get—but does plan to use the spectrum for an LTE network, which would give it the most bang for its hertz under today’s technology.

Both AT&T and T-Mobile are implying that their merger would alleviate the overall spectrum crisis, but the merger would mainly serve primarily to solve both carriers’ personal spectrum crises. Both operators are right in that they need more spectrum and capacity in order to support their customers, innovate and fuel the growth of mobile broadband. All operators face the same challenge: they need to find more spectrum, either at auction or through acquisition. Combining their assets will give AT&T and T-Mobile more room to grow. It will grant them a more elegant network deployment. And it will allow them to enjoy much greater economies of scale. What it won’t do is make a dent in capacity crisis. Only the government releasing more spectrum will accomplish that.