Sprint CEO Dan Hesse Addresses Negative Impact Proposed AT&T/T-Mobile Merger

Sprint Nextel S CEO Dan Hesse testified today before members of the Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy and Consumer Rights, voicing opposition to the proposed takeover of T-Mobile by AT&T T. In his testimony, Hesse contrasted the current vibrant competitive wireless industry, which benefits the American consumer, against a vision of what would result from recreating a 1980s-style duopoly. “The wireless industry thrives on competition, which, in turn, drives investment, innovation, consumer choice, job creation and U.S. global leadership in wireless communications,” said Mr. Hesse. “If AT&T is permitted to devour one of the two remaining independent national wireless carriers, while the rest of the world achieves advances in technology and innovation for the 21st century, the U.S. will go backwards – toward last century's Ma Bell.” Mr. Hesse noted that duopolistic control of the wireless market, which this takeover threatens to create, will provide AT&T and Verizon approximately 80 percent of the market, creating irreparable harm to: Pricing: Controlling approximately 80 percent of the market would give the Twin Bells significant, unchecked leverage to increase prices for consumers for voice and data. Last Mile Access: Control of most of our nation's vast wireline infrastructure and the critical “last mile” offers the duopolists the ability to raise competitors' costs, reduce their network quality and quash competitive alternatives. Choice: Next-generation smartphone and tablet manufacturers would be discouraged from partnering with any company other than AT&T or Verizon because of their massive scale, limiting choice to consumers and opportunity for manufacturers. Innovation: Content and application developers would lack incentive to create content for companies other than the Twin Bells, diminishing innovation and harming developers as well as the capital markets that fund them. Moreover, Mr. Hesse disputed AT&T's claims relating to spectrum constraints and rural reach. AT&T has been warehousing its largest, most desirable spectrum holdings rather than deploying them to solve its customer needs. Moreover, T-Mobile's congested spectrum won't give AT&T the relief it claims to need. AT&T's rural reach will similarly not improve markedly with the addition of T-Mobile since T-Mobile extends AT&T's reach to only 1 percent more of the population. Mr. Hesse concluded the hearing, which the committee titled “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?”, by noting that the fundamental problems of a duopoly cannot be fixed with divestitures or conditions, and urged the Department of Justice and the Federal Communications Commission to reject the merger.