Lawmakers Take Their First Whack at AT&T/T-Mobile Merger

At a hearing subtitled “Putting Humpty Dumpty Back Together Again,” lawmakers got their punches in on the proposed AT&T – T-Mobile merger. The core issue isn’t just the merger of the companies. It’s also about wireless spectrum allocation, competition and service to rural America.

On AT&T’s side, CEO Randall Stevenson told lawmakers that the merger will give the company the “block of clear, unadulterated spectrum” it needs to roll out its Long Term Evolution (LTE) 4G service. The opponents at the hearing say AT&T has more than enough spectrum already and that innovation and competition of the entire wireless industry would be stifled by an AT&T/Verizon duopoly.

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“To make the move in technology you have to have a clear block of spectrum, nothing in it, to be able to deploy that technology,” Stevenson said. “We have to have clear blocks of spectrum, unused spectrum, it has to be clear unadulterated spectrum to do LTE. Because of the data growth that we are experiencing we need 20 megahertz of what we call contiguous spectrum.”

Gigi Sohn of Public Knowledge, a D.C.-based advocacy group, disagrees with Stevenson’s cry of spectrum paucity. She claims that AT&T has spectrum spread out over three different communications standards (2G EDGE, 3G HSPA, 4G LTE – all on the GSM standard) and that at least a third of their spectrum is undeveloped and unused.

“One-third of its spectrum in the top 21 markets has not even been built out yet,” Sohn said. “I want to get to that ’20 megahertz contiguous that Mr. Stevenson said was necessary. That really ignores channel bonding technologies that can bridge non-contiguous spectrum and other technologies that improve spectrum efficiency like femtocells, picocells, distributed antennas. It also ignores AT&T’s ability to reconfigure its network to provide 20 megahertz contiguous for LTE. So, I think that this spectrum crunch, crisis, exhaust is a bit overstated.”

The Federal Communications Commission disagrees with Sohn. The primary goal of the FCC in the last year and its plans for years to come is to open up spectrum to take pressure off of cellular networks across the country, especially in populous areas. If you live in downtown New York City or San Francisco, it is difficult to make a phone call or do use data to do something as simple as a Google search. The spectrum crunch is a real problem. That does not mean the FCC is not looking for ways to optimize spectrum. It is a two-pronged goal that will take years, decades to fulfill — free up the resources, maximize the resources.

Bring Wireless Broadband To Rural America

It is a different case in rural America. It is not a matter of a spectrum crunch but rather a lack of development and infrastructure of spectrum footprints owned by the major carriers. AT&T and T-Mobile believe that together the companies can take their spectrum and build them out in rural communities where one company or the other could not go alone.

“We have been out pursuing and buying spectrum the best we can. We don’t have enough spectrum to deploy this network nationwide,” Stevenson said. “It is a long term solution. Most of the rural communities that we are speaking to, we would not have the spectrum depth to do the conversion we would need. This is one of the big determinacy’s if we can get to a lot of the rural communities that we would need.”

In terms of innovation, Hesse and others are concerned that going back to a supposed-duopoly will be a bane to new technologies. In terms of business and legal speak, that is what Hesse is supposed to say.

“The concern is that the U.S. will fall behind the world like we once did,” Hesse said. “We would lose that edge that we have regained, if you will, over the rest of the world.”

Yet, Stevenson points out that the carriers are not the only groups responsible for innovation in the mobile realm (and our ReadWriteWeb readers who run the gamut of innovation might agree). Stevenson said; “I don’t think that Steve Jobs would hold off putting out the iPhone 5 or 6 or whatever number comes next by one day because of the merger of T-Mobile and AT&T.”

The debate will continue until the FCC, FTC and Judiciary make a final ruling, something not expected till later this year or early 2012.

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