by Juliana Gruenwald
May 10, 2011 | 9:40 p.m.
AT&T and T-Mobile USA and their critics will get their first high-profile opportunity to discuss the proposed merger of the two telecom giants Wednesday when they appear before the Senate Judiciary Antitrust Subcommittee. It is the first congressional panel to examine the deal, which must be approved by the Justice Department and Federal Communications Commission.
Sen. Amy Klobuchar, D-Minn., a panel member, told National Journal Daily she will be focused on finding out what type of consumer protections the merged company plans to offer consumers and what impact it might have on prices.
Klobuchar, who is also on the Commerce Committee, has been active in pushing consumer protection in the wireless industry. She introduced legislation last year to limit early termination fees charged by wireless carriers when customers break their contracts.
Klobuchar said when she has pressed carriers to reduce or limit their early termination fees, “the answer I got was that we don’t need it because there’s so much competition. Well, now we’ll be basically left with a duopoly.”
Critics have been clear—no conditions will make them accept the merger between the nation’s second-biggest wireless provider, AT&T, and the No. 4 provider T-Mobile USA.
“If antitrust law has any meaning any more, you have to block this merger,” Public Knowledge President Gigi Sohn said during a conference call Tuesday. “There is only so much lipstick you can put on a pig before it needs to be put on the spit, and this one needs to be put on the spit. It is unfixable.”
Sohn will be testifying at the hearing along with the CEOs of AT&T, T-Mobile, Sprint and Cellular South and the head of the Communications Workers of America union, which represents about 42,000 AT&T mobile workers and supports the merger.
Sohn, along with Cellular South President and CEO Victor (Hu) Meena, say the merger would reverse efforts made in Congress and by regulators to increase competition.
They point to the breakup of AT&T in 1983, a 1993 requirement that spectrum be auctioned by the FCC, and many of the provisions in the 1996 Telecommunications Act.
“Speaking for Cellular South and for the nearly 100 competitive wireless carriers of [the Rural Cellular Association], I respectfully request that you work to stop this acquisition. It’s bad for consumers, it’s bad for jobs, and it’s bad for competition,” Meena said in written testimony obtained by National Journal Daily. Meena is chairman of the Rural Cellular Association.
The association is particularly concerned about the merger’s impact on smaller wireless operators who use the GSM wireless technology, the same standard AT&T and T-Mobile use. Sprint and Verizon use another wireless standard called CDMA.
“If you’re a GSM technology provider, than your options have essentially evaporated,” Rural Cellular Association CEO Steven Berry said during the conference call.
Berry said smaller wireless carriers will only have one major player, AT&T, to negotiate roaming deals with if the merger is approved. Sohn said she expects Verizon, which would drop from being the top wireless provider to second after the merger, would then likely look to acquire Sprint, the nation’s third-biggest wireless provider.
Sprint spokesman John Taylor said Sprint CEO Dan Hesse will likely echo his previous statements opposing the merger. “Our position is that the transaction should be rejected outright,” Taylor said. “We don’t think any conditions or divestures can fix this transaction.”
In his written testimony for the hearing, AT&T CEO Randall Stephenson said there is much more competition in the wireless market than critics claim when smaller wireless operators are included.
“Certain critics may attempt to create a myth that only a few national competitors exist, but wireless competition occurs primarily on the local level,” Stephenson said in his prepared remarks for the hearing. “Those local competitors often include Sprint, Verizon, and AT&T, but there are many other strong competitors in the marketplace.”