Press Release

Public Knowledge Calls AT&T Takeover of T-Mobile Illegal

June 20, 2011 ,

AT&T’s takeover of T-Mobile is illegal under the Communications Act, Public Knowledge will argue in a filing to the Federal Communications Commission (FCC).

The Communications Act (Sec. 314) bars the FCC from approving transactions that lessen competition or restrain commerce between the U.S. and foreign countries.  In its reply comments to the FCC, PK said:  “As the record shows, even under the most cramped and restrictive reading of the statute, Section 314 prohibits the transfer of facilities and assets between AT&T and Deutsche Telekom. The Commission has received numerous submissions from foreign carriers, foreign governments, and others that the combination of assets will “substantially lessen competition” in international roaming for GSM-based carriers.”

Public Knowledge noted the law creates “an absolute bar” to approving the transaction:  “Undoubtedly, a transaction that reduces the number of possible international roaming partners from 2 to 1 “has the effect” of substantially lessening competition, if not creating an unlawful monopoly, between those geographic regions and “any foreign country” in direct violation of the language of the statute.”

In its filing, PK will also argue AT&T has not been forthright with policymakers about its plans to accept further universal service fund (USF) support.  In its formal papers filed with the FCC, AT&T said the FCC should not impose any USF-related conditions.”  However, in testimony to the Senate Antitrust Subcommittee, AT&T Chairman Randall Stephenson said the company would accept a condition not to take USF funds for its promised advanced wireless build-out.   AT&T in its filing characterized Stephenson’s statement at the hearing as a “voluntary commitment.”

PK also plans to file a preliminary economic and technical report that argues AT&T is not as constrained in spectrum as the company claims, nor is T-Mobile in as bad a shape as AT&T claims.  The report argues both companies have many options to increasing their high-speed data networks.  The report also notes that AT&T’s claim to use T-Mobile spectrum to provide wireless service in rural areas should be greeted skeptically:  “T-Mobile holds no spectrum below 1 GHz, and thus would bring no additional assets to enable AT&T to expand coverage or increase capacity economically in rural areas.  In addition while Verizon has offered its 700 MHz spectrum to rural operators for them to deploy LTE in areas where it prefers not to do so, AT&T has taken no such initiative, which it could do at any time, and thereby ensure its customers access to the capacity that is deployed through reciprocal roaming agreements (assuming that it were willing to undertake such reciprocal agreements which it has been unwilling to do to this point in time).”