With AT&T and Verizon boosting the gap between them and the competition significantly of late, the US wireless carrier market seemed to be destined for a long-term duopoly. AT&T even tried to buy out one major competitor to consolidate its leadership position, but failed due to regulatory hurdles.
Still, no one seemed to stand in the two giants’ way, until recently, when two major deals were announced. T-Mobile and MetroPCS are to be united and share an over 40 million customer portfolio, while Japanese-based Softbank is extending a hand to falling Sprint, offering much needed financial support.
While “T-Metro” is still not viewed as a big threat for Big Red or Ma Bell, Sprint is looking like it could get back into the game, especially after announcing yet another deal, with longstanding partners Clearwire.
AT&T has just come forward on the subject, confirming our thoughts and warning over Softbank’s possible future control of “significantly more U.S. wireless spectrum than any other company” after the Sprint-Clearwire acquisition.
“This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize. “ said AT&T vice president Brad Burns taking a moderately worried position in a situation that is probably giving his company more reason for anxiety than this statement might tell us.
Basically, what AT&T is complaining about (without sounding too whiny) is that Softbank-Sprint could gain the upper hand against them and Verizon courtesy of these deals. We don’t exactly see how that would be “illegal” or “immoral” or why isn’t AT&T taking issue with Sprint’s buying of Clearwire first, but maybe a future statement will detail the reasons “U.S. regulators” should look into the situation.
We’re guessing Verizon might issue a similar statement soon, though it is pretty obvious that AT&T has some personal bad blood with Sprint after it played a key role in the failed T-Mobile merger from last year, so this is probably the number one reason why Brad Burns felt the need to ask for Softbank’s spectrum dominance to “be fully explored in the regulatory review process”.
So, who thinks that AT&T is right to object to the Sprint-Softbank-Clearwire merger? And who thinks they’re simply afraid of some stiff competition?
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I don’t see the FCC blocking this. Here’s why. Softbank is buying a controlling (70%) stake in Sprint. They aren’t merging (At&t and T-Mobile), and moreover Softbank is going to let Sprint continue it’s operations only with an influx of cash. Sprint has always backed Clearwire, and has always owned a majority of the company. The only difference now is that Sprint will have control over the Board of Directors. The FCC looks for monopolistic attributes to mergers. Softbank isn’t acquiring Sprint, and Sprint isn’t acquiring Clearwire.
Although prices would be sky high, I wonder if the At and T and TMobile merger had gone through – would Verizon and Sprint have eventually merged. A Verizon Sprint Merger would have been interesting in that hypothetical.