Sprint to fight AT&T's buyout of T-Mobile

IDG News Service - Sprint Nextel has vowed to fight AT&T's proposed US$39 billion acquisition of T-Mobile USA, calling the deal a bid to create a new telecommunications duopoly.

"Sprint urges the United States government to block this anti-competitive acquisition. This transaction will harm consumers and harm competition at a time when this country can least afford it," said Vonya McCann, senior vice president of government affairs, in a written statement on Monday.

The company said AT&T's proposed deal would roll back decades of opening up the U.S. telecommunications industry to competition following the breakup of the AT&T monopoly in the 1980s. "On behalf of our customers, our industry and our country, Sprint will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly," McCann's statement said.

AT&T announced its agreement to buy T-Mobile on March 20 but said it would probably take 12 months to conclude. The U.S. Federal Communications Commission and Department of Justice will have to approve the deal, with the FCC examining whether it is in the public interest and the DOJ ruling whether it would hurt competition. AT&T executives have said they expect to have to discuss possible divestitures of some assets.

The deal would make AT&T by far the largest mobile operator in the country, with more than 130 million subscribers, while Verizon would remain in second place with 94 million. Sprint would still be the third-biggest mobile operator in the country, with 58 million subscribers, but it would be by far the smallest major carrier if T-Mobile didn't exist.

After the buyout, AT&T would be nearly three times the size of Sprint, the company pointed out in its statement Monday. Some observers believe Sprint would be forced into focusing on low-priced devices and services in order to carve out a market niche.

"The wireless industry moving forward would be dominated overwhelmingly by two vertically integrated companies with unprecedented control over the U.S. wireless postpaid market, as well as the availability and price of key inputs, such as backhaul and access needed by other wireless companies to operate," Sprint said.

Sprint CEO Dan Hesse called the plan anticompetitive just two days after it was announced, during a keynote session at the CTIA Wireless trade show in Orlando last Tuesday. The statement released Monday formally sets the company on a course to try to block the deal. Just as AT&T repeatedly said the proposed combination would generate investment in U.S. infrastructure and make mobile broadband available to more Americans, Sprint invoked the national interest in calling for the deal to be blocked. Sprint said it expects the plan to be the subject of multiple congressional hearings.

"The wireless industry has sparked unprecedented levels of competition, innovation, job creation and investment for the American economy, all of which could be undone by this transaction," Sprint said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com