WASHINGTON-AT&T Inc. Chairman Edward Whitacre last week told the Senate Judiciary antitrust subcommittee he would not oppose conditions on special access lines as part of any regulatory approval of the company’s proposed $67 billion purchase of BellSouth Corp.
Whitacre told the Senate panel he would agree to restrictions on special access lines-dedicated lines used by wireless carriers to transmit calls from base stations to mobile switching centers-in areas where AT&T and BellSouth overlap. Whitacre initially said robust competition negates any need for merger conditions. The FCC instituted a similar safeguard in approving SBC Communications Inc. acquisition of AT&T Corp.
Last week T-Mobile USA Inc. echoed previous comments from Sprint Nextel Corp. that the deal could impact competition.
“Throughout these large service areas (served by the merger aspirants), T-Mobile depends on AT&T and BellSouth for special access services that are critical inputs to T-Mobile’s competitive wireless offerings,” stated the No. 4 national mobile-phone operator. “The proposed merger will significantly degrade what little competition remains in the special access marketplace. Such competition is already depleted due to the recent loss of MCI (acquired by Verizon Communications Inc.) and AT&T as independent providers of special access.”
Sen. Mike DeWine (R-Ohio), chairman of the Judiciary antitrust subcommittee, suggested an AT&T-BellSouth merger could chill the creation of a third broadband pipe .
“The development of the so-called WiMAX service means cellular companies will be able to provide an alternative to the traditional phone and cable TV companies for video and Internet offerings. However, there is some concern that this merger will consolidate so much wireless spectrum in the hands of AT&T that it may hinder the development of WiMAX and diminish its potential as a competitive alternative,” DeWine said.
“We don’t have all that much spectrum,” said Whitacre. He described AT&T-60 percent owner of Cingular Wireless L.L.C.-as having a de minimus [minor] amount of broadband spectrum. BellSouth holds a 40 percent stake in Cingular.
“We use that spectrum. We don’t warehouse it,” said Whitacre.
However, Jonathan Rubin, senior research fellow at the American Enterprise Institute, told lawmakers he had a different take on BellSouth’s Wi-MAX trial plans after many years of allowing its wireless broadband spectrum to lay idle. “To me, I think that’s warehousing,” said Rubin.
Several consumer groups agreed in an FCC filing.
“These [2.3 GHz and 2.5 GHz] spectrum resources could be put to productive use by one or more independent firms to provide broadband services in competition with AT&T and BellSouth,” stated Consumer Federation of America, Consumers Union, Free Press and U.S. Public Interest Research Group. “The applicants’ apparent warehousing of spectrum resources is yet another anticompetitive practice which must be stopped whether or not the merger is allowed to proceed.”
One subcommittee member voiced concern about the implications of an AT&T-BellSouth merger on growing competition between landline telephone companies and mobile phone carriers.
“The merger would also put Cingular, the nation’s largest wireless provider, in the hands of the largest wireline company. So much for competition between wireless and wireline companies. Where will it end?” asked Sen. Patrick Leahy (D-Vt.), top minority member of the full Judiciary Committee.
Thursday’s hearing was overshadowed by testy exchanges between Senate Judiciary Chairman Arlen Specter (R-Pa.) and Whitacre over the telecom executive’s refusal to answer questions about whether AT&T was sharing customer data with the National Security Agency as part of its anti-terrorist surveillance program.
“Senator, we follow the law,” Whitacre said when Specter repeatedly questioned asked about reports of AT&T’s cooperation with NSA. Whitacre did let out he was advised not to answer questions relating to the NSA program as it involves confidential information.
