T-Mobile, Sprint rally usual DC allies to oppose Verizon deal

Josh Peterson | Tech Editor

T-Mobile USA and its allies, including smaller competitors and left-wing advocacy groups, announced Monday the launch of a new coalition determined to disrupt a multibillion-dollar business deal between Verizon Wireless and a consortium of leading cable providers. That deal is pending before the Federal Communications Commission and the Department of Justice.

Industry analysts have taken note that the Alliance for Broadband Competition, despite its branding as a new coalition, is a recycled tactic of the ongoing corporate warfare between players in the highly competitive U.S. wireless market.

Comprised of T-Mobile USA, Sprint, Public Knowledge, Free Press, the American Antitrust Institute and the RCA-Competitive Carrier Association — which itself consists of T-Mobile USA, Sprint, MetroPCS and numerous regional carriers —  the alliance opposes a deal first announced in December between Verizon Wireless, Cox Cable and SpectrumCo., a cable consortium including Comcast, Time Warner Cable and Bright House Communications.

Many of the same groups were instrumental in disrupting AT&T’s failed 2011 merger with T-Mobile USA. The FCC, sympathetic to the viewpoint that the merger would reduce competition in the wireless space, ultimately rewarded their lobbying efforts.

Free Press and Public Knowledge, seemingly perpetual opponents of AT&T and Verizon, were also instrumental in framing the debate over net neutrality — a regulation that favors the high-bandwidth consumption habits of companies like Google and Netflix — as necessary to stop what they viewed as corporate greed at Verizon, AT&T and Comcast.

Those special-interest lobbying groups have historically deep financial ties to left-wing philanthropic foundations, including those of liberal billionaire financier George Soros

Increasing demand by smartphone users for data intensive Internet services like video, audio, pictures and text is behind the drive for what amounts to a digital arms race. Smartphone users now account for more than 50 percent of the U.S. mobile-subscriber market, according to a recent Nielsen Company study.

And the global trend toward mobile adoption has Internet providers and policy makers concerned that there is not enough spectrum available to accommodate future demand.

A so-called “spectrum crunch” is projected to adversely affect a majority of U.S. mobile wireless carriers and their subscribers by 2015. Spectrum itself is a limited natural resource; each broadcast, cable, telecom and Internet provider is licensed to occupy certain frequencies of spectrum, as regulated by both the FCC and the National Telecommunications and Information Administration.

Verizon Wireless observed the hard lessons AT&T learned about its opponents’ ferocity and their willingness to disrupt their business dealings, and took a different approach, avoiding mergers as solutions to its spectrum needs.

Instead, Verizon Wireless inked a deal with several cable companies that sought to sell licenses to their unused Advanced Wireless Services (AWS) spectrum — a highly prized frequency range ideal for mobile communications.

T-Mobile USA, on the other hand, insisted during its failed merger process with AT&T that the U.S. wireless market was highly competitive. But now that the company opposes the Verizon-SpectrumCo/Cox deal, its reasoning has shifted by 180 degrees.

“The end result will be to foreclose competition and harm consumers,” said T-Mobile USA in a statement for Monday’s launch, objecting to the Verizon deal.

In an analyst report published several days prior to Monday’s launch of the Alliance for Broadband Competition, the DC-based investment intelligence firm Capital Alpha Partners recalled the recent T-Mobile/AT&T alliance.

“In the course of the Verizon/SpectrumCo regulatory review, we see the familiar pattern of self-serving (and often contradictory) opposition lobbying at the FCC that has become a Washington tradition,” wrote Robert Kaminski, associate director at Capital Alpha Partners, and James Lucier, the firm’s managing director.

“We hold that opposition from competing carriers might have the unintended consequence of damaging their own credibility in future transactions,” wrote Kaminski and Lucier. “We think this undermines — but does not necessarily kill — a possible T-Mobile/MetroPCS combination.”

A potential merger between T-Mobile USA and MetroPCS, one of the nation’s largest regional carriers, is reported to be in the works.

Market research firm Nomura Equity Research concluded in an April analyst report that without the iPhone, T-Mobile USA would be unlikely to see enthusiasm from wireless customers in the coming months. Deutsche Telekom received a positive grade from the firm, despite the well-known woes of its ailing U.S. subsidiary.

Just a few months after its planned 2011 merger with AT&T was declared dead in the water, T-Mobile USA closed several call centers in the U.S. as part of a restructuring effort.

Kaminski and Lucier called T-Mobile’s current position against Verizon a return to its “historical” stance as an anti-Verizon and anti-AT&T “agitator.”

Dr. Ev Ehrlich, former Under Secretary of Commerce for Economic Affairs during the Clinton Administration called the new alliance “a case study in Orwellian language” that “a group of companies and interest groups that don’t like the effects of telecommunications competition have formed a group to ‘promote’ competition.”

“T-Mobile is a zombie carrier, all but abandoned by its German parent, that can’t compete; the ‘Competitive’ Carrier Association is a group of small, uncompetitive carriers who want their successful counterparts to keep them on life support, and Public Knowledge has a long history of wanting to substitute its views for the outcomes of a consumer-driven market,” said Ehrlich, in a response to Monday’s announcement.

T-Mobile USA did not respond to TheDC’s request for comment.

Follow Josh on Twitter

Tags : fcc free press verizon
© Copyright 2010 - 2018 | The Daily Caller