May 11, 2011
AT&T pleads spectrum poverty despite vast holdings
The claim came as AT&T faces Senate hearings regarding its purchase of T-Mobile
By Brad Reed | Network World
The carrier with the most spectrum says that it doesn't have enough to build out a nationwide LTE network.
During a hearing held by the Senate Judiciary Committee today, AT&T CEO Randall Stephenson said that his company needed to purchase T-Mobile to have enough "spectrum depth" to launch its upcoming 4G LTE network in many rural areas in the United States. This claim sparked skepticism and even mockery from both senators and fellow panelists at the hearing, who noted that AT&T already had more spectrum holdings than any U.S. carrier. In fact, AT&T actively bills itself as the carrier with the "strongest spectrum position" that "boasts the most cell sites and the most spectrum of any wireless network" in the country.
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PROPOSAL: AT&T-T-Mobile merger widely panned
Three panelists at the hearing -- Sprint CEO Dan Hesse, Cellular South CEO Hu Meena, and Public Knowledge President Gig Sohn -- all said AT&T had more than enough spectrum to meet its needs and said the company had significant quantities of spectrum that weren't being used.
"AT&T doesn't use the spectrum it has," said Hesse, who has been critical of the proposed merger since it was announced earlier this year. "AT&T already has the spectrum it needs to reach rural America."
"AT&T has enough spectrum," said Sohn, who noted that many of AT&T's capacity problems were the result of it running legacy technology over spectrum that could be freed up for 3G or 4G services. "This merger would give more spectrum to AT&T and would reward AT&T for their failure to invest in their network."
When asked directly why AT&T had so much unused spectrum, Stephenson said that his company currently lacked the "20MHz of contiguous unused spectrum" to launch its 4G services in many parts of the country.
"To make the move to 4G ... we have to have clear blocks of unused spectrum," he said. "Right now we don't have enough spectrum to launch in West Virginia, for instance."
Panelists and senators also expressed concern that the merger would lead to a wireless duopoly dominated by AT&T and Verizon, which would control about 80 percent of the wireless market if the merger were to pass. Hesse in particular said that his company was in serious danger of becoming a takeover target if that happens, meaning that two large wireless companies would have near-total control of the market.
"The wireless industry thrives on competition, which, in turn, drives investment, innovation, consumer choice, job creation, and U.S. global leadership in wireless communications," Hesse said. "If AT&T is permitted to devour one of the two remaining independent national wireless carriers ... the U.S. will go backwards toward last century's Ma Bell."
Stephenson said that even though T-Mobile would no longer be in the wireless mix, AT&T would still face strong competition not only from Verizon but also smaller players such as Leap and MetroPCS. Sohn scoffed at this, however, and said the idea that MetroPCS could effectively compete with AT&T was like saying mom-and-pop stores could effectively compete with Walmart.
AT&T first announced its proposed $39 billion merger with T-Mobile in March, setting off a storm of criticism from both consumer groups and smaller carriers.