New Media Rights encourages state regulators in California to investigate the AT&T T-Mobile merger

Utility Consumers’ Action Network / New Media Rights
3100 Fifth Ave. Suite B, San Diego, CA  92103
Tel: (619) 696-6966 x654   Fax: (619) 696-7477
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May 23, 2011
John M. Leutza,
Director, Communications Division
California Public Utilities Commission
505 Van Ness Avenue, Room 3210
San Francisco, CA 94102
RE: Protest by Utility Consumers’ Action Network and New Media Rights of Advice Letter No. 160 filed by AT&T Mobility Wireless Operations Holdings, Inc. (“Revised Notice by AT&T Inc. of Proposed CMRS Transfer”)
Dear Mr. Leutza,
The Utility Consumers’ Action Network and New Media Rights would like to take this opportunity to strongly urge the California Public Utilities Commission (“the Commission”) to take an active role in response to the proposed AT&T/T-Mobile merger. UCAN and NMR respectfully submit this Protest to the Advice Letter (“AL”) No. 160 filed on May 3, 2011, by AT&T Mobility Wireless Operations Holdings, Inc. (“AT&T”). AL 160 transmitted AT&T’s Revised Notice of Proposed CMRS Transfer concerning its proposed acquisition of control of T-Mobile West Corporation, d.b.a. T-Mobile (U 3056 C) (“T-Mobile”) in California (“the proposed transaction”). The proposed transaction is part of AT&T’s proposed acquisition of control of all of the Commercial Mobile Radio Service (“CMRS”) licenses held by all affiliates of T-Mobile USA, Inc. (“T-Mobile USA”) in the United States.
The Commission has an opportunity to protect telecommunications consumers in California.  The proposed merger will have such a significant impact on telecommunications consumers in California that the Commission should exercise any and all authority it has in this space.
This proposed transaction represents a horizontal merger that will remove the fourth largest national wireless competitor from the market. AT&T will surpass Verizon Wireless as the largest mobile carrier in the country, providing service to nearly 40 percent of  all U.S. wireless customers. AT&T and Verizon Wireless together will control over 70 percent of the market. This duopoly would reduce choice for consumers and undermine the competitive marketplace for telecommunications services the CPUC seeks to foster.
Particularly in the “value-conscious” market sector, the effects could be most detrimental.  AT&T’s argument that other “all-you-can-eat” providers such as Leap are going to fill the gap T-Mobile leaves, when a service like Leap markets to only 102 of 700 cellular market areas in the
United States, is without merit. The limited availability of other “all-you-can-eat” providers to replace the gap left by T-Mobile means “value-conscious” consumers will have only one or two choices in most cases for “value-conscious” service providers.
There are very real concerns that the AT&T merger will affect, among other areas:
● The allocation of spectrum for “high average revenue per user” versus allocation for “value-conscious” customers.
● Competition and innovation in the wireless market in California - While T-mobile has been the first provider willing to allow certain innovative applications, AT&T has a record of undermining applications it perceives competing with its own services, such as in the case of Skype and Google Voice.
● The quality of customer service and service quality available to California’s consumers, given AT&T’s consistently low results for customer service and network quality.
● A true monopoly in the GSM/HSPA+ space, where T-Mobile is the only major competitor that uses such technology other than AT&T.
● Consumer privacy, as T-Mobile is considered more privacy friendly than other competitors such as AT&T, whose involvement in warrantless wiretapping is documented.
● Wireless service capacity for all of the resulting company’s customers.
● Deployment of faster wireless service for Californians (particularly through provision of 4G LTE service).  While AT&T may claim that the merger will improve deployment of 4G, by eliminating T-Mobile as a competitor, AT&T could have less incentive to quickly roll out 4G service in California, particularly rural areas.
On the ground this means that the availability and quality of communications services for California consumers are at stake in this merger, and the Commission should take an active role in fully reviewing this merger, utilizing the full extent of its powers to review the merger, as well as to allow Californians an open public forum in which to comment on the effects of a merger that will significantly alter the marketplace for communications services.
Accordingly, UCAN and NMR recommend that the Commission both a) open a formal investigation of the proposed merger reviewing the merger to the full extent of its powers to do so, and b) have the Communications Division provide a report to the FCC specifically focusing on the issues that relate to California’s communications consumers, such as potential price increases, degradation of service, and other issues as outlined above.
We would be happy to assist and cooperate in any way that would be helpful to this undertaking. We look forward to the Commission reestablishing itself as the state’s leader in protecting telecommunications consumers by taking an active role in ensuring California consumers are protected in this merger process.
Art Neill                                                                 Mike Scott

Director, New Media Rights Attorney                        UCAN Attorney

UCAN Attorney



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