AT&T Looks to Block Sprint/Clearwire Merger
"The applicants have failed to address in any meaningful way the competitive showing traditionally required by the FCC when reviewing major transactions," says AT&T in its complaint. "Because the applications are therefore facially defective, they should be denied."
The "competitive showing" that AT&T is referring to in its complaint is the full disclosure of Sprint and Clearwire's wireless spectrum assets. AT&T contends that the two sides have discounted some of their spectrum holdings because they are not yet operational. Yet the FCC scrutinized spectrum that AT&T had not yet accessed when it reviewed its acquisition of Dobson.
AT&T believes that if the FCC were to include Sprint and Clearwire's non-operational spectrum, then its proposed merger would be subject to more scrutiny and, therefore, the application should be denied. "Simply stated, the Commission must subject these applications to the same standard under which it reviews similarly situated carriers," contends AT&T in the filing.
The specific spectrum in question is Broadband Radio Service (BRS) and Educational Broadband Service (EBS) in the 2.5 GHz spectrum. "Consistency and logic dictate that the BRS/EBS spectrum held and controlled by the applicants must be considered," says AT&T.
Overall, Sprint holds a nationwide footprint of 90 MHz of 2.5 GHz spectrum, covering 80 markets in the U.S. GHz band through its 2004 merger with Nextel. When the FCC approved the merger it said that the two operators were required to offer services using this spectrum to at least 15 million Americans within four years "of the effective date of the order consenting to the merger" -- and an additional 15 million American subscribers within six years. (See Sprint Nextel Preps Wireless BB and WiMax USA: Spectrum Crunch Ahead.)
AT&T claims it is all for competition and that it isn't against the principles of the Sprint/Clearwire merger. It says it's merely asking that the FCC show some consistency in the way it combs over the deal.
Sprint and Clearwire announced back in May that they would be merging some of their assets to form a nationwide mobile WiMax firm. (See Sprint, Clearwire Create $14.5B WiMax Giant.) Sprint would supply its rights to the 2.5 GHz spectrum in exchange for a 51 percent stake in the new WiMaX network that Clearwire would build. Google (Nasdaq: GOOG), Intel Corp. (Nasdaq: INTC), Bright House Networks , and Time Warner Cable Inc. (NYSE: TWC) are kicking in a combined $3.2 billion investment.
When completed, the new Clearwire will be a competitive force for nationwide incumbent wireless carriers such as AT&T and Verizon Communications Inc. (NYSE: VZ) The deal to complete the "new" Clearwire venture is expected to close by the end of the year and the operator is planning to deploy mobile WiMax nationwide through 2010.
— Raymond McConville, Reporter, Light Reading