If Phone Giants Merge: A Rural Take

[Commentary] AT&T says its acquisition of T-Mobile will help the company to expand its networks in rural and underserved communities by providing spectrum and increasing its scale and scope to levels that can support investment. Acquiring access to T-Mobile’s cell towers would quickly add more towers to the AT&T network than could be built in the next eight-years. However, in recent testimony before the House Judiciary Committee, Rene Obermann, CEO of Deutsche Telekom, stated that T-Mobile does not have the spectrum to deploy in rural areas. He and critics of the deal claim that the spectrum that T-Mobile controls won't increase AT&T’s geographic reach since the companies’ networks almost entirely overlap.

The issue of “spectrum crunch” or overload of the network, which AT&T insists the merger would help solve, is occurring in highly trafficked urban areas, not rural communities. Given AT&T’s track record, there is no guarantee of additional investment and development in the rural network. Past actions and performance are important to consider. Critics contend that it is not a lack of spectrum or towers that prevents rural development; they also suggest that the benefits to rural network development AT&T is promising can come without the merger for much less than the $39 billion price tag the merger will cost. According to a Congressional Research Services report, AT&T already has a substantial amount of spectrum that it isn't using -- up to one third, according to some commentators. Tapping into that spectrum would mitigate numerous complaints of dropped calls coming from customers.

The review to approve or deny the merger will likely stretch into next year, but regardless of when it occurs the decisions made by the Federal Communications Commission in Washington, and by the corporate boards of AT&T and T-Mobile have substantial consequences for communities who rely on wireless services. The merger may produce the most profound effects on rural customers who have already been ill served by the major communication carriers in the past. The merger could result in a less competitive system, with the remaining companies continuing to cite the same lack of incentive to invest that has hampered rural networks to date.

[Desai is the Telecommunications Policy Counsel for Consumers Union]