Skepticism Greets AT&T Theory

One of AT&T's chief justifications for its proposed takeover of rival T-Mobile USA is that the combination would quickly improve network quality and help solve a looming shortage of wireless spectrum in some cities. AT&T executives say the denser cellular network would improve voice calls and data communications in urban areas and speed the construction of its faster fourth-generation data network. But some industry executives and former FCC officials are skeptical the merger is the best way to address AT&T's network needs.

Instead, they say AT&T could add capacity to current cell towers or purchase under-utilized spectrum in a government-led auction, or from other companies. "Putting the two networks together does not create spectrum," said Gerald R. Faulhaber, a former chief economist of the Federal Communications Commission, who has worked as a consultant for AT&T and its rivals. Underlying the debate is the explosive growth of data usage on wireless networks as more Americans purchase smartphones and tablet computers, which allow consumers to more easily surf the Web, watch videos and download applications and games. James Taiclet, chief executive of American Tower Corp., a large independent owner and operator of cell sites, said AT&T and other wireless operators could double the amount of capacity they supply with current spectrum by investing more in new wireless equipment on existing cell towers.

David J. Farber, a former chief technology officer of the FCC and a professor at Carnegie Mellon University, said there are swaths of valuable yet underutilized spectrum being used by the TV industry and the federal government that the government could repurpose for wireless use. AT&T counters that saying the government is moving too slowly, and that if it freed up spectrum today it would take five years before wireless operators could have devices up and running on it. Broadcasters are resisting the proposal, arguing they already gave back a large swath of airwaves when the U.S. switched to digital-only TV broadcasts. They also worry the plan isn't as voluntary as the FCC has advertised.