UPDATE 2-AT&T touts benefits of T-Mobile deal to FCC

Thu Apr 21, 2011 5:11pm EDT

* Says boosts high-speed commitment to 97.3 pct of U.S.

* Previous promise was to support 95 percent

* Sprint argues merger would create duopoly, cut jobs (Adds comments from AT&T and Sprint)

By Jasmin Melvin

WASHINGTON, April 21 (Reuters) - AT&T Inc (T.N) told communications regulators its $39-billion bid to buy Deutsche Telekom AG's (DTEGn.DE) T-Mobile USA would let it build high-speed wireless services reaching more than 97 percent of U.S. users.

In a filing seeking the Federal Communications Commission's approval of the deal, AT&T, the No. 2 U.S. mobile carrier, argued that the merger would spur innovation and economic growth by allowing it to improve the quality of its services.

AT&T has already filed papers with the Justice Department seeking antitrust clearance for the deal that would make the combined operations the largest U.S. mobile service.

The promised network reach of 97.3 percent was slightly higher that the 95 percent promised when the deal was announced last month.

Fewer dropped calls, fewer failed call attempts and better data throughput are among the benefits customers would experience from the merger, Joan Marsh, AT&T's vice president of federal regulatory affairs, told reporters.

"It will address capacity constraints facing both companies that will enable the combined company to provide higher quality services in many urban, suburban and rural markets," she said.

No. 3 mobile operator Sprint Nextel (S.N) opposes the deal on the grounds that it would stifle innovation and competition.

Verizon Wireless, the current market leader, would become the second biggest mobile provider if the deal goes through. Verizon Wireless is a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L). Verizon has declined to comment on the merger.

Sprint argues that around 80 percent of U.S. mobile customers would be served by just two operators if the deal is approved.

"This kind of leverage could strangle competition and give AT&T the power to increase prices, threaten innovation critical to this industry and eliminate American jobs," Vonya McCann, senior vice president of government affairs at Sprint, said in a statement.

AT&T told reporters on Thursday that the transaction would promote, not diminish, competition.

"It's absolutely inaccurate to say this is a duopoly," said AT&T's Marsh. "The market is fiercely competitive today and will remain fiercely competitive."

Marsh also said the combined company would maintain pricing plans for existing T-Mobile USA subscribers to eliminate service disruption. While she would not comment on future pricing, she said wireless pricing trends have always been downward.

Marsh, asked about any layoffs after completion of the T-Mobile deal, commented on past AT&T deals.

"In prior acquisitions," she said, "AT&T has always dealt with personnel issues through natural attrition."

"You can look at our record on this. We do not have a history of significant layoffs post transaction," she said. (Reporting by Jasmin Melvin, additional reporting by Sinead Carew in New York; Editing by Tim Dobbyn)