US senator seeks answers from AT&T, T-Mobile execs

Fri May 6, 2011 5:11pm EDT

* Klobuchar questions AT&T, T-Mobile on merger

* Seeks consumer protections, commitments on pricing

* Senate panel holds hearing Wednesday

By Jasmin Melvin

WASHINGTON, May 6 (Reuters) - A senator is asking AT&T Inc (T.N) and T-Mobile about their commitment to lower-priced plans and to maintaining current employment levels ahead of a congressional hearing on their proposed merger.

Senator Amy Klobuchar sent a letter to the companies raising a series of concerns about the deal prior to the May 11 hearing by the Senate Judiciary's antitrust subcommittee.

"AT&T and T-Mobile ought to be forthright and transparent with their customers about the potential effects the merger might have on prices and the quality of service," Klobuchar said in a separate statement.

AT&T announced plans in March to acquire Deutsche Telekom AG's (DTEGn.DE) T-Mobile USA in a $39-billion bid.

The deal would concentrate 80 percent of U.S. wireless contract customers in just two companies -- AT&T/T-Mobile and Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L).

AT&T, the No. 2 U.S. mobile carrier, has argued the merger would spur innovation, improve the quality of its services and expand wireless service to 97.3 percent of Americans. The combined companies would overtake current industry leader Verizon.

Klobuchar, a Minnesota Democrat and member of the antitrust panel, sent her letter to AT&T Chief Executive Randall Stephenson and T-Mobile USA CEO Philipp Humm.

She asked whether the merger would allow the combined company to reach more rural areas than simply signing data roaming agreements with T-Mobile and other carriers. And she questioned the effect of less competition on early termination fees and cell phone exclusivity clauses.

"We've received the letter and look forward to providing the Senator with information on the consumer benefits of the merger between AT&T and T-Mobile," an AT&T spokesman said.

Congress has no direct role in reviewing the merger but has oversight of the Federal Communications Commission and Justice Department. Those two agencies are expected to take a year to complete their reviews.

Stephenson and Humm are due to testify on Wednesday to the Senate panel, along with major critics of the deal: Sprint Nextel Corp (S.N) CEO Daniel Hesse and Cellular South [TELAPC.UL] CEO Victor "Hu" Meena. (Reporting by Jasmin Melvin; Editing by Tim Dobbyn)

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Comments (3)
DBoo wrote:
Taking into account the whole U.S. market, a combination of Dallas-based AT&T and T-Mobile may raise the Herfindahl- Hirschman Index (HHI), an accepted measure of market concentration, to 3,216 from 2,848, according to a Bloomberg analysis. Any score above 2,500 can indicate a highly concentrated market, and an increase of more than 200 points is “likely to enhance market power,” according to federal guidelines.

If this ridiculous deal goes through, Sprint will be the only low-priced post-paid national wireless carrier left in the United States. T-Mobile customers are already fleeing to Sprint because they know they won’t get low prices from AT&T or Verizon. But AT&T and Verizon are two of the top corporate lobbyists in the country, so I’m sure the Feds are happy to oblige anything they want to do to secure a stranglehold on the market at the expense of the consumer.

May 06, 2011 7:19pm EDT  --  Report as abuse
DBoo wrote:
AT&T and Verizon = The Most Expensive Wireless Plans in America. We know where Verizon (the 10th leading U.S. lobbyist) and AT&T (the 12th leading U.S. lobbyist) get all that money to run commercials 24×7, pay out huge “fat cat” executive bonuses and hire armies of lawyers and lobbyists to push the U.S. market into a wireless industry duopoly — the American consumer.

May 06, 2011 7:20pm EDT  --  Report as abuse
DBoo wrote:
AT&T lobbyists push for T-Mobile deal
March 28, 2011

For years, AT&T has been one of the biggest political and lobbying forces in town. Last year, it spent $15.3 million and had 93 lobbyists on its roster, including six former lawmakers. Germany’s Deutsche Telekom spent $3 million on lobbying for T-Mobile USA in 2010, armed with 41 lobbyists and one former lawmaker.

Many lawmakers have a personal interest in seeing AT&T do well. AT&T ranked as the sixth most popular investment among members of the House and Senate in 2009, the most recent year for which such data is available, according to the Center for Responsive Politics.

And AT&T is considered a heavy hitter during campaign election cycles. In 2010, donors with links to the company made nearly $4 million in campaign contributions to candidates running for federal office.

May 07, 2011 8:46am EDT  --  Report as abuse
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