Verizon CEO To Government: “Not Allowing AT&T/T-Mobile Merger Will Hurt U.S. Wireless Customers.”

  • September 22, 2011 8:38 am

If you thought Verizon’s stance would mirror Sprint/Nextel in opposing the AT&T/T-Mobile merger, you’re in for a world of surprise. During an investor conference on Wednesday, Verizon CEO Lowell McAdam stated that the government needs to allow the merger to allow the cellular industry to keep pace with the customer demand.

“We need to be very thoughtful on what the impacts would be to the overall industry if this is a way to regulate the industry without actually passing regulation.”

“I have taken the position that the AT&T merger with T-Mobile was kind of like gravity. It had to occur, because you had a company with a T-Mobile that had the spectrum but didn’t have the capital to build it out. AT&T needed the spectrum, they didn’t have it in order to take care of their customers, and so that match had to occur.”

The statement is somewhat surprising considering AT&T would leapfrog Verizon in total customer base by many tens of millions. So why are they supportive of the merger?

Two logical reasons come to mind:

  1. Verizon could be looking further out — if AT&T is allowed to swallow up T-Mobile, maybe just maybe Verizon could make a case for acquiring Sprint in the next few years and in turn creating a gigantic cellular duopoly. Such a scenario would essentially give Verizon free reign on CDMA markets and AT&T on GSM void of any competition.
  2. The other possible explanation is that Verizon is anticipating a large influx of new (read: old T-Mobile) users who would rather switch to Big Red then allow AT&T to swallow them up.

In short: Verizon will win one way or another too.

As for McAdam’s statement about “AT&T needing the spectrum T-Mobile can’t afford to build out on” — We can only state that he is so very wrong. Perhaps MacAdam didn’t see this story which essentially proves AT&T doesn’t really need T-Mobile to upgrade their network. Without T-Mobile AT&T will ultimately have to spend more money on upgrades and acquiring new spectrum, take longer to reach their target LTE coverage goal, and perhaps fall a few percentage points short of said goal.

Via: BGR

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