As AT&T (NYSE: T) and T-Mobile USA continue to work their way through regulatory approval of their proposed $39 billion merger, it looks like some of the world’s biggest tech companies have already been won over. Yesterday, eight companies — including Microsoft (NSDQ: MSFT), Yahoo (NSDQ: YHOO) and Facebook — have now been in touch with the Federal Communications Commission in support of the deal.
According to the blog GeekWire, six tech companies — Microsoft, Facebook, Oracle, Qualcomm (NSDQ: QCOM), RIM (NSDQ: RIMM), and Yahoo — signed a single letter to the FCC chairman Julius Genachowski. The New York Times writes that in all there were eight tech companies, along with 10 leading VC firms, coming out in support of the merged operator.
The basic premise of the letter that has been made public (a full copy of it follows) is that consumer demand for mobile data is outstripping network capacity today, and a combined entity would be better placed to rise to the challenge. It notes AT&T’s stated commitment to migrate all of T-Mobile’s existing data network to LTE, which would give the U.S. over 97 percent broadband coverage. Pre-merger news, T-Mobile has been committed to upgrading its 3G network, but never committed to rolling out LTE. Ironically, before the merger, T-Mobile was also very outspoken on how 3G upgrades were actually just as effective in terms of handling more data as a costly buildout of LTE.
What’s in it for these companies? All of them have strong relationships with both carriers, not just as partners for services (eg Facebook) but also as customers for things like IT equipment, mobile devices and search services.
The endorsement from the tech giants comes as a riposte to the chief line of opposition voice by many competing mobile operators — led by the number-three provider in the U.S., Sprint (NYSE: S). They have argued that rather than enabling widespread 4G, the consolidation will result in stifled innovation.
The full text of the letter (via) below:
Julius Genachowski, Chairman
Federal Communications Commission
445 12th Street, SW
Washington, D.C. 20554
June 6, 2011
WT 11-65: In the Matter of applications of AT&T Inc. and Deutsche Telekom AG (NYSE: DT) for consent to assign or Transfer Control of licenses and Authorizations
Dear Mr. Chairman,
Today, consumers are increasingly using smart phones, tablets, laptops and other mobile devices to wirelessly connect to the Internet and to each other. We expect access to our content, information and services wherever we are. As a result, consumer demand for wireless broadband is dramatically increasing and our wireless networks are struggling to keep pace with the demand. Given the network capacity challenges, policymakers must give meaningful consideration to AT&T’s acquisition of T-Mobile as a means of addressing their near term wireless broadband capacity needs.
Despite the network challenges presented by the surging consumer demand, the United States must continue to lead in wireless broadband technologies. U.S. companies are at the forefront of driving innovations in devices, applications and services and an ever evolving wireless network is essential to realizing new and innovative offerings. An increasingly robust and efficient wireless network is part of a virtuous innovation cycle and a healthy wireless ecosystem is an important part of our global competitiveness.
AT&T’s acquisition of T-Mobile represents a near term means of addressing the rising consumer demand. For example, the merged company will be able to leverage a larger network of cell sites allowing greater reuse of spectrum and increasing the wireless broadband capacity of the network. Furthermore, AT&T has indicated that it will migrate the T-Mobile network to LTE technology and offer LTE-based wireless broadband to 97.3 percent of the U.S. population. AT&T has stated that its LTE deployment will bring significant benefits to residents of rural areas and smaller communities, where the benefits of real-time video and similar capabilities are most urgently needed to fill gaps in physical infrastructure for healthcare, education, and other social needs.
The challenge of keeping pace with consumer demand and continuing to lead globally in wireless broadband services and products requires that we tackle the issue on multiple fronts. Many policy related efforts will not be able to quickly address near term capacity needs. The FCC must seriously weigh the benefits of this merger and approve it. Such action will help to meet the near term wireless broadband needs of consumers and ensure that we are globally competitive as the world increasingly embraces wireless broadband connectivity.