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Posted at 01:26 PM ET, 05/11/2011

AT&T, T-Mobile chiefs grilled on merger plan

Senate lawmakers grilled the chief executives of AT&T and T-Mobile on Wednesday on their proposed $39 million merger, questioning whether the deal would lead to less competition and higher prices for consumers.

And among the most forceful arguing that it would was the chief executive of another major wireless provider, Dan Hesse of Sprint Nextel. He told lawmakers that if the merger of his competitors was approved, his firm probably wouldn’t survive as a stand-alone company.

“It would fundamentally put us in a situation where this is a duopoly (industry) and it puts us in position to be acquired,” Hesse said in the antitrust subcommittee hearing.

That, he said, would mean that the merger would create a domino affect of consolidation in the industry, leading to the reduction of national carriers from four to two, with AT&T and Verizon Wireless taking 80 percent of the market.

No one on the antitrust subcommittee called for the deal, first announced in March, to be blocked, and opinions about the deal largely fell along party lines. Democratic lawmakers called for strong conditions and more scrutiny. Republican lawmakers called for “humility” when it comes to government decisions that affect the market, and some supported the argument by AT&T that the deal would help expedite the deployment of high-speed wireless connections to rural portions of the nation.

“I fear that if approved, the merger would take us one step away from a monopoly market we had under Ma Bell,” said Sen. Al Franken (D-Minn.), calling for the subcommittee to hold more hearings on the proposed union. He said a second hearing should follow that closely examines how the merger would affect wireless service prices for consumers.

“It took the DoJ more than 30 years before they eventually broke up Ma Bell, and it is important to keep in mind the stakes of the merger of this size and scope,” Franken said.

AT&T CEO Randall Stephenson said the market is competitive, with new service providers such as Metro PCS and Leap attracting low-cost consumers.

He said T-Mobile customers would be able to retain their current contracts if the merger is approved. But he said those service plans – known for being a low-cost alternative – wouldn’t be offered to AT&T customers.

Several times, Stephenson argued that the merger would help advance White House goals of bringing ubiquitous high-speed Internet access to the nation, drawing criticism from Sen. Herb Kohl, chairman of the subcommittee, who said the merger was about business and “not about national interests,” and that the discussion “should be on that level.”

Sen. Patrick Leahy (D-Vt.) also picked apart AT&T’s argument that by combining AT&T and T-Mobile airwaves, rural areas would get wireless access sooner. He said AT&T already has a large holding of spectrum in Vermont and wondered why AT&T hasn’t used those airwaves yet. He said representatives of AT&T have promised that 250,000 more people in Vermont would get high-speed 4G service thanks to the merger.

“Forgive me if I’m a bit skeptical,” he said, “given past promises.”

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By  |  01:26 PM ET, 05/11/2011

 
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