Updated with comment from AT&T
The chairman of the Federal Communications Commission fired back at AT&T and T-Mobile on Tuesday, saying the agency’s decision to block the mobile giants’ merger won’t push up consumer prices.
In a speech at the CTIA wireless industry conference in New Orleans, Julius Genachowski said the FCC has approved many wireless deals in the past year. But AT&T and T-Mobile’s proposal for a $39 billion merger “simply proves that there is a line.”
The FCC rejected the merger in November over antitrust concerns, saying that the deal would curb competition and cut jobs.
AT&T has heavily criticized the FCC for its decision, arguing that the agency’s rejection of the merger will deprive consumers from more robust networks. They said the merger of the two major wireless firms would have improved broadband coverage for customers. The company has suggested that because of the ruling, consumer prices for mobile service have risen, including AT&T’s own charges.
In his keynote address, Genachowski told the room full of business executives that the FCC decision — and the Justice Department’s rejection of the deal — won’t change the amount of broadband spectrum available to wireless carriers.
“Some have argued that transactions, let’s be frank — one transaction — is somehow causing a shortage and causing a price change,” Genachowski said. “But the overall amount of spectrum hasn’t changed, except for the amount we've added to it.”
AT&T on Tuesday called Genachowski’s views “incorrect,” and questioned his basic understanding of economics.
“The FCC was within its rights to withhold its approval. But it is incorrect when it denies the impact such decisions have on the price of wireless services,” AT&T Senior Vice President Jim Cicconi said.
“Basic economics and the law of supply and demand apply to the wireless industry as to all others. In the case of wireless, without additional capacity, which would have been created by our transaction, prices rise,” Cicconi added. He pointed also to comments made by Genachowski at the last CTIA meeting that spectrum shortages would lead to higher prices for consumers.
Government permissions for more commercial spectrum is among the chief concerns for wireless and high-tech heavyweights in their lobbying efforts in Washington.
More than half of all cellphone users have smartphones, according to Neilsen. There are 332 million mobile connections in the United States — more than the entire population, reports CTIA, a wireless and telecommunications industry group.
Genachowski talked about efforts to bolster the amount of spectrum available for mobile data networks — including the auctions of broadcasters’ airwaves and a proposal to considered this month for carriers to share bands of airwaves with the government.
But there is uncertainty about the FCC’s ability to entice broadcasters to voluntarily give up airwaves for auction. This fall the agency will roll out rules for beginning a series of technical and other regulations related to the auction. Genachowski — the greatest champion of the auctions — may not stay past the presidential election, analysts speculate.