Leap Wireless said Tuesday that it opposes AT&T’s $39 billion bid for T-Mobile, saying the merger would harm consumers because it would reduce competition and put too much power into the hands of just two wireless carriers.
Specifically, the company points out that about 90 percent of pre-tax earnings for the wireless industry would go to AT&T and Verizon Wireless.
That would leave smaller regional carriers such as Leap with a harder time competing against those giants in buying more spectrum for future broadband networks. It would also give them a harder shot at attracting the best partnerships with companies such as Apple for the iPhone.
The remarks come before a second congressional hearing on the merger. AT&T chief Randall Stephenson and Deutsche Telekom chief Rene Obermann are expected to testify before the House Judiciary subcommittee hearing.
San Diego-based Leap, with 6 million customers in 35 states, said it fears that the removal of T-Mobile as a stand-alone national carrier would make it more expensive to strike up roaming deals and contracts to connect to backhaul networks dominated by fixed-wire providers AT&T and Verizon.
“At the end of the day, we need to innovate and have access to capital resources to do that and if you have that much concentration in cash flow, we won’t be able to do those things,” said Doug Hutcheson, chief executive of Leap, in an interview.
AT&T’s Stephenson has argued that Leap and Metro PCS represent competition in the lower-cost wireless market. He said removing T-Mobile, also known for its lower-cost plans, would drive more business to those smaller competitors.
Hutcheson disagrees, saying the key to bringing in new customers is to continue to buy more spectrum and invest in technology. If most of the money from customers is going to AT&T and Verizon, Leap won’t be able to outbid those bigger competitors in spectrum auctions and for business partnerships.
Leap’s chief said he has been asked by the Justice Department to contribute to that agency’s antitrust review. He said Leap will also file comments and meet with FCC members to present their opposition to the merger.