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Wireless giant AT&T has friends in high places — and not just on Capitol Hill.
Several major technology companies including Microsoft, Yahoo, Oracle, Facebook and Research In Motion, which makes the BlackBerry line of devices, have thrown their weight behind AT&T’s proposed $39 billion merger with T-Mobile. So have two of the most powerful venture capital firms in the country: Kleiner Perkins Caufield & Byers and Sequoia Partners.
The tech companies and VC firms expressed their support of the deal, which is being scrutinized by the Federal Communications Commission and the Justice Department, in letters filed with the FCC late Monday, The New York Times reported.
Their support constitutes a powerful endorsement from some of the heaviest hitters in Silicon Valley, and is no doubt warmly received byAT&T public policy chief Jim Cicconi, who last week characterized support for the merger as, “perhaps the broadest, deepest range of public-interest support ever filed at the FCC in support of any transaction.”
Support for the merger is not unanimous in Silicon Valley, however. In fact, one extremely important Valley company is remaining conspicuously silent on the deal: Google. A spokesperson for the web search titan confirmed Tuesday that the company has not taken a position on the merger, but declined to comment further. Tech giant Apple, which did not return a request for comment, is also staying mum on the deal.
Critics of the merger, most notably Sprint, the number three wireless company, argue that reducing the number of nationwide mobile providers from four to three would concentrate too much market power in the hands of AT&T and Verizon, which would control 80 percent of the market. The companies could use this market power to raise prices for consumers or muscle out smaller competitors, especially regional carriers.
Allowing the merger to proceed, critics say, would result in a return to a “1980’s-style” duopoly that would stifle innovation and competition in the wireless market.
For its part, AT&T says that it needs to absorb T-Mobile in order to expand its network capacity and provide better service for its customers. The wild success of the Apple’s iPhone, which was only available on AT&T for four years until this past January, caused service issues AT&T customers are all-too-familiar with.
There is a general consensus that the proliferation of smartphones and explosion of data services will put increasing pressure on the nation’s spectrum capacity. (Wireless spectrum refers to the radio frequencies used for mobile networks, Wi-Fi, and even over-the-air television.) Some observers have suggested that any solution should include a national regulatory approach, from “incentive auctions,” (which would require Congressional approval), to re-allocating existing spectrum from over-the-air TV broadcasts.
Then there’s the issue of spectrum efficiency. Testifying before Congress last month, Sprint CEO Dan Hesse said that AT&T’s spectrum troubles were of its own making.
“If AT&T invested a fraction of the $39 billion T-Mobile purchase price in its own network, it could alleviate its alleged capacity concerns, upgrade its network and deploy advanced wireless technologies, without harming wireless competition,” Hesse said.
In their letter backing the the deal, Microsoft, Facebook, and RIM echoed AT&T’s “capacity constraints” rationale for the T-Mobile purchase. “Many policy-related efforts will not be able to quickly address near-term capacity needs,” the tech giants wrote. “The F.C.C. must seriously weigh the benefits of this merger and approve it.”
Given what’s at stake — no less than the future of the U.S. wireless market — it’s understandable that the tech giants would want to weigh in on AT&T’s bid for T-Mobile. After all, many of the firms partner with AT&T, including Microsoft which supplies its Windows mobile operating system for many of the company’s devices.
So why is Google staying silent? A spokesperson declined to comment beyond confirming that the company is taking no position now, but it’s not hard to imagine why Google would feel that staying out of this fight is in its best interest.
For one thing, thanks to its dominant search market position, Google is in the anti-trust cross-hairs on both sides of the Atlantic. If Google were to take a position on this deal — either for or against — it would naturally attract scrutiny of its own formidable market power.
For another, Google has traditionally sparred with AT&T over a variety of issues, most notably the Google Voice web-calling application. It’s highly unlikely that Google would support a deal that would strengthen a company that has been a thorn in its side over the years. On the other hand, if Google were to publicly oppose the deal, it would invite a withering response from AT&T and its allies. This is one battle, then, that Google may have decided to simply sit out.
When it comes to the AT&T/T-Mobile deal, at least, Google appears to be following an axiom often attributed to American author and philosopher Napoleon Hill: “Wise men, when in doubt whether to speak or to keep quiet, give themselves the benefit of the doubt, and remain silent.”
Microsoft et al Letter Backing AT&T-T-Mobile Deal
Image: John Abell/Wired.com
See Also:
Sprint, AT&T Trade Fire Over T-Mobile Deal as FCC Deadline Passes
Lawmakers, CEOs Tangle Over AT&T’s T-Mobile Bid, Spectrum ‘Crunch’
Market Cheers AT&T’s T-Mobile Buy, But Price, Competition Worries Remain
With AT&T/T-Mobile, Wireless Net Neutrality Should Be Back on the Table
AT&T’s Purchase of T-Mobile Will Face Opposition, Thankfully
