AT&T’s merger plans got a boost from rival Verizon as CEO Lowell McAdam defended the deal and highlighted the industry’s spectrum issue.
“I have taken the position that the AT&T merger with T-Mobile was kind of like gravity,” McAdam said. “It had to occur, because you had a company with T-Mobile that had the spectrum but didn’t have the capital to build it out. AT&T needed the spectrum, they didn’t have it in order to take care of their customers, and so that match had to occur.”
McAdam also said if the government plans to stop a similar merger, they would need to counter it with another way to “get spectrum in the hands of people.” He added that secondary auctions and incentive options from the Federal Communications Commission may be best to give more spectrum to the wireless industry, measures currently on the table as part of the Obama jobs bill.
McAdam’s comments come as AT&T faces increased scrutiny regarding its pending acquisition. The carrier has been unable to reach a settlement with the Justice Department regarding its lawsuit to block the deal, and now faces what may be a lengthy and expensive trial on February 13.
Despite McAdam’s declaration that he understands the reason for a merger, Verizon remains officially neutral on the deal. Even if Verizon decides to support its rival publicly, the boost would do little to reverse the wave of obstacles currently blocking AT&T’s proposal.
The merger’s approval would leave Verizon and AT&T with a duopoly of the wireless market in the U.S., according to critics. The merging of T-Mobile with AT&T would push Verizon into second place, but it would eliminate a low-cost player in the market and may allow the two providers to set prices at high-levels.
McAdam’s comments are the first time he said anything publicly about the merger. However, it will take more than positive support from Verizon’s CEO to make AT&T’s purchase a reality.
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