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PETITION TO DENY Powered By Docstoc
					                                    Before the
                        Federal Communications Commission
                              Washington, D.C. 20554


In re Applications of                       )
                                            )
DEUTSCHE TELEKOM AG, Transferor             )
                                            )
and                                         )
                                            )      WT Docket No. 11-65
AT&T, INC., Transferee                      )
                                            )
for Consent to Assign or Transfer Control   )
of Licenses and Authorizations              )

To:    The Commission




                          PETITION TO DENY
                                             
                                             



                                            RURAL TELECOMMUNICATIONS
                                            GROUP, INC.

                                            Caressa D. Bennet
                                            Michael R. Bennet
                                            Daryl A. Zakov
                                            Bennet & Bennet, PLLC
                                            4350 East West Highway, Suite 201
                                            Bethesda, MD 20814
                                            (202) 371-1500

                                            Its Attorneys

Date: May 31, 2011
                                                   TABLE OF CONTENTS

SUMMARY ..............................................................................................................................i

I.        Introduction .................................................................................................................1

II.       APPROVAL OF THE PROPOSED TRANSACTION IS CONTRARY TO
          THE PUBLIC INTEREST..........................................................................................2

          A. The Purported Public Interest Benefits Claimed by AT&T and T-Mobile
             Cannot be Substantiated........................................................................................3

          B. The Proposed Transaction Will Harm Competition.........................................13

                     a.         The Proposed Transaction Will Leave AT&T With Excessive
                                Amounts of Spectrum.........................................................................16

                     b.         The Proposed Transaction Will Remove a Major Competitor
                                While Removing Potential Spectrum Opportunities for
                                Potential New Entrants.......................................................................18

                     c.         AT&T Has Demonstrated that it Will Act in an Anticompetitive
                                Manner When it Has Dominant Market Power...............................20

          C. The Proposed Transaction Will Stifle Innovation and Investment..................26

          D. The Proposed Transaction Will Lead to Job Loss.............................................33

III.      THE HARMS RESULTING FROM THE TRANSACTION OUTWEIGH
          ANY PUBLIC INTEREST BENEFITS....................................................................36

IV.       APPLICANTS’ FAILURE TO MEET THEIR BURDEN OF
          DEMONSTRATING THAT THE PROPOSED TRANSACTION ON
          BALANCE SERVES THE PUBLIC INTEREST, AND THE EXISTENCE
          OF MATERIAL QUESTIONS OF FACT, REQUIRE THAT THE FCC
          HOLD AN EVIDENTIARY HEARING UNDER SECTION 309(e).....................37

    V.    THE PROPOSED TRANSACTION VIOLATES ANTITRUST LAW................41

          A. The Relevant Geographic Market Is National Not Local.................................45

          B. The Proposed Merger Will Further Entrench the Twin Bell Monopoly.........48

VI.       CONCLUSION...........................................................................................................55
 
                                            TABLE OF CONTENTS (Cont’d)


EXHIBIT A - Wireless industry market share pie chart from “Wireless Industry
Consolidation Webinar”........................................................................................................57

EXHIBIT B - Map depicting spectrum currently warehoused by AT&T from
“Wireless Industry Consolidation Webinar”......................................................................58

EXHIBIT C - Chart excerpted from cited article depicting winners and losers.............59

EXHIBIT D - Chart excerpted from cited article depicting dropped calls......................60

EXHIBIT E - Map depicting AT&T and T-Mobile overlapping coverage from
“Wireless Industry Consolidation Webinar”......................................................................61

EXHIBIT F - Chart showing the existing market share of the major operating
systems available today and the projected market share of those operating systems
through the year 2015............................................................................................................62

EXHIBIT G - Screenshots of AT&T, Verizon Wireless, Sprint and T-Mobile
Pricing Plans...........................................................................................................................63
                                           Summary



       AT&T, Inc. (“AT&T”), parent company of the country’s second largest mobile wireless

operator, seeks the consent of the Federal Communications Commission to acquire T-Mobile

USA, Inc. (“T-Mobile”), the country’s fourth-largest mobile wireless operator, from Deutsche

Telekom AG (“DT”). AT&T and T-Mobile (together, the “Applicants”) are the country’s only

nationwide mobile wireless operators utilizing the Global System for Mobile Communications

(“GSM”) air-interface technology. Should the deal be completed, AT&T, which today has a

staggering 97 million subscribers (or about one out of every three Americans), will balloon in

size to 130 million total subscribers. Verizon Wireless, the country’s largest mobile wireless

operator, has approximately 102 million subscribers. Together, Verizon Wireless and a post-

merger AT&T would have 233 million subscribers. The population of the United States

according to the 2010 Census is almost 309 million people. By any conservative estimation this

means that AT&T and Verizon Wireless, collectively, will control close to 80% of the mobile

wireless marketplace upon the close of the proposed transaction, and likely much more if both

companies add subscribers in the interim. Additionally, the merged entity will control excessive

amounts of spectrum throughout the entire United States.

       As a result of AT&T’s grossly enlarged market share and stranglehold of precious

spectrum, the public interest will be harmed due to the ease with which AT&T can engage in

anticompetitive behavior and exert unprecedented control over the markets for voice and data

services, as well as the markets for network equipment, mobile devices, mobile operating

systems and mobile applications. AT&T will be able to leverage its size to control upstream and

downstream channels in the provisioning of mobile wireless service which will depress

investment and stifle innovation. Based on AT&T’s past behavior, it is anticipated that AT&T’s

                                                i
anticompetitive actions will impact not only retail consumers but also other product markets in

the mobile wireless sector, including domestic and international roaming, machine-to-machine

and wholesale services. Additionally, the merger will undoubtedly lead to the loss of numerous

AT&T and T-Mobile jobs across the entire country, both in rural markets and more populated

markets. Ultimately, the presence of an AT&T and Verizon Wireless duopoly will lead to the

demise of many small and rural carriers, which in turn will lead to a loss of service in rural areas

because AT&T and Verizon Wireless historically have chosen not to serve rural areas. The

demise of these rural carriers will lead to even more lost jobs and a further loss of innovation

since rural carriers have historically been innovative in providing better service with fewer

resources. At a time when the United States is facing a 9% unemployment rate, a mega-

transaction that kills jobs, squashes innovation and lessens competition by removing consumer

choice from an already hyper-consolidated marketplace is clearly contrary to the public interest.

Accordingly, the Commission should deny the applications outright or designate them for

hearing to address whether this transaction serves the public interest and all outstanding

questions of substantial and material fact.

       This merger also violates antitrust law, is bad for consumers and competition, harms

innovation, will result in loss of jobs and cannot be salvaged by the imposition of any post-

merger conditions. The Commission must stand up to AT&T and just say “No.”




                                                 ii
                                                Before the
                                    Federal Communications Commission
                                          Washington, D.C. 20554

In re Applications of                                           )
                                                                )
DEUTSCHE TELEKOM AG, Transferor                                 )
                                                                )
and                                                             )
                                                                )       WT Docket No. 11-65
AT&T, INC., Transferee                                          )
                                                                )
for Consent to Assign or Transfer Control                       )
of Licenses and Authorizations                                  )

To:      The Commission

                                              PETITION TO DENY

         The Rural Telecommunications Group, Inc. (“RTG”), by its attorneys and pursuant to 47

C.F.R. § 1.939 and the Federal Communications Commission (“FCC” or “Commission”) Public

Notice released April 28, 20111, hereby petitions the FCC to deny the captioned applications in order

to protect rural wireless consumers against the numerous public interest harms that will result from

approval of the applications.2

I.       INTRODUCTION

         The proposed merger between AT&T and T-Mobile would be catastrophic to the health and

prosperity of the mobile wireless sector and should be denied outright. The proposed takeover

violates existing antitrust law and is contrary to the public interest. Any purported public interest

benefits proffered by the Applicants are dubious at best and based on selective, self-serving data. If

1
 In re Applications of AT&T Inc. and Deutsche Telekom AG for Consent to Transfer of Control of the Licenses and
Authorizations Held by T-Mobile USA, Inc. and its Subsidiaries, Public Notice, Pleading Cycle Established, WT Docket
No. 11-65, DA 11-799 (released April 28, 2011) (“Public Notice”).
2
  RTG is a 501(c)(6) trade association whose members consist of rural and small wireless carriers and licensees who
serve less than 100,000 subscribers. In addition to the numerous anticompetitive public interest harms that will impact
all Americans should the deal proceed, the proposed merger will specifically harm RTG’s members and its members’
subscribers. Accordingly, RTG, through its members, is a real party in interest in the above-captioned proceeding and
has standing to file the instant petition. 47 U.S.C. § 309(d)(1) and 47 C.F.R. § 1.939.

                                                            1
the proposed transaction were allowed to proceed it would result in immediate and lingering public

interest harms. A post-merger AT&T, by virtue of its staggering spectrum holdings and dominant

market position, would exert oppressive control on vendors and application developers in the mobile

wireless sector. This anticompetitive behavior would also negatively impact every American

consumer of mobile wireless services. A merger of this size would wipe out a large, established,

nationwide, retail competitor of AT&T and force all American consumers to seek mobile wireless

service in a market where AT&T and Verizon Wireless would control almost 80% of the sector3,

allowing the enlarged AT&T to raise prices and suppress mobile device development and

innovation. Finally, as with any merger of this size, an AT&T/T-Mobile combination will inevitably

lead to tens of thousands of lost jobs. The FCC should deny approval of the proposed merger.

II.     APPROVAL OF THE PROPOSED TRANSACTION IS CONTRARY TO THE
        PUBLIC INTEREST.

        The standard of review employed by the Commission to determine whether to approve

transactions such as the one proposed here by AT&T and T-Mobile is whether approval of the

transaction will serve the public interest, convenience, and necessity.4 In making this assessment,


3
 See Exhibit A (Wireless industry market share pie chart from RTG-hosted Webinar “Wireless Industry Consolidation,”
May 19, 2011, 2:00 p.m.) (“Wireless Industry Consolidation Webinar”).
4
  47 U.S.C. §§ 214(a), 310(d). See In the Matters of Applications of AT&T Inc. and Cellco Partnership d/b/a Verizon
Wireless for Consent to Assign or Transfer Control of Licenses and Authorizations and Modify a Spectrum Leasing
Arrangement, Memorandum Opinion and Order, WT Docket No. 09-104, FCC 10-116 (released June 22, 2010)
(“AT&T/Verizon Order”) at ¶ 22; Applications of Cellco Partnership d/b/a Verizon Wireless and Atlantis Holdings LLC
for Consent to Transfer Control of Licenses, Authorizations, and Spectrum Manager and De Facto Transfer Leasing
Arrangements, Memorandum Opinion and Order and Declaratory Ruling, WT Docket No. 08-95, FCC 08-258 (released
November 10, 2008) (“ALLTEL/Verizon Merger Order”) at ¶ 26; Applications of AT&T Inc. and Centennial
Communications Corp. for Consent to Transfer Control of Licenses, Authorizations, and Spectrum Leasing
Arrangements, Memorandum Opinion and Order, WT Docket No. 08-246, FCC 09-97 (released November 5, 2009)
(“AT&T/Centennial Merger Order) at ¶ 27; Applications of Cellco Partnership d/b/a Verizon Wireless and Rural
Cellular Corporation for Consent to Transfer Control of Licenses, Authorizations, and Spectrum Manager Leases, File
Nos. 0003155487, et al., WT Docket No. 07-208, Memorandum Opinion and Order and Declaratory Ruling, FCC 08-
181 (released August 1, 2008) (“Verizon/RCC Merger Order”) at ¶ 26; Applications of AT&T Inc. and Dobson
Communications Corporation for Consent to Transfer Control of Licenses and Authorizations, File Nos. 0003092368 et
al., Memorandum Opinion and Order, WT Docket No. 07-153, FCC 07-196 (released November 19, 2007)
(“AT&T/Dobson Merger Order”) at ¶ 10; Applications of AT&T Wireless Services, Inc. and Cingular Wireless
Corporation for Consent to Transfer Control of Licenses and Authorizations, File Nos. 0001656065, et al., WT Docket
No. 04-70, FCC 04-255 (released October 26, 2004) (“AT&T/Cingular Merger Order”) at ¶ 40.
                                                         2
the Commission first assesses whether the proposed transaction complies with the specific

provisions of the Communications Act of 1934, as amended, other applicable statutes and the

Commission’s rules.5 Assuming the proposed transaction does not violate any statute or rules, the

Commission next considers whether the proposed transaction “could result in public interest

harms.”6 If the Commission finds that the transaction could result both in public interest harms and

benefits, the Commission must “employ a balancing test weighing any potential interest harms of the

proposed transaction against any potential public interest benefits.”7 In all instances, it is the

Applicants who “bear the burden of proving, by a preponderance of the evidence, that the proposed

transaction, on balance, will serve the public interest.”8 As discussed below, AT&T and T-Mobile

have failed to meet their burden of proving that the proposed transaction is in the public interest, and

all record evidence clearly demonstrates that the public interest will be harmed by the proposed

transaction.

          A.     The Purported Public Interest Benefits Claimed by AT&T and T-Mobile Cannot
                 be Substantiated.

          AT&T’s Public Interest Statement9, along with seven declarations by Applicants’ executives

and hired outside consultants, is the main vehicle by which AT&T has attempted to build a case for

why the FCC should approve the proposed transaction.10 The AT&T Public Interest Statement sets


5
 See, e.g., AT&T/Verizon Order at ¶ 22; ALLTEL/Verizon Merger Order at ¶ 26; AT&T/Centennial Merger Order at ¶
27; Verizon/RCC Merger Order at ¶ 26; AT&T/Dobson Merger Order at ¶ 10; AT&T/Cingular Merger Order”) at ¶ 40.
6
    Id.
7
    Id.
8
    Id.
9
 In re Applications of AT&T Inc. and Deutsche Telekom AG for Consent to Transfer of Control of the Licenses and
Authorizations Held by T-Mobile USA, Inc. and its Subsidiaries, Description of Transaction, Public Interest Showing and
Related Demonstrations, WT Docket No. 11-65 (filed April 21, 2011) (“Public Interest Statement”).
10
  Paul Blumenthal, Massive Lobbying Operating For Telecom Merger, The Sunlight Foundation (May 11, 2011),
http://sunlightfoundation.com/blog/2011/05/11/massive-lobbying-operation-for-telecom-merger/. In the first three
months of 2011, AT&T spent $6.84 million in lobbying the federal government. This represents a 44% increase in its
                                                          3
forth four distinct “reasons” why AT&T believes the merger is in the public interest. First, AT&T

asserts that the transaction will benefit the customers of both AT&T and T-Mobile. Second, AT&T

contends that its network is at capacity and that the merger is the best means to resolve this capacity

problem. Third, AT&T suggests that absent the proposed merger, T-Mobile would remain incapable

of surviving and providing third-generation (“3G”) or fourth-generation (“4G”) services to its

customers. Finally, AT&T claims that there are no alternative solutions to the two carriers’ alleged

capacity problems. AT&T also claims that the proposed merger would not just maintain, but in fact

enhance what it sees as an “extremely competitive” mobile wireless marketplace. As demonstrated

below, the public interest reasons put forth by AT&T are overstated or nonexistent, ignore

contradictory data, and in the case of proclaiming the competitiveness of the domestic mobile

wireless marketplace, flatly contradict the findings made by the Commission in its most recent

annual report on industry competition.11

                      1. AT&T and T-Mobile Consumers Will Be Harmed by the Merger.

        While AT&T asserts that “[t]he transaction will benefit customers of both AT&T and T-

Mobile USA”, the truth is that neither customer base will benefit from such a merger. AT&T

acknowledges that T-Mobile provides “industry-leading customer care practices.”12 Meanwhile,

AT&T has been regarded historically as one of the worst providers of customer care to American




total federal lobbying expenditure for all of 2010. AT&T employs the services of 31 different lobbying firms, as well as
the services of scores of law firms.
11
  In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report
and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile
Services, Fourteenth Report, WT Docket No. 09-66 (released May 20, 2010) (“Fourteenth Report”).
12
  Public Interest Statement at p. 43; See also 2011 Wireless Customer Care Performance Study, JD Powers and
Associates (February 3, 2011), http://www.jdpower.com/telecom/ratings/wireless-customer-care-ratings-(volume-1)/.
According to JD Power and Associates, T-Mobile was the 2011 Award Recipient for best customer care service in the
industry.
                                                           4
mobile users.13 Nothing prevents AT&T from changing that perception by implementing similar or

better customer care practices within its own organization. In fact, AT&T has literally had decades

to improve its customer care department through the hiring of additional employees or additional

investment in customer care training, but instead it has consciously chosen to invest its vast

resources in acquisitions and subscriber growth. If there has been no incentive for AT&T to become

a first-class provider of customer care prior to this merger then it is equally unlikely for AT&T to

embrace quality customer care after this merger. What is most likely to result from this merger is a

reduction in the ratio of customer care representatives (“CCRs”) to subscribers, which in turn will

hurt existing T-Mobile and AT&T subscribers. As will be discussed in more detail below, mega-

mergers inevitably lead to job loss. CCRs in the merged company that are deemed redundant by

AT&T will likely be among those jettisoned. The quality of customer care in an organization

decreases when the Average Handle Time (“AHT”) needed to rectify a customer’s particular issue

increases. AHT for an organization can increase as a result of an increase in the number of

subscribers without a corresponding increase in the number of CCRs, or when the number of

customers stays the same but there is a decrease in the number of CCRs. AT&T has given no

indication that it will increase the number of CCRs post merger; it has only expressed its dogged

pursuit of more customers. If AT&T will not hire more CCRs, the merged company’s customer

count will increase without any corresponding increase in the overall number of CCRs. According

to Alcatel-Lucent, as smartphones, USB-devices and other mobile broadband devices have become

more prolific, AHT has skyrocketed.14 AT&T claims it will push nationwide Long-Term Evolution



13
  2011 Wireless Customer Care Performance Study, JD Powers and Associates (February 3, 2011),
http://www.jdpower.com/telecom/ratings/wireless-customer-care-ratings-(volume-1)/. According to JD Power and
Associates, AT&T scored last in customer care service with a rating below “about average.”
14
  Customer Care in the LTE World, Fierce Wireless (January 3, 2011),
http://www.fiercewireless.com/nextgenspotlight/pr/customer-care-lte-world. (“The average handle time (AHT) that a
help desk representative spends with consumers to solve problems, for example, has jumped from approximately 10
                                                         5
(“LTE”) to 97 percent of the U.S. but it is not making any commitments to expand its customer care

capabilities. Without such commitments, there will be an increase in AHT and a consequent

downgrade in the quality of customer care for all subscribers post-merger.

           Another way in which AT&T and T-Mobile customers will be harmed is through the

narrowing of pricing plans made available to both customer bases. AT&T proudly boasts that

“[c]ustomers who are happy with their T-Mobile USA rate plans will be able to keep them.”15 What

AT&T does not say is for how long those T-Mobile customers will be able to keep their existing rate

plans. The way AT&T has historically treated its own customers may be indicative of how it will

treat existing T-Mobile customers post-merger. For example, AT&T, in a well publicized event,

increased the price of its data plans for its own customers and removed the “all you can eat”

unlimited data plan entirely.16 The only time it even modified the “all you can eat” data pricing plan

to benefit consumers was when Verizon Wireless began to sell the Apple iPhone, and even then,

AT&T begrudgingly reintroduced unlimited data plans only to existing customers and not new

subscribers.17 During testimony to the Senate’s Antitrust, Competition Policy and Consumer Rights

subcommittee on May 11, 2011, when asked directly whether AT&T would extend T-Mobile pricing

plans to existing AT&T customers, AT&T CEO Randall Stephenson refused to offer this option.18

Between the cuts to T-Mobile’s award-winning customer care department and the apparent

unwillingness of AT&T to extend T-Mobile’s competitive pricing plans to AT&T’s existing

minutes for feature phone customers to more than 15 minutes for smart phone customers. That AHT can be as much as
30 minutes for USB modem users.”).
15
     Public Interest Statement at p. 44.
16
  Victor Godinez, AT&T Ending Unlimited Data Plans for Smart Phones, The Dallas Morning News (June 3, 2010)
http://www.dallasnews.com/business/headlines/20100603-ATandT-ending-unlimited-data-plans-for-5330.ece.
17
  Joe Aimonetti, AT&T Allowing Unlimited iPhone Data Plans for Some, CNet Online (January 26, 2011)
http://reviews.cnet.com/8301-19512_7-20029689-233.html.
18
  “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?,” Testimony of AT&T Inc. CEO
Randall Stephenson, Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights (May 11, 2011).

                                                        6
customer base, it is readily apparent that T-Mobile customers will see a decrease in the quality of

customer care and AT&T customers, all of whom have inferior customer care services, will see a

similar decrease in quality as a result of the expected decrease in ratio of CCRs to customers and

lack of access to T-Mobile’s variable pricing plans.

                          2. AT&T’s Capacity Problems Are Overstated.

            According to AT&T, the biggest reason it needs to acquire T-Mobile is because it “faces

network spectrum and capacity constraints more severe than those of any other wireless provider.”19

This rationale is completely false. First, AT&T provides no information on the capacity needs of

every other mobile wireless provider, and therefore has no basis for its contention that its alleged

capacity constraints are “more severe” than other providers. Second, AT&T holds an inordinate

amount of spectrum across virtually all markets in the United States, but especially in urban markets;

it is simply using that spectrum in an inefficient manner. In the five largest20 metropolitan markets

of the United States based on the 2010 Census, AT&T today has anywhere between 83 and 101

megahertz (MHz) of spectrum within the four major bands associated with mobile wireless services:

Cellular, Personal Communications Services (PCS), Advanced Wireless Services (AWS), and 700

MHz. Yet despite this enormous stockpile of frequencies at its disposal21, AT&T has deliberately

chosen not to launch 4G or other services on its 700 MHz Band spectrum.22 AT&T states that the

reason it is capacity constrained is because it “must support three generations of technology” 23 and


19
     Public Interest Statement at p. 1.
20
 The five largest wireless markets today, based on population, are New York, Los Angeles, Chicago, Philadelphia and
Houston.
21
 See Exhibit B (Map depicting spectrum currently warehoused by AT&T from Wireless Industry Consolidation
Webinar).
22
  AT&T Declares Spontaneous ‘4G’ Transformation, Daily Wireless (May 5, 2011),
http://www.dailywireless.org/2011/05/05/att-declares-4g-magic-transformation/.
23
     Public Interest Statement at p. 22.

                                                         7
that in order to make the move to LTE it needs “to have clear blocks of spectrum.”24 This claim is

absurd. Why should AT&T’s decision to use its vast spectrum holdings in an inefficient manner be

rewarded by allowing it to take over a viable competitor? AT&T, if it so chooses, can “leapfrog”

from prior generations to 4G as it notes other licensees are doing25 by delaying deployment of a

next-generation technology like 4G until it is able to support all of its customers at second-

generation (“2G”) or 3G without the fear of capacity constraints. In stark contrast to AT&T,

Verizon Wireless has not only been able to launch and support 2G, 3G and now 4G services in the

twenty-one largest U.S. markets with less spectrum26 and more customers27 to support than AT&T, it

asserts that it is not experiencing any capacity problems.28

           RTG notes that AT&T’s professed concern about the lack of spectrum available to support

mobile broadband applications is belied by its ongoing lobbying efforts to prevent new spectrum

from getting released for auction contradicts this position. AT&T is actively trying to block the
24
  “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?,” Testimony of AT&T Inc. CEO
Randall Stephenson, Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights (May 11, 2011)
(When prompted by Senator Mike Lee of Utah whether this meant “unused spectrum,” Mr. Stephenson responded
affirmatively “Unused spectrum. Nothing can be in this spectrum. It has to be clear unadulterated spectrum to make
these moves.”).
25
     Public Interest Statement at p. 51.
26
  Marguerite Reardon, Is AT&T a Wireless Spectrum Hog?, CNET News (April 29, 2011) http://news.cnet.com/8301-
30686_3-20058494-266.html. (“In the top 21 markets in the U.S., AT&T has about 284 MHz more spectrum than its
closest competitor, Verizon Wireless, according to data provided by Verizon Wireless. In San Francisco, where it’s been
well-publicized that AT&T has struggled to keep up with mobile data demand for its smartphones, particularly the
iPhone, AT&T has about 30 MHz more 3G spectrum than Verizon Wireless.”).
27
  Rob Jackson, Verizon: We’re Still Bigger Than AT&T, Me: I Agree, Phandroid (January 28, 2011),
http://phandroid.com/2011/01/28/verizon-were-still-bigger-than-att-me-i-agree/. See also Sue Marek, AT&T is Now
Bigger Than Verizon? Think Again, FierceWireless (January 28, 2011), http://www.fiercewireless.com/story/att-now-
bigger-verizon-think-again/2011-01-28.
28
  Spencer E. Ante and Yukari Iwatani Kane, Verizon Wireless Confident It’s Got Muscle for iPhone, Wall Street Journal
(January 10, 2011) http://online.wsj.com/article/SB10001424052748703667904576072110862862244.html. (“Whether
they are iPhones or Droids, they are smartphones. Regardless of the mix, we are prepared to carry more data.”)
(Comments by Ivan G. Seidenberg, CEO Verizon Communications, Inc.). See also Presentation by Verizon Wireless at
Raymond James Institutional Investors Conference (March 9, 2011), http://www22.verizon.com/investor/investor-
consump/groups/events/documents/investorrelation/event_1045_trans.pdf . (“We feel we’re in a tremendously strong
spectrum position. [A]s traffic migrates from 3G to 4G we can reform that spectrum and again use it for continued
growth with 4G. So we feel like we’re very well-positioned there.”) (Comments by Tony Melone, EVP, CTO Verizon
Communications, Inc.).

                                                          8
reauction of the Upper 700 MHz Band D Block license which is currently sitting fallow and could be

used to support 4G/LTE on a nationwide basis for both the general public and public safety entities.

AT&T actively supports initiatives and organizations that seek the reallocation, and not the re-

auction, of the Upper D Block so that it cannot be used by other commercial operators and direct

competitors of AT&T.29 Indeed, AT&T’s concern in having the spectrum reallocated rather than

auctioned is the fact that its spectrum holdings are so great in the 700 MHz Band that it fears being

ineligible to participate in an auction if the spectrum went to auction.

                         3. T-Mobile’s Mobile Broadband Offerings Are Competitive Today.

           AT&T wishes to present itself as a white knight coming to the aid of a suffering T-Mobile.

To that extent, it asserts that “[a]bsent this transaction, T-Mobile USA would confront capacity

constraints and lack a clear path to LTE.”30 This assertion is both unfounded and misleading. First,

AT&T makes the unfounded assumption that without T-Mobile supporting LTE today or even in the

next few years, it will be unable to survive. Given T-Mobile’s recent technology upgrades it has no

need to support LTE in order to effectively compete with the largest nationwide carriers. Earlier this

year, T-Mobile launched a 4G smartphone “capable of delivering theoretical peak download speeds

of up to 21 Mbps (megabits per second).”31 This launch coincided with T-Mobile’s announcement

that it will launch High Speed Packet Access (“HSPA”) + 42, a 4G technology capable of providing

theoretical peak speeds of 42 Mbps.32 This migration will double the throughput speeds provided by

the current HSPA+ 21 networks and reach approximately 140 million people by the end of the


29
     See http://www.psafirst.org/supporters.
30
     Public Interest Statement at p. 30.
31
  T-Mobile Press Release, T-Mobile to Deliver Fastest Smartphone Running on America’s Largest 4G Network,
(January 20, 2011), http://newsroom.t-mobile.com/articles/T-Mobile-Delivers-Fastest-Smartphone-Galaxy-S-4G.
32
  Mike Dano, T-Mobile: We’ll Match Verizon’s LTE Speeds With HSPA+ 42, FierceWireless (January 6, 2011),
http://www.fiercewireless.com/ceslive/story/t-mobile-well-match-verizons-lte-speeds-hspa-42/2011-01-06.

                                                        9
calendar year. Additionally, independent testing conducted by PC World at 260 locations in 13

cities across the nation in March 2011 revealed that on average “T-Mobile had the speediest results

for smartphones” when compared to AT&T, Verizon Wireless and Sprint.33 These unbiased results

refute AT&T’s notion that somehow T-Mobile needs LTE to attract customers and out-perform

competitors like Sprint, Verizon Wireless and even AT&T. Furthermore, unlike AT&T, which is

threatening to “squeeze[] its GSM spectrum allocation and compromise[] GSM service quality”34 if

it does not obtain approval of the proposed transaction, T-Mobile is not sacrificing its GSM voice

quality to maintain stellar data speeds. In fact, AT&T subscribers experience twice as many dropped

calls as T-Mobile subscribers.35

           AT&T’s suggestion that T-Mobile is facing capacity issues today is misleading and has not

been voiced by T-Mobile’s executives. In fact, at numerous times in the last six months, T-Mobile

has publicly commented on its strong capacity position. T-Mobile CEO Philipp Humm noted “[w]e

have a lot of capacity available to us which we can leverage to make additional revenues.”36

Similarly, DT CEO Rene Obermann commented that T-Mobile owns “54 megahertz of spectrum in

[its] major markets which for the next few years put [sic] us into a position which is actually better

than most of our competitors” and that T-Mobile enjoys “a sufficient spectrum position medium-




33
  Mark Sullivan, AT&T, Sprint, T-Mobile and Verizon: PCWorld’s Exclusive Performance Tests Reveal Which 4G
Network Delivers the Fastest Data Speeds, PC World Online (March 13, 2011),
http://www.pcworld.com/article/221931/4g_wireless_speed_tests_which_is_really_the_fastest.html); See also Exhibit C
infra. (Chart excerpted from cited article depicting winners and losers).
34
     Public Interest Statement at p. 23.
35
  Karl Bode, Verizon iPhone Users See Fewer Dropped Calls, Changewave: AT&T Still has the Worst Dropped Call
Ranking, DSL Reports Online (April 6, 2011), http://www.dslreports.com/shownews/Verizon-iPhone-Users-See-Fewer-
Dropped-Calls-113581; See Exhibit D infra. (Chart excerpted from cited article depicting dropped calls).
36
 Presentation by Philipp Humm at T-Mobile USA, Inc. Annual Investor Day, (January 20, 2011), https://www.t-
mobile.net/dtag/cms/contentblob/dt/en/979218/blobBinary/transcript_20012011.pdf at p. 25.

                                                        10
term.37 He went on to add that because approximately 50% of T-Mobile’s 49,000 cell sites were

connected with fiber backhaul, “performance is truly outstanding.”38 These remarks, taken

collectively, do not sound like a mobile wireless company that is currently struggling with capacity

problems or even worried about capacity problems in the near future. T-Mobile is not capacity

constrained and its network is just as fast as its competitors, including AT&T. The suggestion that

AT&T is buying T-Mobile to “rescue” its smaller competitor from capacity problems and a future-

limited network is absurd and should be dismissed out of hand.

                         4. AT&T Has Alternative Methods of Addressing its Alleged Capacity
                            Constraints.

            AT&T spends a considerable portion of its Public Interest Statement attempting to convince

the Commission that it has thoroughly explored – and dismissed – strategic alternatives to fixing its

alleged capacity constraints that do not involve acquiring T-Mobile and putting the fourth largest

nationwide carrier out of business.39 In addition to considerably less expensive alternatives such as

adding more cell sites or deploying distributed antennas systems and Wi-Fi in core, urban areas,

there is an additional way for AT&T to reduce capacity problems today and in the future, and this

solution can be implemented immediately.

            To the extent that AT&T believes that “in many urban, suburban, and rural markets, AT&T

faces a growing capacity crunch”40 it can quickly enter into reciprocal 3G and 4G data roaming

agreements with T-Mobile and dozens of rural mobile operators, including RTG members, who are

more than willing to enter into 3G and 4G data roaming agreements. For competitive reasons, if


37
 Presentation by Rene Obermann atT-Mobile USA, Inc. Annual Investor Day, (January 20, 2011), https://www.t-
mobile.net/dtag/cms/contentblob/dt/en/979218/blobBinary/transcript_20012011.pdf at p. 2.
38
     Id. at p. 2.
39
     See generally Public Interest Statement at pp. 45-51.
40
     Public Interest Statement at p. 28.

                                                             11
AT&T is serious about fast-tracking a nationwide commercial launch of LTE services (while

focusing its own network and under-utilized spectrum inventory on 2G and 3G services) it can enter

into bilateral roaming arrangements with T-Mobile and other capable and interested rural roaming

partners across the country, in markets both large and small. From an LTE perspective, AT&T has

already identified some of these existing and prospective LTE carriers in its application, including

Verizon Wireless, MetroPCS, Clearwire, Cellular South and Lightsquared. A multi-faceted and

collaborative roaming or network-sharing arrangement with various LTE providers would not only

diminish capacity issues with respect to AT&T’s network, it would also be a much quicker means of

getting 4G/LTE services into both rural and urban markets by providing carriers with the means to

accelerate further build-out of their networks. It is a rising tide that will lift all ships – consumers

who want more choice, Public Safety authorities who need a nationwide network, and small carriers

who need outbound roaming on larger nationwide carriers. Yet another public interest benefit of this

collaborative solution is that it can easily effectuate President Obama’s goal of delivering high speed

wireless broadband, such as LTE, to 98% of the U.S. population in a short amount of time.41 AT&T

claims that its own LTE plans originally called for deployment to 80% of Americans, but that with

the proposed merger, it could find the resources to increase that figure to 97%.42 Through roaming

and collaborative network-sharing arrangements, the President’s goal of near-ubiquitous LTE can be

accomplished on the backs of multiple carriers, not just AT&T, and in a shorter timeframe with few

capital outlays.

           The cost to AT&T of entering into such a roaming or network-sharing solution would be

negligible compared to embarking on a nationwide LTE build-out or a $39 billion corporate


41
  White House Press Release, President Obama Details Plan to Win the Future through Expanded Wireless Access,
(February 10, 2011), http://www.whitehouse.gov/the-press-office/2011/02/10/president-obama-details-plan-win-future-
through-expanded-wireless-access.
42
     Public Interest Statement at p. 19.

                                                        12
takeover. This is true for two reasons. First, a long line of small, rural and regional carriers would

want reciprocally low voice and data roaming rates. Therefore AT&T will, on balance, increase

roaming revenues, and that extra source of income to AT&T could go towards additional cell sites,

DAS and Wi-Fi deployments, or spectrum auction purchases. Second, in the unlikely event that a

roaming partner wanted to force non-commercially reasonable roaming rates upon AT&T or just

stonewall negotiations, AT&T would file a complaint with the FCC in accordance with the

Commission’s recent Data Roaming Order.43 As the roaming docket reflects, our country’s mobile

wireless carriers are hungry for bilateral, low-cost data roaming agreements. Accordingly, AT&T

could launch truly nationwide LTE service much more quickly and with less capital by relying on

roaming and network-sharing than it can by spending tens of billions of dollars purchasing T-

Mobile.

           B.          The Proposed Transaction Will Harm Competition.

           In 1993, Congress established the promotion of competition as a fundament goal for

Commercial Mobile Radio Services (“CMRS”) policy formation and regulation.44 As part of this

initiative, Congress required the FCC to submit annual reports that analyze competitive conditions in

the industry.45 It was also at this time that true competition began to be introduced into every market

of the country when PCS spectrum became available and auctions were held to award the PCS

licenses. By 1995, PCS carriers began to offer service with their newly acquired licenses, a

paradigm shift that ended the long-time duopoly held by only two cellular carriers. Former FCC

Chairman William E. Kennard in his statement accompanying the Third Report released in 1998

43
  In the Matter Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other
Providers of Mobile Data Services, Second Report and Order, WT Docket No. 05-265, FCC 11-52 (released April 11,
2011) (“Data Roaming Order”).
44
 The Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, Title VI, § 6002(b), amending the
Communications Act of 1934 (“Communications Act”) and codified at 47 U.S.C. § 332(c)(1)(C) (“1993 Budget Act”).
45
     § 332(c)(1)(C).

                                                       13
remarked that “[t]hanks to our wireless auctions, duopoly in wireless telephony in now a thing of the

past in many markets, and some markets have five or more operating providers.”46 Just one year

later, in 1999, the Commission found that “there are a minimum of five operators providing some

service in each of the 35 largest BTAs (“Basic Trading Areas”).”47 By 2002, numerous major

markets such as Chicago, Tampa, Phoenix, Atlanta, Seattle and Minneapolis were hosts to no less

than seven mobile wireless competitors.48 Only one decade later we find that if AT&T were to buy

T-Mobile and remove it as a market player, it would reduce the number of facilities-based, licensed

competitors in 15 of the top 25 Cellular Market Areas (“CMAs”) to a total of only four.49 In two

additional top 25 markets, Seattle and Minneapolis, that number will be reduced to only three.50

           While some urban and suburban markets will dwindle down to just three service providers

should this deal get approved, it is the rural consumers who stand to lose the most in a post-merger

marketplace. The unimpressive truth is that the addition of T-Mobile’s network to AT&T’s existing

footprint only increases the geographic size of AT&T’s network by a mere one percent.51 In contrast

to the negligible benefits derived from such minimal geographic expansion of the AT&T network,


46
   In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report
and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Separate Statement by
Chairman William E. Kennard, Third Annual Commercial Mobile Radio Services Competition Report, FCC 98-91
(released June 11, 1998) (“Third Report”).
47
  In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report
and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Fourth Report, FCC 99-
136 (released June 24, 1999) (“Fourth Report”) at p. 63.
48
  In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report
and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Seventh Report, FCC 02-
179 (released July 3, 2002) (“Seventh Report”) at p. 8.
49
     Public Interest Statement – Appendix C at p. 1.
50
     Public Interest Statement – Appendix C at p. 1.
51
  See Exhibit E (map depicting AT&T and T-Mobile overlapping coverage from Wireless Industry Consolidation
Webinar). The size increase of one percent is calculated by measuring the total square miles of network coverage
provided by T-Mobile that is not already covered by AT&T and dividing it by the total square miles of network coverage
provided by AT&T. The total square miles of network coverage provided by AT&T and T-Mobile are generated by
publicly available maps using industry-standard coverage plot software.

                                                         14
approximately 1.2 million Americans, concentrated primarily in the states of Utah, Nevada, Oregon

and Arizona, will see their service provider choices decrease from just these two providers (only

AT&T and T-Mobile today) to just one provider (AT&T only) if this deal is consummated.52

AT&T’s pending monopoly position in these predominantly rural markets is clearly not in the public

interest.

        The great strides made in promoting competition since 1993 are now being reversed due to

unbridled consolidation. It is unfathomable to think that a customer in the shadow of Seattle’s Space

Needle back in 1999 would have had twice as many wireless choices as the same consumer today

were this transaction to proceed, but unfortunately, that is the sad reality. Approval of this

transaction removes T-Mobile as a viable, “maverick” alternative to consumers and that in turn

harms competition.

        The loss of T-Mobile as a market player is not the only way in which competition is harmed.

Without the introduction of new spectrum by the FCC into the marketplace, and with other

competitors unable to access the vacated T-Mobile spectrum, all other competitors will be further

disadvantaged in their efforts to compete effectively against the enlarged AT&T. Additionally,

based on its history of engaging in anticompetitive practices such as entering into exclusivity

agreements with device manufacturers and frustrating device interoperability in the 700 MHz Band,

AT&T is likely to again assert its market power in an effort to frustrate competition. The mobile

wireless sector needs more competition, not less to prevent such public interest harms.




52
  Paul Salasznyk and Juan Marin, Mergers and Acquisitions: AT&T and T-Mobile, (March 24, 2011),
http://www.coolmapsandstats.com/2011/03/24/mergers-and-acquisitions-att-and-t-mobile/.

                                                      15
                         1. The Proposed Transaction Will Concentrate Too Much Spectrum in the Hands
                            of AT&T, Increasing its Market Power to the Point That it Gives AT&T the
                            Incentive to Engage in Anticompetitive Behavior.

           Unchecked market consolidation alone can spark an anticompetitive environment in any

business sector because it can allow the largest player or players to exert control over vertical

channels of productions in that specific industry, which in turn harms smaller players and ultimately

consumers. In the mobile wireless sector, consolidation amplifies the potential for anticompetitive

behavior by large players because all market players need a common resource – spectrum – to even

compete in the first place, and that resource is finite. As discussed above, AT&T’s rationale for why

it needs more spectrum and why T-Mobile has had difficulties operating as a stand-alone competitor

is unconvincing. The sheer amount of spectrum AT&T stands to own in each market, post-merger,

will exceed that held by all of its competitors. This proposed takeover not only eliminates a large

market player that stimulates competition, T-Mobile, but it also prevents T-Mobile’s healthy

spectrum holdings from being used by existing or new market entrants to offer similar mobile

broadband services. AT&T would like the Commission to believe that “the combined network will

far exceed the sum of its parts (i.e., 1 + 1 = 3).”53 The truth is that allowing this merger to proceed

under any terms will perpetuate AT&T’s track record of anticompetitive behavior and diminish

marketplace competition (i.e., 1 + 1 = -1). When AT&T’s massive spectrum holdings are combined

with its well-publicized history of engaging in anticompetitive behavior with respect to device

exclusivity and interoperability, there is ample evidence that consumers will be harmed.

                                   a. The Proposed Transaction Will Leave AT&T With Excessive
                                      Amounts of Spectrum.

           The only way to truly comprehend just how much spectrum AT&T will control in a post-

acquisition marketplace is to take notice of AT&T’s average “depth” of spectrum at a national level


53
     Public Interest Statement at p. 34.

                                                      16
and then the geographic breadth of those markets where AT&T will control a disproportionate

amount. AT&T’s vast holdings of “beachfront” Cellular licenses and 700 MHz Band licenses54

cover both urban and rural CMAs impacting the entire U.S. market. Even without T-Mobile, AT&T

currently owns one quarter of the 700 MHz Band spectrum, over forty-two percent of the Cellular

band spectrum, and one-quarter of the PCS band spectrum.55 By adding T-Mobile’s spectrum to its

portfolio, AT&T will stand to control 45% of the PCS band and over one-third of the AWS band.56

No part of the country is immune from the inevitable anticompetitive harms resulting from the

growth of such a large market player.

           In over 120 counties in 17 different states, AT&T stands to control over half of the available

spectrum in the marketplace if the proposed transaction is approved. Moreover, AT&T will exceed

the FCC’s spectrum screen -- which is used to identify markets which pose an excessive risk of harm

to competition – in a vast number of markets.57 In addition, in 153 CMAs where AT&T exceeds the



54
   Prior to the filing of these applications, AT&T filed applications to purchase nationwide 700 MHz Band licenses in
the Lower D and Lower E Blocks from Qualcomm Corporation. See generally, In the Matter of AT&T Mobility
Spectrum, LLC and Qualcomm Incorporated Seek FCC Consent to the Assignment of Lower 700 MHz Band Licenses,
FCC Public Notice Pleading Cycle Established, WT Docket No. 11-18, DA 11-252 (released February 9, 2011). As if
two pending large-scale transactions were not enough, AT&T has filed applications with the Commission to purchase 17
Lower B and Lower C Block 700 MHz Band licenses in Wisconsin and Minnesota. See generally, Shareholders of
Redwood 700, Inc. and AT&T Inc. Seek FCC Consent to the Transfer of Control of Lower 700 MHz Band B and C Block
Licenses Held By Redwood Wireless Corp., Public Notice, ULS File No. 0004643747, DA 11-943 (released May 24,
2011).
55
     Fourteenth Report at Table 25.

56
     Id.
57
   In light of the fact that both AT&T and T-Mobile control spectrum nationwide, compete directly against each other,
and advertise throughout the United States, the Commission should review the applications at the national level, which is
the appropriate geographic market definition. In fact, not even one year ago, when the Commission approved AT&T’s
purchase of divested ALLTEL and Verizon Wireless assets and customers, it noted that AT&T argued “that the market
for mobile telephony/broadband services is national in scope and that…national and regional wireless providers offer
nationwide rate plans and set prices on a national basis.” See AT&T/Verizon Order at ¶ 37. As discussed in greater detail
in Section V.A infra, this transaction must be analyzed at the national level. However, should the Commission choose to
review the transaction on a market-by-market basis, the huge number of markets that will exceed the spectrum screen
strongly suggests that the proposed acquisition is contrary to the public interest. When applying the same spectrum
screen used just last year by the Commission in the AT&T/Verizon Order, AT&T will exceed the screen in over 600
counties in 36 different states, including the District of Columbia and Puerto Rico. Although AT&T and T-Mobile may
dispute RTG’s calculation of the spectrum screen, which is based on the exclusion of some BRS/EBS spectrum and all
                                                           17
spectrum screen, the number of competitors remaining post-merger will be four, and in 35 CMAs

where it exceeds the spectrum screen there will only be three competitors remaining post-merger.

           AT&T recognizes that its actual competitors are not those companies who merely own

spectrum but rather those companies that also have operational, facilities-based services available to

consumers today.58 The real litmus test for deciding who is a competitor today is identifying those

with active operations who are actually competing for customers on a day-in and day-out basis,

whether locally or nationally. When viewed in this more realistic context, and combined with the

fact that Verizon Wireless also controls large amounts of spectrum in the beachfront Cellular and

700 MHz Bands, the amount of spectrum held by AT&T is in itself indicative of a high risk of

competitive harm because AT&T will control a limited resource that is necessary to both compete in

and enter the market.

                                  b. The Proposed Transaction Will Remove a Major Competitor
                                     While Removing Potential Spectrum Opportunities for Potential
                                     New Entrants.

           The proposed sale of T-Mobile to AT&T would impair competition in two significant

respects. As discussed above, if approved, it will place a tremendous amount of spectrum (and

marketplace power) in the hands of a company already controlling one-third of the nation’s

subscribers and with a history of anticompetitive behavior. Furthermore, it will prevent all of the

other small, rural and regional operators and potential new market entrants from acquiring the scarce

spectrum in T-Mobile’s possession. RTG agrees with FCC Chairman Julius Genachowski and the

rest of the Commission that more spectrum is needed for the mobile wireless industry to remain




MSS/ATC spectrum, even the outdated spectrum screen used in the AT&T/Verizon Order would be exceeded in a large
number of markets.
58
     Public Interest Statement – Appendix C at p. 1.

                                                       18
competitive. Unfortunately, since the release of the National Broadband Plan59 (one goal of which

was repurposing at least 500 megahertz of airwaves) not a single megahertz anywhere in the country

has been repurposed and auctioned off to the public to address the “looming spectrum crunch” that

the nation currently faces.”60 To the extent that AT&T needs more spectrum to offer more enhanced

mobile broadband services, so does every other mobile wireless carrier in the nation.

             AT&T suggests that “the wireless marketplace will be more competitive because of the

transaction”61 and that “other competitors can quickly replace the diminished market role T-Mobile

USA plays today.”62 The facts do not support this assertion. T-Mobile is the country’s fourth-

largest mobile wireless carrier, the smallest of the “nationwide” providers, and it has approximately

34 million customers. It took 17 years and numerous acquisitions for T-Mobile to achieve this

subscriber count and national geographic reach. The next eight largest mobile carriers after T-

Mobile, by size, have a combined subscriber count that is not even two-thirds the size of T-Mobile.63

Furthermore, neither their combined geographic coverage today nor their spectrum portfolio matches

what T-Mobile has today. For AT&T to claim that any of these competitors, whether individually or

collectively, could “quickly replace” T-Mobile is laughable. Indeed, if AT&T believes it cannot

itself compete effectively without additional spectrum, it surely cannot expect competitors with far

less spectrum than AT&T to be able to do so.

59
  In the Matter of Joint Statement on Broadband, GN Docket No. 10-66, Connecting America: The National Broadband
Plan (released March 16, 2010) (“National Broadband Plan”) at p. 3.
60
  Prepared Remarks of Chairman Julius Genachowski, Federal Communications Commission, at the Minority Media &
Telecom Council Broadband and Social Justice Summit, Washington, DC (January 20, 2011) at p. 3.
61
     Public Interest Statement at p. 9.
62
     Public Interest Statement at p. 13.
63
 See http://www.dailywireless.org/2011/02/28/top-ten-us-carriers/ and http://www.nqlogic.com/2011/03/at-acquires-t-
mobile-usa.html (summarizing several publicly-available Q4 2010 subscriber statistics and industry analyst reports).
The next eight largest facilities-based mobile wireless carriers, based on size, are MetroPCS, Leap Wireless (Cricket),
US Cellular, Clearwire, Cellular South, Atlantic Tele-Network (Allied Wireless), Cincinnati Bell Wireless, and NTelos.
These eight carriers’ current customer counts range from 8.155 million to 432,000.

                                                          19
       Before the Commission even considers permitting hyper-consolidation, the removal of a

market player with tens of millions of customers and the return of a duopoly, it should wait until

more spectrum can become available through auctions for both existing and new carriers. Today’s

mobile wireless marketplace closely resembles the state of the industry at the dawn of the PCS era in

the mid-1990s, only it is moving in reverse and not forward. Instead of new companies and new

markets launching on an almost weekly basis, we are witnessing the elimination of more companies

and a concentration of resources, and customers, into the hands of AT&T and Verizon Wireless, who

just happen to be the legacy “baby bell” cellular operators (a.k.a. “the Twin Bells”). The ever-

increasing value of spectrum, both in auction and in the secondary market, attests to the fact that

demand exceeds supply and that all market participants, including small, rural and regional players,

are thirsty for more spectrum.   Accordingly, no merger should be approved under any circumstance

unless and until a sufficient amount of spectrum becomes available to the public via repurposing and

auction.

                          c. AT&T Has Demonstrated that it Will Act in an Anticompetitive
                             Manner When it Has Dominant Market Power.

       Historically, AT&T has used its market domination in an anticompetitive manner by entering

into device exclusivity agreements with vendors and denying data roaming agreements to requesting

parties. AT&T continues to engage in (and has shown no interest in stopping) a practice of entering

into device exclusivity agreements with the manufacturers of mobile devices and smartphones. The

most egregious example of this anticompetitive behavior is the exclusive access it secured in 2007 to

sell the various versions of the Apple iPhone. AT&T, with its overwhelmingly large market share,

has used its dominance to continually engage in these anticompetitive agreements to the direct




                                                  20
financial harm of T-Mobile64 and RTG’s members.65 All indications point to AT&T continuing this

particular anticompetitive practice even after further industry consolidation.

        While handset exclusivity agreements have for years been a crippling anticompetitive tool of

AT&T, their negative impact on competitors is overshadowed by the even more devastating

anticompetitive repercussions of AT&T’s long-running policy to deny data roaming agreements to

its competitors. Before the Commission adopted its Data Roaming Order earlier this year, T-

Mobile, RTG and every other GSM carrier tried mightily to get AT&T to enter into 3G data roaming

agreements. For example, in response to a Commission request for clarification on the status of T-

Mobile’s various 3G data roaming agreements, T-Mobile informed the Commission that “although

T-Mobile has sought a roaming agreement with AT&T for 3G and better service, we have not been

able to achieve such an agreement.”66 In fact, a mere ten days prior to the announcement of the

proposed merger, T-Mobile stated that “AT&T’s intransigence, a direct result of the dominant

position it now holds in the roaming marketplace, has made it impossible for us to negotiate

reasonable and non-discriminatory roaming arrangements.”67 T-Mobile went on to add that

“[w]ithout the availability of roaming arrangements in these areas, T-Mobile would be unable to

64
  Earlier this year, T-Mobile CEO Philipp Humm noted that up to ten percent of T-Mobile’s churn is attributed directly
to the fact that customers switch to AT&T because of its exclusive offering of the iPhone. Quite simply, if T-Mobile had
been able to sell 3G and 4G iPhones to its customers since 2007 - on a network which has been proven to provide faster
downloads and with cheaper pricing plans for its customers - there is no telling how well T-Mobile could have
performed in comparison to AT&T and its other competitors. Presentation by Philipp Humm at T-Mobile USA, Inc.
Annual Investor Day, (January 20, 2011), https://www.t-
mobile.net/dtag/cms/contentblob/dt/en/979218/blobBinary/transcript_20012011.pdf.
65
  In the Matter of Petition for Rulemaking Regarding Exclusivity Arrangements Between Commercial Wireless Carriers
and Handset Manufacturers, Public Notice, DA 08-2278, RM-11497 (released October 10, 2008). In 2008, small and
rural carriers filed a petition for rulemaking with the FCC that would preclude exclusivity agreements between mobile
wireless carriers and device vendors, but this petition remains pending.
66
  In the Matter Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other
Providers of Mobile Data Services, Ex Parte of T-Mobile USA, Inc., WT Docket No. 05-265 (filed February 9, 2011) at
p 2.
67
   In the Matter Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other
Providers of Mobile Data Services, Ex Parte of T-Mobile USA, Inc., WT Docket No. 05-265 (filed March 10, 2011) at p.
5.

                                                          21
ensure that its customers have seamless service when they travel.”68 T-Mobile was not alone in

facing harm from AT&T’s refusal to enter into data roaming agreements. Many smaller providers,

including RTG members, were routinely denied the ability to negotiate, execute and launch 3G data

roaming services with AT&T to the detriment of those companies and, more importantly, their

customers.69 One major public interest harm that resulted from AT&T (and Verizon Wireless) being

unwilling to enter into data roaming agreements was the “chilling” effect it put on broadband

investment. RTG and other associations recognized this specific threat to rural communities while

MetroPCS and Cellular South each revealed just how difficult it was to gain financing for LTE

deployment from lenders when nationwide data coverage was not guaranteed.70 The inability of T-

Mobile, RTG members and other GSM carriers to offer nationwide data services has put them in an

inferior position with respect to a crucial criterion that American consumers use to evaluate the

various mobile wireless carriers – the existence of a true nationwide footprint with data services that

are as good off-network as they are on-network. By denying carriers data roaming agreements,

AT&T denied them the financing and the confidence to begin deploying LTE, which in turn has

delayed the launch of new services by LTE facilities-based competitors. The harm that stems from

AT&T’s past practices of anticompetitive behavior is truly industry-wide and well-documented.

            Although the FCC recently adopted rules allowing all carriers the ability to enter into 3G data

roaming agreements at commercially reasonable rates, this provides no guarantee that any mobile

wireless carrier besides AT&T and Verizon Wireless can compete in the future. Unlike in the past,

where intra-band, mobile device interoperability was a foregone conclusion, AT&T has aggressively


68
     Id. at p. 4.
69
  In the Matter Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other
Providers of Mobile Data Services, Ex Partes of Rural Telecommunications Group, Inc., WT Docket No. 05-265 (filed
November 3, 2010 and March 31, 2011).
70
     Data Roaming Order at ¶ 17.

                                                        22
pursued a policy that prevents small, rural and regional operators, and even T-Mobile, from being

able to access devices that permit interoperability within the 700 MHz Band.71 Specifically, AT&T

has spent years advocating for and adopting a self-serving band classification that excludes LTE

device interoperability on the A-Block of the Lower 700 MHz Band. This is a huge problem and

further evidence of AT&T’s adherence to anticompetitive tactics because an LTE data roaming

agreement at commercially reasonable prices is not worth the paper it is written on if mobile device

vendors are unwilling to create devices and smartphones that incorporate two separate “band

classes” on the chipset – one that allows for use on the Lower 700 MHz Band A-Block and one that

works successfully on licenses within the Lower 700 MHz B-Block and C-Block, of which AT&T

owns many.72

           The simple truth is that mobile device vendors need a “critical mass” to develop and

manufacture custom-made devices. As discussed in more detail below, AT&T, with its 97 million

subscribers, can easily convince vendors to create devices and smartphones that will not work on any

network except its own. It is almost impossible for small, rural and regional providers to get vendors

to do the same. Device interoperability across an entire band is currently and has always been the

industry norm for Cellular, PCS and AWS capable devices. What AT&T is trying to accomplish is

completely contrary to intra-band interoperability. Furthermore, the National Broadband Plan

recommended that the Commission “explore other ways to encourage the deployment of public

safety devices that transmit across the entire broadband portion of the 700 MHz band (i.e., Band 12,

Band 13, Band 14 and Band 17).”73 AT&T’s actions clearly frustrate this FCC recommendation as

well.


71
 See generally In the Matter of 700 MHz Block A Good Faith Purchasers Alliance Petition for Rulemaking Regarding
Mobile Band Equipment Design and Procurement Practices, RM-11592.
72
     Verizon Wireless is also unwilling to support a band class that works across the entire 700 MHz band.
73
     National Broadband Plan at p. 316.
                                                             23
                     2. The Proposed Transaction Will Harm Consumers in Rural Areas by Driving
                        Rural Carriers Out of the Market Further Lessening Competition.

        T-Mobile is merely the most recent in a long-line of mobile wireless carriers to be placed in

the cross-hairs of AT&T and Verizon Wireless in their attempts to reduce the number of competitors

in the marketplace. In just the last seven years since the merger between AT&T Wireless Services,

Inc. and Cingular Wireless Corporation, the transaction which gave rise to the modern-day AT&T,

over a dozen rural or regional mobile wireless competitors, licensees or divested assets have been

removed from the competitive landscape into the hands of AT&T.74 This hyper-consolidation has

had a disproportionate impact on Americans who live, work and travel in rural markets.

        As discussed below in greater detail, the merging of AT&T and T-Mobile will reduce the

number of national GSM networks to only one. This consolidation will make all of the numerous

small and rural GSM-based mobile operators, including RTG members, dependent upon AT&T for

nationwide roaming. AT&T has already proven itself to be unwilling to voluntarily negotiate 3G

data roaming agreements – agreements that are crucial for any carrier to compete effectively in

today’s marketplace, whether nationally, regionally or locally. Earlier this year, in a filing with the

Commission, T-Mobile stated that it was “willing to enter into agreements that cover 3G or better

services” but that “to date it has not been able to achieve a roaming agreement for 3G (or better)

service with AT&T, and as a result, it cannot currently offer any 3G or better service in the areas in

which it must rely on AT&T roaming.”75 AT&T’s willingness to treat direct competitors, including


74
  See generally In the Matter of Applications of AT&T, Inc. and Dobson Communications Corporation for Consent to
Transfer Control of Licenses and Authorizations, File Nos. 0003092368, et. al., WT Docket No. 07-153; In the Matter of
Applications of AT&T, Inc. and Centennial Communications Corp. for Consent to Transfer Control of Licenses and
Authorizations, WT Docket No. 08-246; In the Matter of Applications of AT&T, Inc. and Cellco Partnership d/b/a
Verizon Wireless for Consent to Assign and Transfer Control of Licenses and Authorizations and Modify a Spectrum
Leasing Arrangement, WT Docket No 09-104. Other operator, spectrum and asset acquisitions by AT&T during this
time include Aloha Partners, Caprock Cellular, Cellular One of San Luis Obispo, Easterbrooke Cellular, Edge Wireless,
Farmers Wireless, Highland Cellular, McBride Spectrum Partners, and Rural Cellular Corp. dba Unicel.
75
   In the Matter Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other
Providers of Mobile Data Services, Ex Parte of T-Mobile USA, Inc., WT Docket No. 05-265 (filed February 2, 2011) at
p. 4.
                                                         24
T-Mobile, in an anticompetitive manner stems from the fact that AT&T has “been able to essentially

eliminate [its] need for external coverage through consolidation of the nation’s cellular operators.”76

Once AT&T no longer needs extended roaming coverage in a particular market, either as a result of

acquisition of a roaming partner or by overbuilding that roaming partner, it has historically starved

roaming partners in that market of roaming revenue. Small and rural carriers then find themselves

with unilateral roaming agreements and a roaming ledger where outbound roaming costs vastly

exceed inbound roaming revenues. This predicament typically cripples a service provider’s financial

health. When small and rural carriers find themselves no longer able to remain solvent, they are

often forced to sell their operations to larger competitors or scale back operations, thus removing

competition from the marketplace and reducing consumer choice.

        AT&T has also been known to harm its own rural consumers by denying them regional

roaming access on small competitors. In one such example, AT&T suspended its customers’

outbound roaming in select markets in north Texas, despite the fact that AT&T’s coverage in those

markets was not as extensive as the roaming partner’s coverage.77 AT&T can easily afford to allow

its consumers to roam off-network, judging by its multi-billion dollar annual net revenues, but

instead it deliberately has chosen to deny that option to its rural subscribers. Whether AT&T

engages in this practice because it does not value rural consumers or whether it is actively seeking to

dislodge smaller competitors is secondary. What is most important is recognizing that both

motivations are clearly anticompetitive and violate the conditions of the AT&T/Cingular Merger




76
   In the Matter Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other
Providers of Mobile Data Services, Ex Parte of The Rural Telecommunications Group, Inc., WT Docket No. 05-265
(filed March 9, 2011) at p. 8.
77
  Letter to the Editor: Out of Service, Times Record News, Wichita Falls, TX (October 8, 2010),
http://www.timesrecordnews.com/news/2010/oct/08/no-headline---10-8_letters_to_ed/.

                                                         25
Order.78 It is important to note that AT&T preventing its customers from roaming outbound on

roaming partners has severe consequences for all Americans. If small and rural providers enter into

truly bilateral roaming relationships with AT&T and AT&T actually allows its customers to roam on

these networks, rather than restrict them by Location Area Codes (“LACs”), these rural carriers’

finances would improve and that in turn would help limit a carrier’s need to rely on Universal

Service Funds (“USF”) to support its high-cost network operations in sparsely populated markets.

This, in turn, would give rural carriers the ability to invest more capital in expansion to better

improve mobile broadband coverage in rural America. Clearly, the fostering of unnecessary

dependency on USF support by virtue of AT&T’s deliberate, anticompetitive actions is not in the

public interest and harms rural consumers nationwide.

                C. The Proposed Transaction Will Stifle Innovation and Investment.

            In addition to calling the proposed transaction “pro-consumer”, which it is clearly not based

on the facts presented above, AT&T insists that it is also “pro-innovation” and “pro-investment.”79

The removal of T-Mobile as a market participant will negatively impact innovation and investment

in three distinct ways. First, the proposed merger will stifle innovation in mobile device, mobile

operating system and mobile application development. Second, it will drastically reduce

competition in the roaming, Mobile Virtual Network Operator (“MVNO”) or “wholesale,” and

machine-to-machine (“M2M”) sub-sectors of the industry, all of which harms consumers. Finally, it

will deter overall investments in the mobile wireless sector by small and rural carriers going out of

business, and these investments will not be offset by AT&T and especially not in rural America.




78
  AT&T/Cingular Merger Order at ¶ 182 (“We adopt as a condition to our grant in this Order a reciprocal duty, i.e., that
Cingular may not prevent its customers from reaching another carrier and completing their calls in these circumstances,
unless specifically requested to do so by a subscriber.”)
79
     Public Interest Statement at p. 9.

                                                          26
                        1. Market Power Allows AT&T to Stifle Innovation By Creating a “Walled
                           Garden” of Devices, Operating Systems and Applications.

           Large mobile wireless carriers like AT&T and Verizon Wireless have the luxury, due to their

vast financial resources and disproportionately huge subscriber bases, of manipulating subsectors

within the industry in order to squeeze out competitors, drive up the procurement costs of

equipment, and ultimately reduce choice and increase retail prices among consumers. The most

recent and stark examples of AT&T engaging in anticompetitive manipulation of these subsectors

are its attempts to create a self-serving “band class” for LTE-capable equipment operating in the 700

MHz Band and its use of exclusivity agreements with mobile device vendors, both of which are

discussed above.80

           The economics of mobile device procurement are such that before a mobile device vendor

will dedicate resources to developing, testing and launching a new mobile device, that vendor needs

to be assured that there is a market (for all practical purposes, a sales order) for a singular device or

family of devices. In the case of AT&T, it can influence vendors to produce devices with very

specific features and capabilities simply because it can order those devices in very large quantities,

sometimes by the tens of millions as in the case of the iPhone. Small, rural and regional carriers

without this type of market dominance are relegated to purchasing devices that are either outdated

and thus unappealing to retail consumers or often times “generic” so as to make them

indistinguishable from other smaller competitors or inferior when compared to AT&T. Mobile

device vendors are complicit in catering to the production needs of AT&T because they stand to

make more on one device order with AT&T than they could possibly make with all the small, rural

and regional operators combined.




80
     See Footnotes 65 and 81, supra.

                                                    27
        This type of strong arming is not restricted to the mobile device subsector. Because AT&T

provides service to one in three Americans, it has the ability to influence the success or failure of

competing mobile operating systems and applications. For example, if AT&T were to cease selling

HP or Nokia devices, the resulting precipitous decline in sales would have a major impact on the

Palm, Symbian and Windows Phone 7 operating systems.81 Likewise, when AT&T controls through

its device portfolio which mobile operating systems are used, that in turn dictates which applications

(or “apps”) can be used by consumers. App developers, just like mobile device vendors, will only be

incentivized to develop and release operating system-specific apps if there are enough end users with

that operating system on their mobile device. To this end, AT&T has developed a regimented

“Developer Program” which tightly controls the process of how apps are developed.82 By virtue of

its dominant market position, AT&T is in a position to pick the winners and losers of the mobile

device, mobile operating system and mobile application sub-sectors.

        A consequence, perhaps intended by AT&T, of this consolidation of decision influencing

power is a renewal of the “walled garden” Internet ecosystem that the general public abhors. By

tightly controlling which mobile devices are designed and purchased, which operating systems are

installed and which mobile applications are developed, AT&T can direct a large portion of the “user

experience.” But more profoundly, this winnowing down of end user choices into tightly-scripted

packages will stifle innovation by competing mobile device manufacturers, mobile operating system




81
   See Exhibit F showing the existing market share of the major operating systems available today and the projected
market share of those operating systems through the year 2015 (citing Greg Lamm, Android to be King of the World with
Windows Phone Gaining, Tech Flash (April 7, 2011), http://www.techflash.com/seattle/2011/04/ardroid-posed-to-be-
king-of-the-world.html). There are a limited number of mobile operating systems in the marketplace today. When two
service providers (AT&T and Verizon Wireless) stand to collectively control over 80% of the subscribers, and by
extension, mobile devices entering the marketplace, they will have the ability to pick winners and losers in the mobile
operating system independent of customer demand.
82
  AT&T Developer Program: Platform and OSes, AT&T Inc.,
http://developer.att.com/developer/tierNpage.jsp?passedItemId=100034.
                                                          28
developers and mobile application developers. While AT&T pledges that this transaction will be

pro-innovation, it will inevitably curtail innovation.

                     2. Innovation in Roaming, Wholesale and M2M Markets Will Be Stifled.

        The most visible markets for mobile wireless service are postpaid and prepaid voice and data

services to end consumers. While a post-merger AT&T, together with Verizon Wireless, will serve

in excess of 233 million voice and data subscribers, or approximately four out of every five

Americans, in reality, the resulting duopoly will be significantly larger (and stronger) because of its

stranglehold on the roaming, wholesale and M2M sub-markets.

        Today, AT&T and T-Mobile are the only two GSM-based nationwide service providers and

the only two domestic carriers offering near-global international roaming capabilities. The ability of

a mobile device to seamlessly roam overseas is a major criterion when enterprise customers and

business travelers decide between service providers. This is a clear example of where AT&T and T-

Mobile are direct competitors. For example, if an American wished to purchase domestic mobile

wireless service from a carrier providing international roaming to Afghanistan or Zimbabwe or over

a hundred other countries or international territories, he or she must choose between AT&T83 and T-

Mobile.84 Were AT&T to buy T-Mobile, it would provide AT&T with a true monopoly on global

international GSM roaming services and provide AT&T with the unfettered ability to arbitrarily

raise rates on any American consumer who wishes to travel overseas. Nothing prevents AT&T from

doubling or tripling its international roaming rates charged to U.S. consumers for both voice and

data services. This monopoly power works in reverse as well. Because foreign mobile wireless

operators can no longer choose between two “visited” networks in the U.S. to send their roaming


83
  See AT&T: Traveling Outside the U.S., http://www.wireless.att.com/learn/international/roaming/international-
roaming.jsp.
84
 See T-Mobile: International Services, http://www.t-
mobile.com/international/roamingoverview.aspx?tp=Inl_Tab_RoamWorldwide.

                                                         29
subscribers, they will be forced to pay whatever rates AT&T demands for access to roaming on the

AT&T network. The international roaming market is a multi-billion dollar industry and AT&T can

leverage its monopoly position to make foreigners and Americans pay whatever roaming rates it

imposes with little fear of competition or regulatory oversight. While the bulk of inbound

international roaming traffic comes from non-citizens, there are hundreds of thousands Americans

living abroad, including soldiers, diplomats, government contractors and private-sector workers, who

depend upon mobile wireless service from non-U.S. service providers. When these Americans travel

back to the U.S. they will be forced to pay whatever international roaming rates AT&T chooses to

impose, and those charges are the direct result of AT&T’s monopoly position. Regardless of

whether those inflated costs are ultimately born by private citizens, U.S.-based companies, or the

American taxpayers, their imposition is squarely anticompetitive.

           AT&T argues that the FCC “should account for MVNOs within its competitive analysis” and

that “MVNOs offer service to tens of millions of subscribers.”85 While technically true, what AT&T

does not disclose is that the undisputed king of MVNOs, with 18.5 million subscribers, is Tracfone,

which is owned by America Movil. AT&T’s parent company owns a 9.0% stake in America Movil

worth upwards of $7.5 billion and it continues to purchase shares of America Movil.86 Furthermore,

approximately 90% of all Tracfone subscribers use the AT&T or T-Mobile GSM networks.87 A

post-merger AT&T would hold undue influence over the MVNO marketplace because of its

monopoly control of a nationwide GSM network and its close financial relationship with America

Movil. Small, rural and regional mobile wireless operators will be incapable of grabbing any market


85
     Public Interest Statement at p. 94.
86
  America Movil: Major Shareholders, America Movil Investor Relations,
http://www.americamovil.com/amx/en/cm/about/struct.html?p=28&s=37; See also AT&T 2010 Annual Report, AT&T
Inc., http://www.att.com/Common/about_us/annual_report/pdfs/ATT2010_Full.pdf, at p. 40.
87
     Tracfone Coverage Area, Prepaid.Com, (last visited May 31, 2011), http://preprepaid.com/tracfonecoveragearea.php.

                                                           30
share through a GSM-based nationwide MVNO business because AT&T vigilantly imposes terms in

its domestic roaming agreements that prevent roaming partners from granting access to MVNOs or

resellers. In practical terms this means that all small, rural and regional GSM operators cannot offer

MVNO service with a national footprint which materially harms a company’s ability to compete. So

while AT&T argues that the MVNO market provides unlimited competition, the truth is that AT&T

will be the gatekeeper for any GSM-based MVNO in the future, thus preventing innovation and

competition.

            The M2M sub-market is destined to be the next focal point of mobile wireless service

providers as the traditional handset market reaches saturation.88 M2M services allow for data

transmissions between remote devices or between a remote device and the core network.

Specifically, AT&T offers M2M services for “applications like energy management, fleet tracking,

and remote health care.”89 According to industry analysts, AT&T has over 8.5 million “connected

devices” on its network and T-Mobile has reported at least 1.8 million M2M “enterprise devices” on

its network.90 For the most recent financial reporting period, AT&T added approximately two

million net subscribers. Of those nearly two million net subscribers, 1.27 million were M2M

connected devices.91 Clearly, M2M is poised to be a large part of AT&T’s growth plans and a major

part of its future revenue streams. However, in a post-merger marketplace, AT&T will use its

nationwide GSM network monopoly to subvert M2M innovation by controlling the access for all

market entrants, just as it will do in the roaming and wholesale/MVNO submarkets.


88
  John Keough, A Closer Look at M2M Carrier Strategy, The Yankee Group (December 2010),
http://www.business.att.com/content/article/Yankee_Group_M2M-Report.pdf, at p. 1.
89
     Public Interest Statement at p. 3.
90
  John Keough, A Closer Look at M2M Carrier Strategy, The Yankee Group (December 2010),
http://www.business.att.com/content/article/Yankee_Group_M2M-Report.pdf, at p. 2.
91
 AT&T Q12011 Quarterly Report, AT&T Inc., http://www.att.com/Investor/Financial/Earning_Info/docs/ATT_10-
Q_filing_1Q2011.pdf, at p. 22.

                                                     31
                         3. The Combination of Horizontal and Vertical Channels Will Reduce Overall
                            Investment.

           AT&T contends that the proposed transaction is in the public interest, in part, because the

company’s anticipated initiatives, including a national LTE deployment, “will spur additional

broadband investment, jobs and economic growth worth billions of dollars in all areas of the

country.”92 This prediction ignores the fact that similar or better social and financial benefits may

accrue were the transaction not to proceed. With or without the acquisition of T-Mobile, AT&T will

still make significant investments in its business. However, by consolidating the number of

horizontal players in the marketplace, there will be one less nationwide network for mobile wireless

services. At the very least T-Mobile’s individual capital investments year-in and year-out will

disappear, and the repercussions of this loss will spread-out like a spider web.

           The truth is that the “substantial cost synergies” that AT&T would realize if the deal goes

through equate to fewer investment dollars overall in the economy. By removing T-Mobile from the

equation, AT&T ensures that T-Mobile will have no future investments in new spectrum or new

facilities and equipment. This in and of itself will result in tens of billions of dollars of lost

investment. Additionally, the elimination of T-Mobile has a cascading effect throughout ancillary

sectors of the industry; all the suppliers and vendors to T-Mobile (i.e., mobile device manufacturers,

core network equipment manufacturers, software developers, etc.) will have one less customer for

their wares and services. In turn, those companies will make few investments in their own

businesses in their own respective industries. The loss of just one large player in an already highly-

concentrated market will result in less overall investments in both a horizontal and vertical context.

So while AT&T proclaims that this merger will “enable AT&T to continue fostering wireless

innovation and supporting the virtuous cycle of investment and innovation needed to fuel advances


92
     Public Interest Statement at p. 56.

                                                     32
in the mobile broadband ecosystem,” 93 in reality, the destruction of T-Mobile will result in less

innovation and less investment.

                D. The Proposed Transaction Will Lead to Job Loss.

           Another public interest harm that will occur should AT&T be allowed to acquire T-Mobile is

the loss of jobs in various departments within the merged entity. Horizontal mergers, because they

intrinsically involve two parties with similar organizational structures with similar human resource

components, are prone to job cuts and layoffs.94 Furthermore, AT&T’s parent company, as an

institution over the last decade, has habitually shed jobs the larger it has grown through acquisition.

While this practice of downsizing might be good for AT&T shareholders, it is definitely not good for

AT&T and T-Mobile employees or a national economy that is still trying to recover from the Great

Recession. Additionally, mergers between a dwindling number of nationwide mobile wireless

carriers has led to recent, documented job loss in the United Kingdom in a situation that eerily

parallels what will happen in the United States should this deal get approved. Finally, there is a

genuine concern for what is deemed “ancillary” job loss when a large firm gets dissolved, especially

those jobs near the merged company’s headquarters and regional offices. When a large market

player is removed completely, multiple smaller businesses geographically close to those corporate

campuses see precipitous declines in business - - everything from coffee shops to dry cleaners to day

care centers. All of these potential jobs losses and reductions in business are not in the public

interest.



93
     Public Interest Statement at p. 10.
94
   Horizontal Mergers, Involuntary Unemployment, and Welfare, Dr. Oliver Budzinski, University of South Denmark
and Mr. Jurgen-Peter Kretschmer, University of Marburg (2009) (“Such efficiency gains typically originate from
synergy effects of the integration of two or more companies to a single entity, i.e. an (assumed) constant output can post-
merger be produced with fewer inputs, for instance due to the amalgamation of overhead and administration departments
like human resources, accounting, executive committee, etc. According to standard M&A business economics, the
reduction of staff represents an important source for such kinds of synergy gains.”) (emphasis added).

                                                            33
           While AT&T and its predecessor companies over the last decade have consistently shed jobs

after making acquisitions, T-Mobile has traditionally added jobs as it has grown. From 2002

through 2010, AT&T has, on average, reduced employment six percent annually.95 This reduction in

AT&T’s total employee headcount by approximately 107,000 has occurred in spite of its acquisition

of AT&T Corp., BellSouth Corp., Cingular Wireless, Dobson Communications Corp. and

Centennial Communications Corp., which together employed over 180,000 people at the time of

their respective acquisitions. By contrast, over the same period, T-Mobile added over 20,000 jobs

across the country, which equates to roughly 2,250 new jobs annually.96 AT&T has repeatedly

trimmed its size while gobbling up competitors which has resulted in a net loss of over 100,000 jobs

over the last decade. This history of job loss following major takeovers by AT&T combined with T-

Mobile’s history of consistently adding jobs as it has grown and remained independent again

demonstrates that the proposed merger is not in the public interest.

           The United States is not the only country where a consolidation in the number of nationwide

players has resulted in job losses. In fact, developments in the same industry in the United Kingdom

are an ominous bellwether for what to expect should AT&T remove T-Mobile as a competitor. The

U.K., a significantly smaller country than the U.S., has traditionally had four facilities-based GSM

nationwide operators: Vodafone, Orange, O2 and T-Mobile UK.97 In May 2010, T-Mobile UK and

Orange agreed to merge and form “Everything Everywhere,” which catapulted the combined

company into the number one spot with 37 percent market share. Between the merger

95
  Calculations are based on AT&T’s annual reports beginning in 2002 and ending in 2010, and calculating the number
of employees of the acquired companies over that same time span. These specific sources for these additions include
AT&T Corp. 2004 10-K Report (47,600 employees), BellSouth Corp 2005 10-K Report (63,000 employees), Cingular
Wireless 2005 10-K Report (64,000 employees), Dobson Communications Corp. 2006 10-K Report (2,500 employees)
and Centennial Communications Corp. 2008 10-K Report (3,100 employees).
96
  Calculations are based off of Deutsche Telekom and T-Mobile’s annual reports beginning in 2002 and ending in 2010,
and calculating the number of employees (1,924) SunCom Wireless Holdings Inc. added after its acquisition by T-
Mobile (SunCom 2006 10-K Report).
97
     This does not include MVNOs and Hutchison 3, a non-nationwide, non-GSM operator.

                                                         34
announcement in September 2009 and the closing date, T-Mobile UK and Orange shed 2,500

positions.98 Less than six months after the merger finalized, Everything Everywhere confirmed that

it was cutting 7.5 percent of its workforce, or approximately 1,200 jobs.99 In December 2010, there

were media reports that Everything Everywhere was “actually preparing to axe an additional 3,000

employees over the next four years – in other words, layoffs totaling some 4,200.”100 There are

striking similarities between the U.K. mobile wireless marketplace last year and the same

marketplace in the U.S. this year. When AT&T says it will try to exceed over $3 billion in “cost

synergies” annually, there is every indication this will include job cuts similar to what was done

between Deutsche Telekom and Orange.

        The loss of T-Mobile as a profitable, independent and fierce competitor to AT&T will have

repercussions well beyond the mobile wireless industry. Within days of the merger announcement,

there was already speculation in metropolitan Seattle about the fate of T-Mobile’s corporate campus

and its impact on other local businesses and the local economy.101 T-Mobile not only has a large

corporate headquarters in suburban Seattle, it also has four regional engineering offices102, 24

customer care call centers103, several network operations centers, and distribution centers, and


98
  Rupert Neate, Everything Everywhere to Cut 1,200 Jobs, The Telegraph UK (October 1, 2010),
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/8035545/Everything-
Everywhere-to-cut-1200-jobs.html.
99
  Simon Goodley, Everything Everywhere Mobile Phone Group to Cut 1,200 Jobs, The Guardian UK (September 30,
2010), http://www.guardian.co.uk/business/2010/sep/30/everything-everywhere-tmobile-orange-job-losses.
100
   Ingrid Lunden, UK’s 02, Everything Everywhere (Orange and T-Mobile) Prep For Job Cuts, MocoNews (December
13, 2010), http://moconews.net/article/419-uks-o2-everything-everywhere-orange-and-t-mobile-prep-for-job-cuts/.
101
   Jon Talton, Inside the AT&T Bid for T-Mobile: Big Loss for Seattle Area, The Seattle Times (March 20, 2011),
http://seattletimes.nwsource.com/html/soundeconomywithjontalton/2014554637_inside_the_att_bid_for_t-mobil.html;
See also From Seattle: AT&T Merger Not Great, Your Info Linc (March 28, 2011),
https://yourinfolinc.wordpress.com/2011/03/28/from-seattle-merger-not-great/.
102
   T-Mobile maintains regional engineering offices with large headcounts in Frisco, TX, Parsippany, NJ, Chicago, IL
and Concord, CA.
103
 T-Mobile maintains customer care call centers with large headcounts in Allentown, PA, Augusta, GA, Bellingham,
WA, Birmingham, AL, Brownsville, TX, Charleston, SC, Chattanooga, TN, Colorado Springs, CO, Ft. Lauderdale, FL,
                                                         35
hundreds of retail stores and local offices. The disappearance of T-Mobile will have a devastating

effect on the thousands of employees who are likely to be purged by AT&T should this deal go

through, and that pain will be felt in the cities and towns that currently support T-Mobile’s active

presence today.

III.    THE HARMS RESULTING FROM THE TRANSACTION OUTWEIGH ANY
        PUBLIC INTEREST BENEFITS.

        The merged AT&T entity will hold a substantial and excessive spectrum interest in markets

throughout the United States. In applying its public interest test under sections 214(a) and 310(d) of

the Communications Act of 1934, as amended, (the “Act”) the FCC employs a balancing test

weighing any potential public interest harms of the proposed transaction against any potential public

interest benefits to ensure that, on balance, the proposed transaction will serve the public interest.

Under this test, AT&T and T-Mobile bear the burden of proving that the proposed transaction, on

balance, serves the public interest.

        AT&T and T-Mobile assert that the proposed transaction will benefit the customers of both

companies, alleviate purported network capacity problems, and help T-Mobile provide 4G services.

The two companies also insist that there are no alternative solutions to the two carriers’ alleged

capacity problems. All of these alleged public interest benefits have been thoroughly disproven.

Instead, the proposed transaction will give rise to numerous public interest harms that in the

aggregate clearly outweigh any conceivable public interest benefits that might arise should the

transaction proceed. Accordingly, the applications should be denied outright.




Frisco, TX, Lenexa, KS, Meridian, ID, Mission, TX, Nashville, TN, Oakland, ME, Redmond, OR, Richmond, VA,
Salem, OR, Springfield, MO, Tampa, FL, Thornton, CO, Wichita, KS and two in Albuquerque, NM.
                                                      36
IV.          APPLICANTS’ FAILURE TO MEET THEIR BURDEN OF DEMONSTRATING
            THAT THE PROPOSED TRANSACTION ON BALANCE SERVES THE PUBLIC
            INTEREST, AND THE EXISTENCE OF MATERIAL QUESTIONS OF FACT,
            REQUIRE THAT THE FCC HOLD AN EVIDENTIARY HEARING UNDER
            SECTION 309(e).

            AT&T and T-Mobile bear the burden of proving, by a preponderance of the evidence, that

the proposed transaction, on balance, would serve the public interest.104 If the FCC is unable to find

that the proposed transaction serves the public interest, or if the record presents a substantial and

material question of fact, Section 309(e) of the Act requires that the applications be designated for

hearing.105 Because AT&T and T-Mobile have failed to meet their burden of demonstrating that the

proposed transaction on balance would serve the public interest, and because of the existence of

substantial and material questions of fact, the FCC must hold an evidentiary hearing under Section

309(e).

            Specifically, and at a bare minimum, the Commission needs to adduce further evidence and

make a determination on the following issues:

            •   Will the proposed merger benefit AT&T’s existing customers?

            •   Will the proposed merger benefit T-Mobile’s existing customers?

            •   Is AT&T’s network operating at full capacity?

            •   Is AT&T currently capable of deploying broadband services to rural America using its

                existing spectrum, and is contiguous spectrum necessary for AT&T to do so?

            •   What is AT&T’s timetable for deploying broadband services to rural America?

            •   Is the proposed merger the optimum means for AT&T to resolve its alleged capacity

                problems?

104
   Application of EchoStar Communications Corporation, (a Nevada Corporation), General Motors Corporation, and
Hughes Electronics Corporation (Delaware Corporations); (Transferors) and EchoStar Communications Corporation
(a Delaware Corporation); (Transferee), Hearing Designation Order, CS Docket No. 01-348, 17 FCC Rcd 20559 at par.
25 (2002) (“EchoStar”).
105
      Id.
                                                       37
         •   If the proposed merger is not approved, is T-Mobile capable of surviving?

         •   If the proposed merger is not approved, will T-Mobile be capable of providing 3G or 4G

             service?

         •   Has AT&T considered or attempted all alternatives to resolve its alleged capacity

             problems?

         •   How will AT&T improve the quality of customer care currently experienced by its

             customers?

         •   Will AT&T increase the number of customer care representatives?

         •   Will AT&T reduce the ratio of CCRs to subscribers?

         •   How will AT&T prevent Average Handle Time from increasing?

         •   How long will T-Mobile customers be able to keep their existing rate plans?

         •   Will a merged AT&T use its enhanced spectrum holdings more efficiently than AT&T

             and T-Mobile separately?

         •   Will AT&T actually use the entire amount of spectrum held by T-Mobile?106

         •   As a result of the efficiencies it claims it will gain as a result of the proposed merger, will

             AT&T lower its prices?

         •   Does evidence exist that shows that AT&T’s alleged capacity constraints are “more

             severe” than those experienced by other providers?

         •   Does T-Mobile face capacity constraints?

         •   As a means of addressing its alleged capacity constraints, has AT&T considered adding

             more cell sites or deploying distributed antenna systems in core urban areas, and if it has

             chosen not to do so, why has it not done so?
106
   See EchoStar at ¶ 203 (designating an assignment application for hearing where Applicants failed to present
“sufficient convincing evidence that they will actually use the entire amount of spectrum” held by the acquired entity and
not choose to warehouse the spectrum).

                                                           38
           •    Has AT&T attempted to utilize roaming to address its alleged capacity constraints?

           •    How many jobs will be lost as a result of the merger?

           •    Is the wireless market national in scope?

           •    Is AT&T’s past behavior with respect to small and rural carriers indicative of future anti-

                competitive behavior post-merger?

           •    All questions posed by the FCC to AT&T and T-Mobile in their letters and Information

                and Discovery Requests dated May 27, 2011.107

           The Commission has found the need for an evidentiary hearing under Section 309(e) where

merger applicants failed to demonstrate that their proposed merger is necessary to achieve their

claimed public interest benefits and where substantial and material issues of fact existed with respect

to whether the proposed transaction was likely to cause anticompetitive harm and yield any public

interest benefits.108 Among the issues designated for hearing in EchoStar were the product market;

geographic market (local vs. national); market participants, market shares and concentration;

timeliness, likelihood and sufficiency of entry to offset any potential adverse competitive effects that

may result from the proposed transaction; effects on price, quality and innovation (considering the

likelihood of the merged entity to unilaterally take anticompetitive actions); and whether cost

savings and other benefits claimed by Applicants are non-speculative, credible and transaction

107
   In the Matter of AT&T Inc. and Deutsche Telekom AG Seek FCC Consent to the Transfer of Control of the Licenses
and Authorizations Held by T-Mobile USA, Inc. and its Subsidiaries to AT&T Inc., WT Docket No. 11-65, FCC
Information and Discovery Request for Deutsche Telekom AG (released May 27, 2011); In the Matter of AT&T Inc. and
Deutsche Telekom AG Seek FCC Consent to the Transfer of Control of the Licenses and Authorizations Held by T-
Mobile USA, Inc. and its Subsidiaries to AT&T Inc., WT Docket No. 11-65, FCC Letter to T-Mobile License LLC and
Deutsche Telekom AG (released May 27, 2011); In the Matter of AT&T Inc. and Deutsche Telekom AG Seek FCC
Consent to the Transfer of Control of the Licenses and Authorizations Held by T-Mobile USA, Inc. and its Subsidiaries to
AT&T Inc., WT Docket No. 11-65, FCC Information and Discovery Request for AT&T Inc. (released May 27, 2011); In
the Matter of AT&T Inc. and Deutsche Telekom AG Seek FCC Consent to the Transfer of Control of the Licenses and
Authorizations Held by T-Mobile USA, Inc. and its Subsidiaries to AT&T Inc., WT Docket No. 11-65, FCC Letter to
AT&T Inc. (released May 27, 2011). Each of the questions presented to AT&T and T-Mobile by the FCC are more
appropriately addressed in the context of an evidentiary hearing, where opposing parties can challenge and rebut
evidence proferred by the applicants, rather than a post-petition to deny-deadline data submission.
108
      EchoStar at ¶¶ 284, 289.

                                                          39
specific and are likely to flow through to the public; all of which need to be addressed in the context

of the proposed AT&T/T-Mobile merger.109

            The Commission has also designated a merger application for hearing where the proposed

transaction, as it would here, would create an “effective duopoly” and where the record lacks

sufficient evidence to mitigate concerns about potential adverse competitive effects of the proposed

transaction.110 As in EchoStar, the Commission in Air Virginia designated a merger application for

hearing in order to address issues including product market definition; geographic market definition;

market participants; market shares; market concentration; potential adverse competitive effects;

conditions of entry, including timeliness, likelihood and sufficiency of entry to offset potential

adverse competitive effects; and possible efficiencies and public interest benefits.111 These same

issues need to be addressed in the context of this proceeding.

            A hearing is needed to assess whether the various claims of AT&T and T-Mobile regarding

the purported public interest benefits of the proposed transaction are verifiable. As the Commission

has stated, “Because much of the information relating to the potential benefits of a merger is in the

sole possession of the merging parties, those parties must provide sufficient support for any benefit

claims so that the Commission can verify the likelihood and magnitude of each claimed benefit.”112

The FCC must calculate the magnitude of benefits net of the cost of achieving them and discount or

dismiss any speculative benefits, including benefits claimed by AT&T that are not immediate in

time.113 “[B]enefits that are to occur only in the distant future may be discounted or dismissed


109
      Id. at ¶ 289.
110
    See Air Virginia, Inc. (Assignor) and Clear Channel Radio Licenses, Inc. (Assignee); For Consent to the Assignment
of the License of WUMX (FM), Charlottesville, VA, Hearing Designation Order, MM Docket No. 02-38, 17 FCC Rcd
5423 at par. 27, 42 (2002) (“Air Virginia”).
111
      Id. at ¶¶ 43-52.
112
      EchoStar at ¶ 190.
113
      Id.
                                                          40
because, among other things, predictions about the more distant future are inherently more

speculative than predictions about events that are expected to occur closer to the present.”114

            The instant petition makes a prima facie case that approval of the proposed transaction would

be inconsistent with the public interest, and AT&T and T-Mobile have failed to demonstrate by a

preponderance of the evidence that the proposed transaction, on balance, would serve the public

interest. Accordingly, the Commission must hold an evidentiary hearing pursuant to Section 309(e)

to address all issues of substantial material fact, including those referenced above.

V.          THE PROPOSED TRANSACTION VIOLATES ANTITRUST LAW.

            Section 7 of the Clayton Antitrust Act of 1914 (the “Clayton Act”) prohibits mergers and

acquisitions in any line of commerce where the effect of such acquisition "may be substantially to

lessen competition, or to tend to create a monopoly."115 Courts have interpreted the language of the

Clayton Act to prohibit transactions that may reduce competition in any relevant market.116 In

practice, a proposed transaction is believed to substantially lessen competition if it (1) raises prices,

(2) lowers quality, or (3) reduces innovation.117 The proposed merger of AT&T and T-Mobile will

do all three.

            In assessing whether a transaction will reduce competition, the Department of Justice

(“DOJ”) compares the state of current competition with its evaluation of the degree of competition

that will exist if the parties are combined. Therefore, the relevant question is not whether the

industry will be competitive or not after the transaction, but whether the industry will be less


114
      Id.
115
      15 U.S.C. § 18.
116
   See United States v. Philadelphia Nat'l Bank, 374 U.S. 321 (1963); Brown Shoe Co. v. United States, 370 U.S. 294
(1962).
117
    See DOJ & FTC, Horizontal Merger Guidelines, at Section 1 (Aug. 19, 2010) ("A merger enhances market power if it
is likely to encourage one or more firms to raise price, reduce output, diminish innovation, or otherwise harm customers
as a result of diminished competitive constraints or incentives.")

                                                          41
competitive as a result of the merger. The DOJ and Federal Trade Commission (“FTC”) have

outlined their approach to evaluating mergers in jointly issued Horizontal Merger Guidelines, the

most recent version of which was released in August 2010 (“Guidelines”).118

         The generally accepted test as to whether a merger will violate the Clayton Act is whether it

is likely to result in increased prices, reduced quality or less innovation. This evaluation is

extremely fact-intensive, as the nature and competitive dynamics of the industry at issue, and the

roles of the specific merging parties within that industry, are unique from one proposed transaction

to the next. Economic modeling and analysis, which accounts for the industry and party-specific

facts, is central to the evaluation. As demonstrated below, this merger will result in increased prices,

reduced quality and less innovation.

         Defining a relevant market in which competition will be reduced is typically both a threshold

issue of antitrust analysis and a key determinant of the outcome because a transaction is likely to

reduce competition only if (i) both merging parties are competitors or potential competitors in that

market; and (ii) the other competitors in that market are insufficient to ensure that the market will

remain competitive post-merger.119 Relevant markets have both product and geographic

dimensions.120 A relevant product market consists of all the products/services regarded as


118
    These new Guidelines replace the Horizontal Merger Guidelines issued in 1992 and later amended in 1997. The
new Guidelines reflect the ongoing accumulation of experience at the DOJ and FTC and differ markedly from the
predecessor guidelines. Among other things, the new Guidelines “reduce[] focus on market definition and de-
emphasize[] bright-line tests” as well as place “heightened emphasis on particular microeconomic tools.” See “Including
Exclusion in the 2010 Horizontal Merger Guidelines,” D. Bruce Hoffman and Daniel Francis, The Antitrust Source
(published October 2010).
119
    The 2010 Horizontal Merger Guidelines deemphasize the importance of market definition, noting that the "agencies'
analysis need not start with market definition." See 2010 Horizontal Merger Guidelines at Section 4. However, courts
still require the definition of a relevant market, and ultimately if a merger is litigated between the DOJ and the merging
parties, a court will decide the question. See Malaney v. UAL Corp., 2010 WL 3790296, *5 (N.D. Cal. Sept. 27, 2010)
("To advance the requisite showing of a likely violation of Section 7, and thereby warrant injunctive relief, a plaintiff
must, by a preponderance of the evidence, first show the existence of a relevant market and then establish that the
pending acquisition is ‘reasonably likely to cause anticompetitive effects’ in that market.")
120
   See F.T.C. v. CCC Holdings Inc., 605 F. Supp. 2d 26, 37 (D.D.C. 2009) ("An analysis of the likely competitive
effects of a merger requires determinations of (1) the relevant product market, (2) the relevant geographic market, and
(3) the transaction's probable effect on competition in those markets.").
                                                            42
substitutable by customers by virtue of the products' characteristics, their prices and their intended

use.121      A proposed transaction could potentially impact a number of relevant product markets.122

A relevant geographic market refers to the area in which the parties' customers may reasonably turn

for substitutes.123 In this case the relevant product markets are retail and wholesale wireless

services. The relevant geographic market is the national market for wireless services not the local

market because mobile wireless services are marketed and sold to provide services on a nationwide

basis not on a fixed or local basis. The United States Supreme Court has itself recognized that the

relevant geographic market is national in scope when national competitive forces determine prices

and the same products are offered nationwide at the same price.124 The national carriers all market

and advertise their services on a nationwide basis and their individual pricing plans are the same

regardless of where the respective customer resides in the United States.

           After the relevant markets in which to analyze the transaction have been determined, the next

step is to identify the other competitors or potential competitors in each market. Market participants

are "all firms that currently earn revenues in the relevant market,"125 as well as firms that are not yet


121
   See FTC v. Staples, Inc., 970 F. Supp. 1066, 1074 (D.D.C. 1997) ("The general rule when determining a relevant
product market is that '[t]he outer boundaries of a product market are determined by the reasonable interchangeability of
use [by consumers] or the cross-elasticity of demand between the product itself and substitutes for it.'…In other words,
the general question is "whether two products can be used for the same purpose, and if so, whether and to what extent
purchasers are willing to substitute one for the other.") (citing Brown Shoe, 370 U.S. at 325 and Hayden Pub. Co. v. Cox
Broadcasting Corp., 730 F.2d 64, 70 n.8 (2d Cir 1984)).
122
   See F.T.C. v. ProMedica Health System, Inc., 2011 WL 1219281, *54-55 (N.D. Ohio Mar. 29, 2011) (recognizing and
analyzing two separate relevant product markets: one for general acute-care inpatient services and a second for inpatient
obstetrical services and noting it would be "would be inappropriate and misleading" to use only one relevant product
market). See also CCC Holdings, 605 F. Supp. 2d at 39-40 (recognizing two separate product markets for Estimatics and
TLV)
123
   See Little Rock Cardiology Clinic PA v. Baptist Health, 591 F.3d 591, 598 (8th Cir. 2009) ("Properly defined, a
geographic market is a geographic area 'in which the seller operates, and to which ... purchaser[s] can practicably turn for
supplies.'") (citing Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961)).
124
   See United States v. Grinnell Corp., 384 U.S. 563, 575 (1966) (finding that relevant market for security services was
nationwide where defendants had a “national schedule of prices, rates, and terms.”)
125
      See Guidelines at Section 5.

                                                            43
participating in the industry but are positioned to easily and quickly enter the market. Once the

relevant market is defined and the market participants are identified, the agencies look at the various

participants' market shares and how concentrated the market is before and after the transaction.

Market concentration is measured by the Herfindahl-Hirschman Index (“HHI”). Under the 2010

Horizontal Merger Guidelines, markets with an HHI of below 1500 are "unconcentrated," markets

with an HHI between 1500 and 2500 are "moderately concentrated" and markets with an HHI above

2500 are "highly concentrated." The agencies also look at the change in HHI caused by the

proposed transaction; mergers that cause an increase of 200 or more points in highly concentrated

markets raise an inference of enhanced market power. The proposed transaction has an HHI of over

3500 and will result in a change of more than 750 points, well above the established thresholds.

Evaluation of market concentration is only an initial screen. If a market is not concentrated, a

transaction is unlikely to reduce competition. However, if a market is concentrated, further analysis

of the likely competitive effects of the transaction is required to determine if a reduction in

competition is in fact likely. In the instant merger AT&T will hold a 43% market share post merger.

Verizon Wireless, the next largest competitor-post-merger will hold a 33% market share and

combined, the Twin Bells will hold almost a 77% market share.

       The most important part of the antitrust analysis is the "competitive effects" analysis. RTG

believes that when the DOJ considers all the industry facts and competitive dynamics it will

determine that this proposed transaction will "substantially lessen competition" by allowing the

merged AT&T to raise prices, reduce quality and harm innovation. Additionally, RTG believes that

the DOJ will also find that the wireless industry will be likely to act in a coordinated fashion to

match the pricing set by AT&T post-merger.

       If the DOJ determines that this transaction will lead to reduced competition, it will assess the

estimated efficiencies or synergies of the proposed transaction and weigh the likely consumer

                                                   44
benefits against the potential consumer harms.126 The DOJ will not credit AT&T’s claimed

efficiencies set forth in its Public Interest Statement that are vague, speculative or otherwise

unverifiable. In addition, all such efficiencies will only be credited to the extent they are "merger-

specific," meaning that they can only be achieved via the merger.127 Moreover, the loss of

competition and the potential consumer benefits are not weighed exactly. As a practical matter, the

DOJ usually believes that harms are more likely and immediate and that benefits are more

speculative and take longer to be realized. When the potential anticompetitive effects of a merger

are significant, the claimed efficiencies must be "extraordinary" to prevent a challenge. For all the

reasons stated in Section II of this Petition, AT&T has not met this burden. Accordingly, RTG

expects the DOJ to block the merger.

                A. The Relevant Geographic Market Is National Not Local.

           The FCC traditionally has defined wireless geographic markets as local.128 However, in

recent wireless transaction reviews involving local or regional wireless providers, the Commission

has found that the relevant local market for wireless service may encompass multiple counties and,




126
   RTG notes that in its Fourteenth Report, the FCC could not make a determination that effective competition exists.
Fourteenth Report at ¶ 3 (“As a result, rather than reaching an overarching, industry-wide determination with respect to
whether there is ‘effective competition,’ the Report complies with the statutory requirement by providing a detailed
analysis of the state of competition that seeks to identify areas where market conditions appear to be producing
substantial consumer benefits and provides data that can form the basis for inquiries into whether policy levers could
produce superior outcomes.”)
127
      See Guidelines at Section 10.
128
   See AT&T/Dobson Merger Order ¶ 23; Applications of Midwest Wireless Holdings, L.L.C. and ALLTEL
Communications, Inc. for Consent to Transfer Control of Licenses and Authorizations, Memorandum Opinion and
Order, 21 FCC Rcd 11526, ¶¶ 29-30 (2006) (“ALLTEL-Midwest Wireless Order”); Applications of Nextel
Communications, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations,
Memorandum Opinion and Order, 20 FCC Rcd 13967, ¶¶ 52, 56 (2005) (“Sprint-Nextel Merger Order”); Applications of
Western Wireless Corporation and ALLTEL Corporation for Consent to Transfer Control of Licenses and
Authorizations, Memorandum Opinion and Order, 20 FCC Rcd 13053, ¶ 35 (2005) (“ALLTEL-Western Wireless
Order”); AT&T/Cingular Merger Order, ¶¶ 89-90; Sprint Nextel Corporation and Clearwire Corporation; Applications
for Consent to Transfer Control of Licenses, Leases, and Authorizations, Memorandum Opinion and Order, 23 FCC Rcd
17570, ¶ 52 (2008) (“Sprint Nextel-Clearwire Order”); ALLTEL/Verizon Merger Order ¶ 49; Verizon/RCC Order ¶ 41.

                                                           45
depending on the consumer’s location, even parts of more than one state.129 In those reviews, the

Commission identified two sets of geographic areas that could be used to define wireless markets:

Component Economic Areas (“CEAs”) or, alternatively, CMAs.130

           Industry dynamics have changed dramatically since 2006, when the Commission reviewed

Sprint’s acquisition of Nextel Communications, Inc.,131 the last merger between two national

carriers. In fact, both AT&T and Verizon Wireless have recognized that the market for retail

wireless service is national.132 AT&T has publicly stated that “the predominant forces driving

competition among wireless carriers operate at the national level.”133 These carriers set prices

nationwide, engage in countrywide advertising campaigns and promote their brand nationally, sell

plans through national retailers, develop and sell handsets nationwide, and have nationwide

footprints. Furthermore, the national carriers have moved away from local competition in recent

years, focusing primarily on national pricing and marketing strategies. The United States Supreme

Court has recognized that the relevant geographic market is national in scope when national

competitive forces determine prices and the same products are offered nationwide at the same



129
      See Verizon/RCC Order ¶ 39; AT&T/Dobson Merger Order ¶ 23.
130
      See ALLTEL/Verizon Merger Order ¶ 49.
131
   At the time of the transaction, Nextel Communications, Inc., together with its affiliate Nextel Partners, provided
service to 297 of the top 300 markets with its network covering 260 million POPs. See Sprint-Nextel Merger Order ¶ 7.
132
   In the Matter of the State of Mobile Wireless Competition, Comments of AT&T, Inc., WT Docket No 10-153 (filed
July 30, 2010) at p. 21 (“AT&T and other national competitors offer the same services, devices options, voice plans, data
plans, and other benefits throughout their service areas, and thus consumers in these areas benefit from the same
nationally available pricing and options that are offered to more urban consumers.”); at p. 22 (“The Commission could
reasonably look at either of the measures – i.e., recognizing that national and regional wireless providers typically do not
charge different prices or offer different service plans in different areas.”); In the Matter of Implementation of Section
6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market
Conditions With Respect to Mobile Wireless Including Commercial Mobile Services, Reply Comments of Verizon
Wireless, WT Docket No. 09-66 at p. 17 (filed October 22, 2009) (“Like other national carriers, Verizon Wireless
primarily prices – and advertises – on a national basis. For example, Verizon Wireless offers the same rates and plans in
Missoula as in Manhattan, and the same in Cheyenne as in Chicago.”)
133
      AT&T-Dobson Application at 18.

                                                            46
price.134 For these reasons, assessing the effect on retail wireless service of the combination of

AT&T and T-Mobile – two of only four national wireless carriers – requires the Commission to

analyze competition at a national level, instead of each local area in which the carriers compete.

                      1. AT&T, Verizon, Sprint, and T-Mobile Price Post-Paid Wireless Plans
                         Nationally, With No Regard to Rural or Regional Competitors.

         AT&T, Verizon Wireless, Sprint, and T-Mobile price their post-paid wireless plans

nationally, with no regard to rural or regional competitors. These pricing plans are advertised on the

respective carriers’ websites and are not negotiable online. Moreover, the post-paid plans in New

York City are the same as those in Los Angeles, California, Pensacola, Florida and San Angelo,

Texas.135 Likewise, RTG’s members provide service on a local basis but enter into roaming

agreements to provide their subscribers with nationwide service. RTG’s members set post-paid

pricing plans in reaction to the nationwide retail plans offered by the four largest carriers.

                      2. Handsets are an Extremely Important Factor in Consumers’ Selection of a
                         Wireless Carrier, and They are Developed and Sold Nationally.

         The national market concept does not stop at retail pricing plans. Handsets have become an

extremely important factor in consumers’ selection of a wireless carrier, and they are developed and

sold nationally. A handset must be built with the correct chips, antennae, and transmitters to be

operable on a carrier’s nationwide network, and there is a significant amount of engineering and

testing involved in bringing a handset to market. The arrangements between handset manufacturers

and wireless carriers to bring new handsets to market are nationwide in scope. Unfortunately, rural

carriers do not have the market power to develop or obtain popular handsets. Instead, rural carriers

purchase outdated and unused handsets from manufacturers after they have been determined to be


134
   See United States v. Grinnell Corp., 384 U.S. 563, 575 (1966) (finding that relevant market for security services was
nationwide where defendants had a “national schedule of prices, rates, and terms.”)
135
  See Exhibit G (Screenshots of AT&T, Verizon Wireless, Sprint and T-Mobile Pricing Plans in New York, NY, San
Angelo, TX, Los Angeles, CA, and Pensacola, FL showing identical pricing plans within each company).

                                                           47
“yesterday’s model” or not a top seller by the nationwide carriers. Rural carriers do not drive this

process, yet consumers expect to be able to purchase handsets advertised nationally, such as the

iPhone, from a rural carrier who provides service locally.136

                       3. The Four National Carriers Advertise and Market Nationally.

         Nielsen data shows that the vast majority of dollars spent on advertising by the four national

carriers is on a national basis. The substance of the national carriers’ advertising campaigns also

focuses on national slogans that promote their nationwide attributes, including their national

footprints (e.g., AT&T’s “The Nation’s Fastest Mobile Broadband Network,” Verizon Wireless’s

“America’s most reliable network,” Sprint’s “America's Favorite 4G Network” and T-Mobile’s

“Step Up to America’s Largest 4G Network”). This type of nationwide marketing and advertising

speaks volumes on the scope of the geographic market and argues in favor of it being a national

market.

             B. The Proposed Merger Will Further Entrench the Twin Bell Monopoly.

         The proposed merger between AT&T and T-Mobile will have a significant effect on RTG’s

members and their ability to provide adequate services to underserved rural consumers. The existing

Twin Bell duopoly that exists today will become further entrenched as a result of this merger causing

RTG’s members to be even more disadvantaged in their ability to access backhaul, roaming,

spectrum (availability and interoperability) and current, multi-function handsets.

         AT&T is already a behemoth in the wireless industry. As discussed earlier, AT&T's home

network currently covers over 300 million people, and the company has a premerger subscriber base

of roughly 97 million wireless customers. AT&T currently controls about 31% of the post-paid

wireless market and, combined with T-Mobile, will control over 43% of the market. Furthermore, as

Verizon Wireless currently controls 38% of the post-paid wireless market, allowing the merger to go

136
   Unfortunately, as discussed in Section II.B.1.c above, these handsets are not available for rural carriers to sell because
of exclusive contracts with nationwide carriers.
                                                             48
through will put over 80% of the post-paid wireless market into the hands of the same two

companies who also control the vast majority of the essential inputs necessary to compete in the

market, such as roaming, backhaul and wireline access. The proposed transaction will only

exacerbate the difficulties the regional carriers currently face, and will also hurt the consumers of

regional wireless providers by resulting in higher prices, reduced innovation and lower quality.

       The proposed transaction will entrench AT&T and Verizon Wireless as the market leaders

and marginalize all other carriers, from Sprint, which would be the only remaining national carrier,

to RTG's members. RTG’s members are dependent on AT&T and Verizon Wireless for essential

inputs, such as roaming, backhaul, special access and wireline access.

                   1. Special Access/Backhaul.

       Many of RTG's members depend on AT&T or Verizon Wireless for backhaul. If the

proposed transaction is allowed, the Twin Bell duopoly will be able to exert such a high degree of

market dominance over special access that the Twin Bells will be able to systematically raise other

carriers' costs (and the prospective costs of potential future entrants) and degrade the quality of

backhaul provided to those carriers. Without access to affordable, quality backhaul, RTG’s

members will be even more reliant on universal service support or will have to shut down portions of

their networks. As a result, competition will be further decreased and the quality of service available

in rural markets will decrease as rural carriers are forced to turn down cell sites to continue in

business. Likewise, the innovation that is spurred by rural carriers who constantly seek low cost

solutions to provide services in remote and rural areas will give way as they are forced to

discontinue operations.

       AT&T and Verizon Wireless combined control about 85 to 90 percent of the nation's

backhaul assets; the remaining 10 to 15 percent is owned by Time Warner Telecom, microwave

providers such as FiberTower, fiber owners such as Level3 and cable companies. T-Mobile plays a

                                                   49
significant role in generating business opportunities for competitive providers of special access

services. Just last year, for example, T-Mobile told the FCC that "T-Mobile is proud of its success in

creating competition for Ethernet services in major metropolitan areas."137 This important role in

stimulating competition for special access services would be eliminated if T-Mobile were no longer

a purchaser of competitive special access services.138

         T-Mobile's removal from the market would diminish the ability of the smaller, more

competitive special access providers to remain in business and compete with AT&T's in-region

wireline offerings. Indeed, these providers may find that their businesses are no longer viable if they

lose T-Mobile as a potential customer.139 Thus, the merger would substantially diminish any

prospect that alternative backhaul providers will emerge to compete with AT&T and Verizon in their

incumbent wireline service areas.140 Absent a realistic threat of competitive entry in areas where the

combined demand from T-Mobile, Sprint, and other carriers potentially could attract new backhaul

providers, marketplace forces will not constrain AT&T's and Verizon's ability to impose

unreasonable rates, terms, and conditions on their wireless rivals in their incumbent service territory.




137
  Letter from Kathleen O'Brien-Ham, T-Mobile, to Marlene H. Dortch, FCC, WC Docket No. 05-25, at 2 (May 6,
2010).
138
  See Testimony of Victor H. Meena before the Senate Committee on the Judiciary Subcommittee on Antitrust,
Competition Policy and Consumer Rights, May 11, 2011 at 11 ("AT&T's takeover of T-Mobile removes a significant
competitive carrier partner and advocate from America's wireless marketplace.").
139
    Competitive backhaul providers already are concerned that "their entire business model could face strains as a result
of the merger" removing T-Mobile as a potential customer. See Sara Jerome, Backhaul Industry Fears AT&T Merger,
THE HILL (May 11, 2011) available at: <http://thehill.com/blogs/hillicon-valley/technology/160407-backhaul-industry-
fears-atat-merger> (reporting that officials in the alternative backhaul industry fear that the merger could "potentially
sink[] some companies . . . leaving AT&T and Verizon to dominate the backhaul market").
140
   AT&T and Verizon "historically have not engaged in vigorous wireline competition against [each other or] other
ILECs." Comments of T-Mobile, WC Docket No. 05-25, at 11-12 (June 13, 2005); see also, e.g., Special Access Rates
for Price Cap Local Exchange Carriers, WC Docket No. 05-25, Comments of T-Mobile, Declaration of Chris Sykes, ¶
11 (June 13, 2005) ("ILECs have not competed vigorously against each other in the provision of any wireline service,
including special access service.").
                                                           50
                         2. Roaming.

           Through previous mergers, AT&T and Verizon Wireless have assembled large wireless

footprints. Post-merger, the Twin Bells will understand that they control the key assets necessary for

RTG members to offer nationwide service through roaming, and that if they raise prices they will

earn greater returns while simultaneously raising the costs for rural providers. This would

effectively set a price floor by increasing the cost structures of all other carriers. As wireless

competitors and gatekeepers to essential roaming service, AT&T and Verizon Wireless would have

every incentive to increase their roaming rates or deny RTG members access to their networks for

roaming.

           With respect to GSM technology, the proposed transaction will only reduce the number of

alternatives that rural carriers with GSM networks can turn to for roaming partners. Without the

competition that T-Mobile provides in the GSM market, AT&T would have the post-merger

incentive to raise roaming rates because AT&T will be the only nationwide GSM carrier in the

United States – a GSM monopoly. All other GSM carriers will be subject to whatever rate AT&T

decides to charge for roaming. If this merger is approved, the next largest GSM carrier in the United

States would be Cincinnati Bell Wireless which only serves approximately 504,000 subscribers in

southwest Ohio and very small portions of Indiana and Kentucky.141 Entering into a GSM roaming

agreement with Cincinnati Bell will only provide the ability to roam in a small portion of southwest

Ohio and portions of Kentucky, not the rest of the United States. The stranglehold AT&T will have

on the wholesale roaming market will crush all other GSM carriers in the United States who will not

be in a position to negotiate reasonable roaming rates. T-Mobile currently serves as a backstop

offering much lower roaming rates to rural and regional GSM carriers. Without T-Mobile, rural and

regional GSM carriers will not be able to compete.

141
      See http://www.dailywireless.org/2011/02/28/top-ten-us-carriers/.

                                                             51
       Unfortunately, the eventual transition of carriers from GSM and Code Division Multiple

Access (“CDMA”) to LTE will not cure this competitive problem. First, any transition is likely to

occur over a period of many years and existing 3G technologies are likely to continue to provide an

important access point for consumers for many years to come, just as 2G offerings do today.

Second, as discussed in Section II.B.1.c above, the LTE configurations of both AT&T and Verizon

Wireless, as presently devised, will not allow roaming on other carriers' networks because the 700

MHz networks where they are building LTE are not interoperable.

                  3. Spectrum.

       As discussed in Section II.B.1.a above, AT&T and Verizon Wireless currently own the

majority of the available 700 MHz spectrum characterized as "beachfront" given its superior

propagation features. The combination of AT&T and T-Mobile will increase spectrum consolidation

and remove an independent licensor of spectrum in rural areas. For RTG members licensing

spectrum from T-Mobile, this will be an area of significant concern, as they will no longer have the

option of turning to T-Mobile for their spectrum needs.

       Sprint, T-Mobile and smaller regional carriers have, in the past, worked together to develop

the auctioning of additional spectrum and to trade spectrum. The elimination of T-Mobile removes a

key player from those efforts. RTG's members are small, rural businesses whose revenues are a

fraction of those of the national carriers. RTG's members cannot possibly bear the burden of the

increased development costs associated with bringing additional spectrum to market that will arise

from T-Mobile's elimination. Furthermore, T-Mobile has long been a strong advocate in the fight

for additional spectrum, and the loss of T-Mobile will have severe implications on future spectrum

availability. RTG's members simply do not have the financial strength to fight for more spectrum

without support from multiple national carriers, including T-Mobile.




                                                 52
        For example, T-Mobile, Sprint, Cellular South, RTG, RCA, CTIA, Xanadoo, MetroPCS,

Access Spectrum and Triad Communications were all part of Connect Public Safety Now, a broad

base of stakeholders advocating the auction of the D Block as the most efficient and effective way to

ensure construction of a reliable and cost-effective interoperable network for our nation’s first

responders and its citizens. After AT&T announced its intention to acquire T-Mobile, T-Mobile

withdrew from Connect Public Safety Now. AT&T’s position on the D Block is to have it

reallocated to Public Safety to let Public Safety try to build an independent network. This

reallocation would prevent any other stakeholder from being able to acquire sufficient 700 MHz

spectrum to compete with AT&T (or Verizon Wireless) in the valuable 700 MHz bands where LTE

technology will take its foothold. T-Mobile had been a very vocal opponent of auctioning the D

Block and now that voice has been silenced by AT&T.142

                     4. Device Interoperability.

        The transaction will also further empower AT&T and Verizon Wireless to petition against

interoperability among the various "beachfront" 700 MHz bands. As more fully discussed in Section

II.B.1.c, historically, bands across the same spectrum block have been interoperable, and any device

using a specific spectrum block would work on any network's towers on that spectrum block.

However, bands along blocks of 700 MHz spectrum are not fully interoperable, allowing owners to

block others from roaming on their networks. Verizon Wireless owns spectrum in the 700 MHz C

Block spectrum in Band Class 13, and AT&T owns 700 MHz licenses in the lower C and B Blocks

in Band Class 17; and smaller operators own 700 MHz spectrum licenses in the Lower A, B and C

142
   See, e.g., In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993,
Annual Report and Analysis of Competitive Market Conditions with Respect to Mobile Wireless, Including Commercial
Mobile Services, Reply Comments of T-Mobile USA, Inc., WT Docket No. 10-133 (filed August 6, 2010) at 5 (“In
addition to these initiatives, the Commission should take steps to auction the 700 MHz D Block for Commercial use,
starting with the release of a Notice of Proposed Rulemaking before the end of this year.”); In the Matter of
Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz Band, Ex Parte of T-
Mobile USA, Inc., PS Docket No. 06-299 (filed January 6, 2011) at 3 (“To promote competition in the wireless
marketplace, the Commission must look for ways to make more low band spectrum available to competing providers.
One way to accomplish this is to rapidly auction the 700 MHz D Block.”).
                                                        53
Blocks in Band Class 12. Unlike prior implementations in the cellular and PCS bands, where

consumer devices were capable of operating across entire bands, regardless of the particular

licensing block assigned to a carrier, AT&T and Verizon have obtained unique "Band Class"

designations for their respective 700 MHz spectrum block assignments.

       What this means is that the LTE equipment standards permit AT&T and Verizon Wireless to

have device manufacturers build handsets and other devices that will operate in each carrier's Band

Class (the carrier's licensed spectrum) only – even if both of them are operating otherwise

compatible LTE broadband networks. AT&T and Verizon Wireless are using their market power

and size and scale advantages to limit the devices they sell to their own spectrum blocks, thereby

preventing customers from roaming or from even taking their LTE devices to the other Bell carrier.

What this also means is that the smaller 700 MHz licensees will not only be precluded from roaming

on AT&T’s or Verizon Wireless' 700 MHz LTE networks, but they will be excluded from sharing in

the scale efficiencies and lower costs that a common Band Class would bestow on all Band Class

members. AT&T and Verizon Wireless are using their market power to deny competitors the scale

advantages they would otherwise enjoy from handsets built to operate across the band. The

elimination of T-Mobile as a competitor will further enhance AT&T's and Verizon Wireless' market

power and scale advantages, making it even harder for small carriers to compete. Lack of

interoperability will prevent small carriers from roaming on the nationals' networks and will force

small carriers to make costly dual-chip handsets. This will not only raise costs for RTG's members,

but will also limit the number of handsets they will be able to provide.

                   5. Access to Handsets and Devices.

       The merger, while simultaneously increasing AT&T's scale and eliminating T-Mobile, will

impair the ability of RTG's members to acquire innovative and multi-functional handsets and

devices. There is no doubt that the wireless industry is increasingly being driven by handset and

                                                  54
device availability, and the availability of new handsets and other types of equipment is an important

consideration for consumers choosing a wireless carrier. Handset manufacturers naturally want to

partner with carriers that will allow the manufacturer's product to reach the largest possible customer

base. If the proposed transaction is allowed, AT&T will control over 43% of the market, and AT&T

and Verizon Wireless will together control over 76% of the market. Carriers often negotiate a "time-

to-market" advantage during which time they will have exclusive selling rights for a given handset.

Post-merger, AT&T and Verizon Wireless will have even greater ability to demand longer periods of

exclusivity, and in a market where technology changes in a matter of months, this will increase the

existing disparity between the market leaders and all other carriers in this regard.

       In sum, this proposed merger will substantially lessen competition because it will raise prices

in both the retail and wholesale market, it will reduce the quality of the services offered to

consumers, and it will reduce innovation by allowing AT&T to exploit its market dominance.

VI.    CONCLUSION

       AT&T’s proposed takeover of T-Mobile is presumptively anticompetitive, violates Federal

merger laws, and will generate massive public interest harms. Furthermore, AT&T and T-Mobile

have failed in their applications and supporting statements to overcome those presumptions and have

not shown that there are public interest benefits that outweigh public interest harms. For the

foregoing reasons, RTG respectfully requests the Commission to deny the above-referenced




                                                   55
applications outright or, in the alternative, designate them for hearing pursuant to Section 309(e) to

determine whether the proposed acquisition of T-Mobile by AT&T serves the public interest.

                              Respectfully submitted,

                              RURAL TELECOMMUNICATIONS GROUP, INC.

                       By:    /s/ Caressa D. Bennet
                              ______________________________
                              Caressa D. Bennet
                              Michael R. Bennet
                              Daryl A. Zakov
                              Bennet & Bennet, PLLC
                              4350 East West Highway, Suite 201
                              Bethesda, MD 20814
                              (202) 371-1500

                              Its Attorneys

May 31, 2011




                                                  56
                                          EXHIBIT A




Wireless industry market share pie chart from Wireless Industry Consolidation Webinar.




                                               57
                                        EXHIBIT B




Map depicting spectrum currently warehoused by AT&T from Wireless Industry Consolidation
Webinar.




                                             58
                                        EXHIBIT C




Source: Mark Sullivan, AT&T, Sprint, T-Mobile and Verizon: PCWorld’s Exclusive Performance
Tests Reveal Which 4G Network Delivers the Fastest Data Speeds, PC World Online (March 13,
2011).




                                             59
                                        EXHIBIT D




Source: Karl Bode, Verizon iPhone Users See Fewer Dropped Calls, Changewave: AT&T Still has
the Worst Dropped Call Ranking, DSL Reports Online (April 6, 2011).




                                             60
                                        EXHIBIT E




Map depicting AT&T and T-Mobile overlapping coverage from Wireless Industry Consolidation
Webinar.




                                             61
                                         EXHIBIT F




Greg Lamm, Android to be King of the World with Windows Phone Gaining, Tech Flash (April 7,
2011) (citing Worldwide Mobile Communications Device Open OS Sales to End User by OS
(Thousand Units)) (citing Gartner).




                                             62
                               EXHIBIT G



Screenshots of AT&T, Verizon Wireless, Sprint and T-Mobile Pricing Plans in
    New York, NY, San Angelo, TX, Los Angeles, CA and Pensacola, FL


                   AT&T Pricing Plan in New York, NY
                  AT&T Pricing Plan in San Angelo, TX
                  AT&T Pricing Plan in Los Angeles, CA
                   AT&T Pricing Plan in Pensacola, FL

              Verizon Wireless Pricing Plan in New York, NY
             Verizon Wireless Pricing Plan in San Angelo, TX
             Verizon Wireless Pricing Plan in Los Angeles, CA
              Verizon Wireless Pricing Plan in Pensacola, FL

                   Sprint Pricing Plan in New York, NY
                  Sprint Pricing Plan in San Angelo, TX
                  Sprint Pricing Plan in Los Angeles, CA
                   Sprint Pricing Plan in Pensacola, FL

                  T-Mobile Pricing Plan in New York, NY
                 T-Mobile Pricing Plan in San Angelo, TX
                 T-Mobile Pricing Plan in Los Angeles, CA
                  T-Mobile Pricing Plan in Pensacola, FL




                                    63
AT&T Pricing Plan in New York, NY




               64
AT&T Pricing Plan in San Angelo, TX




                65
AT&T Pricing Plan in Los Angeles, CA




                66
AT&T Pricing Plan in Pensacola, FL




               67
Verizon Wireless Pricing Plan in New York, NY




                     68
Verizon Wireless Pricing Plan in San Angelo, TX




                      69
Verizon Wireless Pricing Plan in Los Angeles, CA




                      70
Verizon Wireless Pricing Plan in Pensacola, FL




                     71
Sprint Pricing Plan in New York, NY




                72
Sprint Pricing Plan in San Angelo, TX




                 73
Sprint Pricing Plan in Los Angeles, CA




                 74
Sprint Pricing Plan in Pensacola, FL




                75
T-Mobile Pricing Plan in New York, NY




                 76
T-Mobile Pricing Plan in San Angelo, TX




                  77
T-Mobile Pricing Plan in Los Angeles, CA




                  78
T-Mobile Pricing Plan in Pensacola, FL




                 79
                              CERTIFICATE OF SERVICE

       I, Colleen von Hollen, of Bennet & Bennet, PLLC, 4350 East West Highway, Suite 201,
Bethesda, MD 20814, hereby certify that a copy of the foregoing Petition to Deny of the Rural
Telecommunications Group, Inc. was served on this 31st day of May, 2011, via electronic mail,
on those listed below:

Peter J. Schildkraut
Arnold & Porter LLP
555 12th Street, NW
Washington, DC 20004
Email: peter_schildkraut@aporter.com
Counsel for AT&T Inc. and AT&T Mobility

Scott Feira
Arnold & Porter LLP
555 12th Street, NW
Washington, DC 20004
Email: scott_feira@aporter.com
Counsel for AT&T Inc. and AT&T Mobility

Nancy J. Victory
Wiley Rein LLP
1776 K Street, NW
Washington, DC 20006
Email: nvictory@wileyrein.com
Counsel for Deutsche Telekom and T-Mobile

William R. Drexel
AT&T Inc.
208 South Akard Street, Room 3305
Dallas, TX 75202
Email: william.drexel@att.com

Dan Menser
T-Mobile USA
Deutsche Telekom AG
12920 SE 38th Street
Bellevue, WA 98006
Email: Dan.Menser@t-mobile.com

Kathy Harris
Mobility Division
Wireless Telecommunications Bureau
Federal Communications Commission
Email: Kathy.harris@fcc.gov
Kate Matraves
Spectrum and Competition Policy Division
Wireless Telecommunications Bureau
Federal Communications Commission
Email: Catherine.matraves@fcc.gov

Jim Bird
Office of the General Counsel
Federal Communications Commission
Email: Jim.bird@fcc.gov

David Krech
Policy Division
International Bureau
Federal Communications Commission
David.krech@fcc.gov

Best Copy and Printing, Inc. (BCPI)
445 12th Street, S.W., Room CY-B402
Washington, D.C. 20554
Email: fcc@bcpiweb.com
                                           /s/ Colleen von Hollen
                                           ____________________
                                           Colleen von Hollen

				
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