Members of the House Judiciary Committee said they were skeptical that AT&T's planned acquisition of T-Mobile would benefit consumers, and that they feared it would mean higher prices for wireless service.
The $39 billion deal was announced March 20. It needs to pass muster with the Federal Communications Commission and antitrust authorities in the U.S. Department of Justice. Congress has no direct say in mergers, though it can exert some influence. The review of the merger by the Justice Department and the FCC will take at least several months.
At a hearing before the Judiciary Committee's competition subcommittee, even the usually pro-business Republicans seemed wary. Representative Darryl Issa (R-Calif.) said he had concerns about reassembling a duopoly on the back end, because AT&T and Verizon already own large landline networks. Those landline networks often carry traffic for wireless carriers.
John Conyers of Michigan, the senior Democrat on the Committee, was blunt. I see absolutely no redeeming reason for this merger to go through, he said. Normally, at antitrust hearings, we get the promises that there won't be losses of jobs and they won't raise the rates. The thing I like about these witnesses is, they don't even promise that.
Randall Stephenson, chairman and CEO of AT&T, said on the contrary, the merger would be a vehicle for job creation because of greater investment.
Rep. Melvin Watt (D-N.C.) noted that in parts of his state there is often no wireless service at all, and that there are still blocks of spectrum that AT&T owns that are going unused. Stephenson said AT&T bought the spectrum, which lies in the 700 megahertz band, in order to build out its LTE network.
Some on the committee were less opposed to the deal. Rep. Ben Quayle, an Arizona Republican, said new competitors would enter the market to compete with AT&T and Verizon if prices got too high.
But Andrew Gavil, an antitrust professor at the Howard University School of Law, said the barriers to entry - including high capital costs and the need to acquire spectrum - make it much more difficult for smaller competitors to get a foothold.
Also appearing before the committee was Rene Obermann, CEO of Deutsche Telekom, T-Mobile's parent company. He said the deal was the best outcome for T-Mobile customers. He said the company had invested billions in its network.
But that prompted questions from the subcommittee chair, Virginia Republican Bob Goodlatte. He asked whether T-Mobile was a viable competitor or not, and if not, why Obermann claimed that T-Mobile's Network was the best in the U.S. Obermann said T-Mobile is trying to compete with aggressive marketing.