CCA’s Berry Responds to AT&T’s Stephenson’s Remarks
In recent remarks at a Milken Institute conference, AT&T’s Chairman and CEO Randall Stephenson clearly stated that there should be less competition in the wireless industry. He said, “I don’t think the market’s going to accommodate the number of competitors there are in the landscape…Competitors will be forced to drop out if they can’t find enough wireless capacity to offer modern data services to growing numbers of customers.” Through direct and indirect anticompetitive practices, AT&T has long attempted to block or eliminate competitors in their marketplace. Stephenson’s statements put a clear point on that end game – starve competitors of the critical inputs needed to provide latest generation wireless services, and force them out under the guise of “market pressure.”
AT&T’s prices have increased, and Stephenson clearly is trying to place blame where it is not deserved – on the commendable actions of the Department of Justice and the Federal Communication Commission. I find it interesting that Stephenson neglects to mention that despite failing to takeover of T-Mobile for $39 billion, AT&T’s wireless revenues increased 5.4% from the first quarter of 2011 to the first quarter of 2012. So despite being “spectrum-starved,” AT&T has continued to grow with more customers, more revenues, and higher EBITDA. Meanwhile truly spectrum-starved competitors, without the luxury of AT&T’s or Verizon’s spectrum warehouses, are approaching exhaustion of their existing spectrum holdings and are facing severe challenges deploying 4G long term evolution (LTE) service – the “modern data services” desired by consumers.
It is time for AT&T, and their twin Bell Verizon, to stop thinking and acting like monopolists and begin to support competitive connectivity. A competitive market does not mean less efficient allocation of spectrum or reduced services for consumers. In fact, more competitive carriers can help to provide connectivity for the benefit of consumers. Spectrum is a tax-payer owned resource, after all, and AT&T and Verizon do not have a right to spectrum aggregation. Competitive connectivity requires policies ensuring responsible, appropriate and competitive spectrum allocations. Spectrum policy must ensure all competitors have access to the critical inputs for providing wireless service – voice and data roaming, backhaul and offload services, and interoperable devices.
Competitive connectivity is not a new concept. Indeed, about a month before announcing the intent of eliminating T-Mobile, Mr. Stephenson noted in remarks at the Mobile World Congress that wireless ecosystems must be interoperable, yet here in the U.S. AT&T has failed to support interoperable solutions.
Competition promotes investment and innovation and alleviates the need for burdensome regulation. In more dynamic times, when competition flourished, prices declined, services expanded, and consumers benefited. Now, following two years of the FCC failing to find the wireless industry effectively competitive, AT&T has increased data prices 30% since the end of 2011 alone, as Stephenson noted. Restoration of competition is not only possible but necessary. Federal regulators must pursue policies that ensure competitive connectivity and access to critical inputs for all wireless carriers, not just the largest two.