AT&T Gives Love To Merger Foe Sprint


Sprint Nextel has been one of the earliest and most outspoken critics of AT&T's proposed acquisition of T-Mobile USA. Sprint CEO Dan Hesse earlier this month said the mega-deal poses a "serious threat" to the industry and would eliminate competition from the wireless market by effectively turning it into a duopoly dominated by AT&T and Verizon Wireless. The company has also formally asked the U.S. government to block the merger.

But in merger documents AT&T filed with the Federal Communications Commission yesterday, the nation's No. 2 carrier had only complimentary things to say about Sprint as a competitor.

"Sprint is aggressively challenging AT&T's value proposition by promoting a consumer message that extols the combined value of a next generation network, innovative devices and aggressive pricing," noted AT&T CMO David Christopher. "This strategy has fueled Sprint's resurgence as a successful competitor to AT&T and will continue to drive Sprint's success in the future."

In particular, he credited Sprint's early efforts to offer 4G service and sell devices such as the HTC EVO 4G, billed as America's first 4G phone. Christopher even highlighted shots Sprint has taken at AT&T as part of its marketing: "With respect to data speeds, Sprint has taken aim at AT&T smartphone users, promoting the Sprint network as "4G, not faux G,'" he wrote.

Why all the AT&T love for a rival it would otherwise be trashing right back? It's part of AT&T's broader effort to convince federal regulators there's already fierce competition in the wireless market from operators like Sprint and budget-oriented "mavericks" like MetroPCS and Leap Wireless -- competition that won't be dampened by the proposed ATT-T-Mobile merger.

At the same time, AT&T disses T-Mobile -- the smallest of the four major U.S. carriers -- as a competitor to argue that its disappearance from the market won't make much of a difference. Aggressive, "all-you-can eat" wireless providers like MetroPCS and Leap will ably fill the low-end service void while also offering 4G options, according to the filing.

AT&T just doesn't see T-Mobile as much of a threat. "Simply put, AT&T does not generally focus its competitive energies on T-Mobile USA because in our view: 1) T-Mobile USA does not have a strong differentiating network claim; 2) it does not have a marquee device portfolio; and 3) its emphasis on lower, but not the lowest, prices has not resulted in T-Mobile USA winning customers away from AT&T on a net basis," noted Christopher.

Reading that, it sounds like AT&T is doing consumers a favor by reducing the number of major carriers from four to three by swallowing T-Mobile and using its spectrum to build out its own 4G network. But Sprint, at least, is unlikely to be swayed by this bit of AT&T's counterintuitive marketing -- exalting other competitors while diminishing T-Mobile's status.

That's because Sprint -- now the No. 3 carrier -- would obviously then be competing against two telecom behemoths in Verizon and the combined AT&T-T-Mobile. Following AT&T's logic, it would then be in the same position as T-Mobile, an operator to0 weak to compete with the big boys and in need of buyout. Oh wait, that would lead to even more concentration in the industry. How would AT&T spin that?

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