Group asks FCC to press T-Mobile on 'Plan B'

By Gautham Nagesh - 10/18/11 05:30 PM ET

Public Knowledge wrote to the Federal Communications Commission on Tuesday asking the agency to press T-Mobile USA parent company Deutsche Telekom on the viability of the firm if AT&T’s $39 billion takeover bid is unsuccessful.

“Just as AT&T neglected to submit evidence supporting its claims that its acquisition of T-Mobile will create new jobs, AT&T has failed to substantiate its assertion that AT&T is somehow saving T-Mobile by acquiring it,” wrote Public Knowledge legal director Harold Feld.

“There is substantial reason to believe that AT&T’s claims of saving T-Mobile from perishing at the hands of the market are false.”

Specifically, Feld urged the FCC to request documentation from Deutsche Telekom regarding the other firms that showed interest in purchasing T-Mobile, the price they offered and why they were rejected in favor of AT&T.

Feld cited recent comments from Deutsche Telekom’s chief technology officer as evidence the firm has alternative plans should the deal fall through. AT&T and Deutsche Telekom have both consistently maintained T-Mobile lacks the resources to build out its 4G network and compete in the U.S.

When contacted, a T-Mobile spokesman referred Hillicon to a statement sent in September that argued the sale to AT&T is the best possible solution for consumers and declared, "There is no Plan B."

The Justice Department has filed suit to block the merger, arguing the elimination of T-Mobile as a low-cost competitor to AT&T, Sprint and Verizon would reduce competition in the wireless market and harm consumers.

The firms are exploring the possibility of a settlement, which could include divestitures, to satisfy the government’s concerns while preparing to go to trial early next year.

Feld argued that alternatives to the merger include taking T-Mobile public or selling to one of the other interested parties, which reportedly include Sprint. He pointed to analysts’ estimates that an initial public offering of T-Mobile could raise as much as $28 billion and questioned why AT&T is willing to pay $11 billion above that market value.