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Sprint CEO Dan Hesse vigorously attacked the AT&T-T-Mobile merger in the Senate

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Sprint CEO Dan Hesse vigorously attacked the AT&T-T-Mobile merger in the Senate
Yesterday's Senate hearing, which was concerned with the proposed AT&T-T-Mobile merger, was always going to be interesting - just for one thing, it was charmingly named "The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?" - but Sprint CEO Dan Hesse played his part in this with his staunch opposition to the buyout and his well coined metaphors.

Of course, we have already heard Mr. Hesse speak against the proposed merger, but his testimony in the Congress was a powerful, well formulated verbal assault that envisaged a return to the dark ages of Ma Bell:

"The wireless industry thrives on competition, which, in turn, drives investment, innovation, consumer choice, job creation and U.S. global leadership in wireless communications."

This rather general statement was followed by his warning that innovation stagnation is imminent:

"If AT&T is permitted to devour one of the two remaining independent national wireless carriers, while the rest of the world achieves advances in technology and innovation for the 21st century, the U.S. will go backwards – toward last century’s Ma Bell."

The Sprint CEO claimed that if the merger is approved, it will result in a duopolistic control of the wireless market, which is against the interest of the public for four major reasons:

  • AT&T and Verizon (referred to as the Twin Bells by Hesse) would be able to dictate freely the voice and data prices - and, nope, Sprint's CEO didn't suggest they will be decreased.
  • He noted that the Twin Bells would be able "to raise competitors’ costs, reduce their network quality and quash competitive alternatives", because they will control most of USA's wireline infrastructure and the critical "last mile".
  • Dan Hesse also said that a duopolistic wireless market would limit consumer choice, as most smartphone and tablet manufacturers would opt to release their products on Verizon and on the carrier that's formed by the AT&T-T-Mobile merger, because of their dominating market share.
  • He warned that innovation would also be harmed, as developers would focus on creating content for the Twin Bells.

Furthermore, Dan Hesse attacked AT&T's claim that it needs T-Mobile's spectrum in order to extend its network reach in the rural areas, arguing it will reach out merely a percent more than it already does. As expected, he appealed to the Department of Justice and the Federal Communications Commission to reject the merger.

source: Sprint

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posted on 12 May 2011, 10:20 2

1. Mymotodroid (unregistered)


Sprint would suffer and die under the weight of the two giant carriers. In a way I’m glad he’s so strongly opposed to the acquisition. However, the state that Sprint is in right now, with their prices as low as they are. It would simply put them out of their misery.

posted on 12 May 2011, 10:36 4

3. skymitch89 (Posts: 1309; Member since: 05 Nov 2010)


I think that if there were the two giant carriers, then the prices of devices and plans would skyrocket "because of the coverage" and more people would switch to Sprint because of the lower prices.

posted on 12 May 2011, 10:54 4

5. jogutier (Posts: 324; Member since: 12 Feb 2010)


No, I think they will keep it inexpensive until they sign alot more people and then get rid of all the inexpensive plans for more expensive plans.

Verizon and ATT&TM future prices:
Unlimited smartphone data = $50 ($30).
Unlimited calling plans with no data = $100 ($60)
Add a line $30 ($9.99)

NO BUENO!

posted on 13 May 2011, 07:13 1

66. remixfa (Posts: 14255; Member since: 19 Dec 2008)


sprint wouldnt suffer and die. Hell, they would actually have a boon. They would be the only national 4g "value" carrier left. Half of Tmo's customers would probably flock to them.

Thats not what they are worried about.

What sprint is worried about is carrier exclusivity on phones. Why would apple, htc, samsung want to give Sprint the exclusive rights on a phone when VZW and ATT are litterally going to be 3x bigger. That means sprint would ultimately get the shaft in a lot of products which would make it hard for them to compete on the high end phone level.

posted on 12 May 2011, 10:32 6

2. Jake (unregistered)


Yea, I think this is totally a return to a monopoly.

posted on 12 May 2011, 10:45 3

4. jogutier (Posts: 324; Member since: 12 Feb 2010)


SPRINT,,, get ready to get bought out. Welcome to VERIZON, we think you'll like it here. :)

posted on 12 May 2011, 14:48

53. iHateCrapple (Posts: 734; Member since: 12 Feb 2010)


NO NO NO!

posted on 12 May 2011, 15:05 2

54. jbash (Posts: 345; Member since: 07 Feb 2011)


wont happen because verizon is already at their max market share capacity aloowed by the fcc at 95%

posted on 12 May 2011, 15:05

55. jbash (Posts: 345; Member since: 07 Feb 2011)


allowed*

posted on 13 May 2011, 07:15 1

67. remixfa (Posts: 14255; Member since: 19 Dec 2008)


VZW would have bought sprint years ago if they wanted them. back when they were worth even less.

To quote a direct conversation with one of the VZW uppers I had a while ago..

"why buy them and all their debt for billions when we can wait for them to sink, buy up their towers for pennies, and a large portion of their customers will come to us anyways for free.

posted on 12 May 2011, 11:01 11

6. You'reAtool (unregistered)


Good for Dan Hesse. Someone needs to take a stand on this. People who joke about Sprint being bought next probably don't realize what will happen. If it were just ATT and Verizon and small regional carriers here and there, they can do ANYTHING they want with plans, prices, devices, etc. We consumers are the puppets in this situation. We would have no control. cancel contract and go to the other? who cares, especially if there prices are nearly identical. Go to a regional carrier? Sure, but we all know the downfalls to that. This obviously isn't about Sprint going under to Dan. His arguments are for the benefits of the consumers, not himself or Sprint. If this deal goes through there's no stopping a Verizon/Sprint merger. Then there is no stopping those two companies to control this entire country(wireless industry). Sadly, we all need cellphones these days with the world we live in. You could see people flock to Sprint if this goes through, you may not. I would sway more on the side of may not, simply because people still havent flocked to Sprint, even though they are continually rated top in customer satisfaction, plan prices and too be fair, their coverage is better than ATT and not so far behind Verizon. The fact that Americans still haven't figured out Sprint is a good choice is still concerning and it possibly will never change sadly.

posted on 12 May 2011, 11:07 2

8. vvelez5 (Posts: 623; Member since: 29 Jan 2011)


Someone here that has no idea what dictates price. You are not forced to go to ATT or Verizon you are also not forced to own a cellphone or a cellphone contract for that matter. The wireless industry has many different options and what dictates price is the consumer not the company. If it's too pricey for consumers then they wont buy. Simple as that.

posted on 12 May 2011, 11:10 3

9. celljrod (Posts: 82; Member since: 07 Apr 2011)


Not in this day and age. The majority of us HAVE to have a cell phone for one reason or another. It is no longer a luxury. I've seen people lose their house and live out of a car to make sure the cell phone stays on. I'm not saying it's right, but that's the society we live in now.

posted on 12 May 2011, 11:14 4

10. vvelez5 (Posts: 623; Member since: 29 Jan 2011)


Just because that's what is accepted by society that doesn't mean that its a necessity. Selling cell phones has taught me alot about people. Most people don't buy what they need but rather buy what they want or to keep up with the Jones' when they can't really afford it or aren't going to use 1/4th of the features. Do you think most consumers who have smartphones actually use it to its fullest potential. I have customers who havent downloaded apps because they only use their phones to make calls and send text and they only buy the phone and pay the extra cost of data because everyone else has a smartphone.

posted on 12 May 2011, 11:15 2

11. vvelez5 (Posts: 623; Member since: 29 Jan 2011)


Also that still doesnt dictate price. If people absolutely need a cellphone and cant afford a contract plan or doesnt have good credit there are prepaid phones that can work for them Virginmobile offers great phones for a great price.

posted on 12 May 2011, 11:19 1

13. celljrod (Posts: 82; Member since: 07 Apr 2011)


Not everybody has good prepaid options. For a lot of people it's Verizon, AT&T or nothing.

posted on 12 May 2011, 11:21 2

14. vvelez5 (Posts: 623; Member since: 29 Jan 2011)


If its verizon or att then you can always go for verizon or atts prepaid options also wherever you have att coverage you have tracfone or net10 coverage if people cant afford verizon or att they can get something else. and if thats the case now anyways then this merger wont hurt people in that region because they had to deal with verizon and att regardless.

posted on 12 May 2011, 11:18 2

12. celljrod (Posts: 82; Member since: 07 Apr 2011)


I agree with you on that part. However, if you asked 100 people if they would rather have a cell phone or TV, what do you think the answer would be? If you asked a single guy or girl a similar question? Cell phones have adapted to be an integral part of most peoples lives. We are moving closer and closer to a day when there will no longer be standalone TV's, computers, etc. We will do everything from our smartphones.

posted on 12 May 2011, 11:26 2

17. vvelez5 (Posts: 623; Member since: 29 Jan 2011)


I agree we will do mostly everything from our smartphones but that isnt the point. The point is many people dont need these features and the only reason they get these phones because they see everyone else has them. But again if you want these features you have to be ready to pay for them.

posted on 12 May 2011, 11:28 1

19. celljrod (Posts: 82; Member since: 07 Apr 2011)


Again, agreed. The problem I have is that without T-Mobile; Sprint, US Cellular and any other regioanl carrier are sitting ducks because VZW and AT&T will be able to control all pricing

posted on 13 May 2011, 07:17

68. remixfa (Posts: 14255; Member since: 19 Dec 2008)


i choose cellphones!! lol. I got rid of my cable and went netflix/hulu forever ago. i frikkin love it.

posted on 12 May 2011, 13:35 1

38. bridge4spirit (Posts: 6; Member since: 19 Oct 2010)


Exactly. Most people do not need smartphones. All the do is use Twitter and Facebook and check their email. You can do that on a dumbphone for less money....unless you are with Verizon who now charges $30 for data even on dumphones. Needless to say, I'm not a Verizon fan.

I truly think we all need to flee the huge cell companies...either for Cricket, Virgin, Boost, MetroPCS, etc......or old fashioned land lines and teach the major carriers that we CAN live without them.

posted on 12 May 2011, 14:03 2

49. tragichero (Posts: 163; Member since: 07 Jan 2011)


@bridge4spirit mobile email on a dumb phone for verizon is $5 a month unlimited..... 25 mb is also 9.99 with unlimited email. i understand your not a fan of verizon... but get your facts straight

posted on 12 May 2011, 13:35 3

39. tedkord (Posts: 12313; Member since: 17 Jun 2009)


It's obviously not a life necessity - no one's going to pay $1000/month per line for 450 minutes and no data.

However, it will drive prices up - monopolies (and duopolies with cooperating giants) always do. They also invariably stagnate innovation. If you've got no competition, you don't compete.

You don't need to look any further than microprocessors. At one point, Intel was the only real game in town, up to the original pentium. Processors were $500-1000, and speed changes were slow. Then, AMD stepped in with the original Athlon processor, which beat the PII/PIII in speed at lower price points. Suddenly, Intel started ramping up it's R&D and lowering prices. Today, a low end processor can be had for $50 or less, and it beats the tar out of a PII or PIII.

Initially, if it goes through, ATT will keep prices somewhat in line - until Sprint is either gobbled up by Verizon or just goes out of business. Then, hold on to your britches.

Just look at the moves Verizon has made in the past two years, without total market dominance. Requiring data plans for non-smartphones, removing New Every Two, removing 1-year contracts, removing 1-year upgrade prices in a two year contract, increasing phone prices for the newest from $200 to $250-300 on a 2-year contract, increasing ETFs.

And during all this, Verizon profits have soared - they weren't making these moves because they were fighting for survival and losing money. They made them because they felt their market power would allow them to get away with it. And, other than the data for non-smartphones, they have gotten away with it.

Now, imagine Verizon's moves if they're only competing with one company that mirrors their own policies and prices, while controlling 95% of the market combined.


This merger WILL ultimately be bad for the consumer. Period.

posted on 21 May 2011, 16:21

74. PoneLover (Posts: 9; Member since: 18 May 2011)


yeahhh thats trueeee...but ppl shudnt be complanin bout other companies...ppl shud mind their own fkn business..none of the carriers ask them to get in.nor nobody points at them with a gun..theres alot of companies u cud go to.

posted on 21 May 2011, 16:19

73. PoneLover (Posts: 9; Member since: 18 May 2011)


well yeah we all need cellphones but none of the cpompanies make u go on it..u got cricket.so stop complainin ppl..if verizon is expensive leave to us ..we dont care n u shudnt either...if we dont give a fk then u guys shudnt..we r ok with it....

posted on 12 May 2011, 11:21 4

15. bluechrism (unregistered)


YOu only have choice if there are genuine choices. If AT&T and Verizon own all the backhaul, all the infrastucture then they have the power to drive competitiors prices to meet their own, which i'm sure they already do with MVNO's. If sprint would be an acquisitoon target, then surly US Cellular, Cinncinnatti Bell and others have no chance, and MVNO's based off T-Mobile's, like SImple Mobile (1 million subscribers) are wiped out of existance, and if Sprint is bought by verizon, all the MVNO's using sprint will see a rate hike to bring them into like with what Virutual networks pay Verizon.

As Verizon and AT&T both have data and voice networks through landlines, FIOs etc, affordable mobile voice and data represents something of a conflict of interest. ALso in the rest of the worl where tethering is suported by carriers, this will never happen here as it's simple not in their interest.

Consumers will buy if it's a choice between paying X or not having it at all. Look at the controlled monoplies for cable Internet if you need evidence of that.

posted on 12 May 2011, 11:23 1

16. celljrod (Posts: 82; Member since: 07 Apr 2011)


Thank you.

posted on 12 May 2011, 11:29 1

20. vvelez5 (Posts: 623; Member since: 29 Jan 2011)


So youre saying that ATT and Verizon will drive all the regional carriers to raise their prices so they can make more money off the individual consumers. and if those consumers cant afford it then they go without right? Sounds like what you are saying. Wouldn't make more sense for a company to have as many subscribers as possible instead of trying to ring dry the consumers they already have? Your thought though well put together is flawed by the simple fact that businesses want to make money not lose money. So if the company loses subscribers they lose money. there are options take advantage of them.

posted on 12 May 2011, 11:31 2

22. celljrod (Posts: 82; Member since: 07 Apr 2011)


What he's saying is that with VZW and AT&T in control, they will be able to dicatate roaming agreements and thus force the regionals to raise prices.

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