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Ranking Member Statement:

Given the large number of witnesses participating in this hearing as well as the complexity of the issues before us, I will keep my opening remarks brief in order to allow more time for questions and answers.

The mobile phone market is a critical component of our nation’s economy.  According to recent estimates, it is directly responsible for more than 250,000 jobs, generates over $150 billion of economic activity each year, and accounts for nearly $25 billion in annual capital investment.

It is difficult to overstate the increasing importance of mobile devices in the lives of virtually all Americans.  Many people rely on wireless phones as their principal means of communications, with more than a quarter of the population having become wireless-only households.  Mobile devices are also increasingly a primary means by which individuals access the Internet.  Next year smartphone sales are expected to be greater than the combined sales of both desktop and laptop computers.

This explosion in demand for wireless services has led to significant capacity constraints throughout the industry.   Most of us are all too familiar with dropped calls and sluggish data speeds.  The strength of available wireless networks is vital to individuals, families, schools, businesses, public safety organizations, and virtually all aspects of modern communications.  With the current capacity crunch in mind, the Obama administration announced last year in the National Broadband Plan a goal to “lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.”

An important question before our Subcommittee today is whether the proposed merger between AT&T and T-Mobile is a positive step along the path to world-class wireless broadband throughout the United States. 

There are a number of reasons to believe that the merger could contribute to this goal.  In many respects, AT&T and T-Mobile are unique in having roughly compatible networks, complementary spectrum holdings, and well-matched cell-site grids.  A merger between the two companies may provide significant and immediate efficiencies that will enable enhanced service quality, fewer blocked or dropped calls, and increasing data speeds.

Ultimately, the entire wireless industry will require additional spectrum to address the significant growth in demand for mobile broadband services.  Until such spectrum is made available, the benefits of this proposed merger will enable AT&T to roll out its 4G LTE network.  And AT&T has committed to provide this more advanced wireless broadband service to 97 percent of the U.S. population.  In addition to offering better services and speeds, 4G nationwide networks create opportunities for handset innovation and the development of data-rich applications.

I favor market approaches, rather than government funding and intervention, to develop nationwide mobile broadband networks. The U.S. wireless marketplace is in many ways less concentrated than in other industrialized nations.  Some suggest that our national interest would be disserved by restricting the American marketplace to a larger number of spectrum-starved providers ill-equipped to build the most advanced wireless networks. 

At the same time, I share some of the concerns expressed by my colleague, Senator Kohl, and believe it is our responsibility—along with the Department of Justice’s Antitrust Division and the Federal Communications Commission—to ensure that the proposed merger would not produce damaging anticompetitive effects.

The combination of AT&T and T-Mobile would create the largest wireless carrier in the nation, with roughly 42 percent of all wireless subscribers in the United States.  And it would leave the market with only three (rather than four) nationwide carriers that account for the vast majority of total subscribers.

A critical question, therefore, is whether the smaller regional carriers can effectively compete in a post-merger market, helping to discipline prices, preserve consumer choice, and promote innovation.  Two potential roadblocks to robust competition deserve special attention. 

First, regional carriers with limited spectrum holdings must rely on the large national carriers for data roaming access outside their local areas.  Although a recent FCC order mandates that major carriers offer “commercially reasonable” data roaming agreements, the terms and conditions of these agreements will largely determine whether smaller carriers can become a true competitive force in a nationwide market.

Second, regional providers are often at a competitive disadvantage in gaining access to the most popular and desirable handsets.  National providers with large volume and advertising budget are better positioned to negotiate exclusive contracts for cutting edge devices like the iPhone and lower prices for other handsets purchased in bulk.

In seeking to address these and other issues relating to the competitive position of smaller regional carries, we would do well to remember the insight made famous by Robert Bork’s seminal work The Antitrust Paradox: “Competition must be understood as the maximization of consumer welfare.”  Our analysis of the proposed merger between AT&T and T-Mobile should be guided by what will be best for consumers—in the form of prices, service quality, and range of choice.