McAdam Expects Regulators to Sign Off on AT&T/T-Mobile
Verizon President Lowell McAdam expects approval of AT&T’s purchase of T-Mobile by the FCC and Department of Justice, he said Wednesday. “If I was betting I would say that the merger will probably go through,” he said at the Fortune Brainstorm Tech conference. “It’s a merger that I think AT&T had to do because we have a failed spectrum policy in this country. There’s plenty of spectrum out there. It’s in the wrong peoples’ hands. [AT&T] needed to get spectrum. T-Mobile had spectrum. To me, the only question was why did it take this long to do it.”
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AT&T is “motivated enough” to complete the deal that the company will agree to whatever it needs to on conditions to complete the transaction, McAdam said. “Our concern is … how they affect Verizon,” he said. “That’s what we're kind of waiting to see.” The wireless industry will remain “highly competitive” regardless of whether AT&T/T-Mobile is approved, he said. The benefits of competition don’t outweigh market realities, he said. T-Mobile is a “great company” that “had spectrum, could not afford to build it out,” McAdam said. “So what good did it do to have them in that competitive space?”
Government policy “frankly” caused the spectrum crunch, McAdam said. “One of your best assets is AWS, which has a build out date of 2021,” he said. “You contrast that with the 700 [MHz], which we bought and within 12 months of when we actually got the spectrum it was in commercial use.” Spectrum does no good “sitting on somebody’s shelf somewhere,” McAdam said. The FCC also carved up much of the spectrum in recent auctions into too-small of chunks to be usable and/or imposed designated entity rules that “just encouraged people to buy it, hold it, and then flip it in 10 years,” he said. “That doesn’t help the nation deliver broadband to these rural communities."
McAdam also said he expects to take over from Ivan Seidenberg as CEO of Verizon before the end of the year. “I use these days as a bit of a gift,” McAdam said. “[Seidenberg] can deal with the shareholders and the board and I can scurry around the company causing mischief. So there’s no rush from my perspective."
Christine Varney, outgoing head of Justice’s Antitrust Division, said after two years on the job her views have become “if you don’t like the antitrust laws, repeal them. You don’t believe in the Sherman Act, the Clayton Act, repeal them.” Varney, who has said she’s leaving, conceded she was “tagged” with “having an agenda,” but said she’s fundamentally a pragmatist. “I don’t particularly have an agenda other than the fair, transparent, predictable enforcement of the law.”
CEA President Gary Shapiro said regulators in Europe want to place restrictions on U.S. companies and welcome U.S. government investigations of trade practices here. “When our own federal government goes forward and attacks our companies, that’s catnip to the Europeans,” he said. “We see it with Google and Intel and Qualcomm. We saw it with Microsoft. We saw it with IBM.” Shapiro, a former antitrust lawyer, said U.S. antitrust law is clear that price fixing is illegal. But recent investigations of trade practices fall outside the bounds of traditional antitrust law, he said. “It’s not helpful to us, as a country, to have our best companies attacked by our own government."
Varney took issue with whether U.S. investigations have fueled others in Europe. “Most CEOs have told me that it’s precisely the opposite,” she said. “In the decade preceding, the Europeans viewed the American administration as not enforcing antitrust laws and [saw] their opportunity to do so.”