Dear Chairman Genachowski, Attorney General Holder and Commissioner Sandoval:

We write to urge you to reject AT&T Inc.’s proposed purchase of T-Mobile because it will without question lead to higher prices for consumers.

This is not conjecture; it is the lesson of history. Seven years ago, AT&T Inc.’s wholly owned subsidiary, AT&T Mobility LLC (then known as Cingular Wireless Corporation) requested permission to buy AT&T’s wireless network (then known as AT&T Wireless Services, Inc.) for $41 billion. At that time, AT&T and Cingular had the first and second largest share, respectively, of wireless communications providers in the U.S.

In order to get the merger approved, AT&T and an army of executives, lobbyists and allies assured regulators and consumers that the deal was in the public interest by making promises — the very same promises that we’re hearing from AT&T today:

What happened after the AT&T – Cingular merger? Once the Federal Communications Commission approved the deal (after negligible scrutiny), the newly merged company – which later renamed itself AT&T Mobility LLC– betrayed its promises. It abandoned the old AT&T network, deliberately degrading the network so that AT&T customers would be forced to migrate to Cingular’s own network, pay an upgrade fee of $18, buy new phones and agree to new and more expensive rate plans. These anti-consumer moves were enforced by an anti-competitive “early termination fee” of anywhere between $175 and $400, which prevented customers of AT&T from moving to another carrier.

In short, AT&T policyholders were railroaded into spending hundreds of dollars more in order to maintain their cellular service – a colossal rip-off by the same corporate executives who are now asking for permission to do it all over again.

Nothing in the terms of the proposed merger bars AT&T from engaging in a repeat performance against helpless T-Mobile customers if this deal is approved. Indeed, even as the companies mount a massive public relations campaign to win your approval, T-Mobile executives are already implicitly acknowledging that once the merger is approved, AT&T will make changes in the T-Mobile network:

T-Mobile has no plans to alter our 3G / 4G network in any way that would make your device obsolete. The deal is expected to close in approximately 12 months. After that, decisions about the network will be AT&T’s to make. That said, the president and CEO of AT&T Mobility was quoted in the Associated Press saying “there’s nothing for [customers] to worry about… [network changes affecting devices] will be done over time… ”

Moreover, AT&T has publicly admitted that if the merger goes through, T-Mobile subscribers with 3G phones will have to replace their phones to keep their wireless broadband service. AT&T plans to “rearrange how T-Mobile’s cell towers work” so that T-Mobile’s airwaves can be used for 4G service rather than 3G. Even though AT&T will be altering T-Mobile’s 3G cell towers to operate 4G services, Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets, said that after the merger, T-Mobile 3G phones will need to be replaced with AT&T 3G phones, which “will happen as part of the normal phone upgrade process.” Once AT&T forces the T-Mobile subscribers with 3G phones to buy AT&T 3G phones, it is only a matter of time before AT&T pushes all of its subscribers over to the 4G network.

T-Mobile customers who are forced to migrate to AT&T’s network will have to buy new phones, agree to more expensive rate plans, or cancel their contracts and pay a termination fee.

Once known for its low prices, T-Mobile has already begun increasing its rates and decreasing options in anticipation of the merger. On July 20, 2011, T-Mobile discontinued its unlimited data plans, replacing them with plans that cap the amount of data a customer can use; once the customer hits the data cap, T-Mobile will substantially slow down their network speed. Nine days later, AT&T, which stopped offering new unlimited data plans last year, announced it would similarly start throttling data speeds even for customers on “grandfathered” unlimited data plans. AT&T is attributing its slow-down to the “serious wireless spectrum crunch.” In another implicit promise sure to be broken, AT&T has told its customers and regulators that “[n]othing short of completing the T-Mobile merger will provide additional spectrum capacity to address these near term challenges.”

Finally, T-Mobile was recently named one of the world’s most ethical companies for 2011. It was the only U.S. wireless telecommunication service provider that made the list. By contrast, complaints about AT&T’s service and prices are legion. Indeed, the views of millions of AT&T customers have been summarized by an online campaign known as “#attfail.” This merger will eliminate a U.S. wireless company that at least seemed to care about its customers.

To this day, the AT&T customers who were misled and overcharged by AT&T’s actions after the 2004 merger are still fighting in the courts for refunds and other remediation arising from the merger. In 2006, lawyers for Consumer Watchdog, joined by a group of private law firms, filed a national class action lawsuit against AT&T on behalf of the millions of customers who were victimized by the merger: Coneff v. AT&T Corp., et al., No. C06-0944 (W.D. Wash). In response, AT&T’s lawyers claimed that when AT&T customers were forcibly moved to the new network, they simultaneously agreed to waive their right to seek refunds from AT&T in court because of a provision buried in the fine-print of AT&T’s contract that required arbitration of all disputes and barred customers from joining together in an arbitration. Throughout the litigation, AT&T changed its arbitration clause several times, each time modifying various terms while retaining the arbitration clause that prohibited customers from bringing or participating in a class action, regardless of whether it is brought in arbitration or in court.

In 2009, the U.S. District Court in Seattle, Washington, held that AT&T’s arbitration clause was unconscionable because most AT&T customers would never obtain redress without the ability to bring a class action. The case is presently before the 9th Circuit. In its briefing, AT&T now contends that the U.S. Supreme Court’s recent decision in AT&T Mobility v. Concepcion 563 U.S. __ (2011) should be interpreted by the courts to apply to the egregiously unfair and one-sided mandatory arbitration clauses like the one struck down in Coneff in 2009, which, in our case and unlike in Concepcion, has been shown to preclude customers’ basic due process rights.

Albert Einstein defined insanity as doing the same thing over and over again and expecting different results. Considering AT&T’s track record, it is irrational to expect that the AT&T and T-Mobile merger will yield different results. If the merger is approved, millions of T-Mobile customers will be subjected to the same costly and unfair practices that AT&T customers experienced after the 2004 Cingular merger. Moreover, permitting AT&T to swallow a competitor will leave the American cellular marketplace controlled by a duopoly that, through the artifice of termination fees and arbitration agreements, will effectively eliminate competition between them.

This is a bread and butter test of the federal government’s commitment to American consumers versus the Wall Street and corporate interests that too often seem to be the winners every time the federal government takes action.  The Administration should ignore the lofty pronouncements of the corporate-funded academics and allies who provide cover for the glib promises of two cellular giants, along with the Wall Street firms that will reap millions in fees for providing the merger paperwork, in favor of the average American family, who, after all they have been forced to sacrifice these last few years, should not be required to pay more of their dollars for the ability to use a cell phone.

Harvey Rosenfeld

Laura Antonini

You can find documented footnotes accompanying this letter here.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT T-Mobile Merger Ad.flv[/flv]

AT&T is blanketing the airwaves with claims of improved service in its advertising promoting the merger with T-Mobile.  (1 minute)

The Federal Communications Commission today raised the hurdle for AT&T when it told the wireless company it would consider its proposed acquisition of wireless spectrum from Qualcomm in concert with its application to acquire T-Mobile USA.

The FCC wrote both AT&T and Qualcomm regarding the ongoing review of both transactions:

“The Commission’s ongoing review has confirmed that the proposed transactions raise a number of related issues, including, but not limited to, questions regarding AT&T’s aggregation of spectrum throughout the nation, particularly in overlapping areas. As a result, we have concluded that the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time.”

AT&T Donates $9,000 to the United Way of Northwest Florida, which promptly returns the favor with a nice letter to the FCC supporting the telecom company's agenda.

At issue is whether AT&T is warehousing wireless spectrum it actually has little intention to use and whether or not AT&T is being honest when it suggests it needs to acquire T-Mobile USA to expand the number of frequencies open for its growing wireless network.

Critics of the merger claim AT&T has plenty of unused spectrum available to deliver service, particularly in the rural areas AT&T claims T-Mobile can help it serve.  T-Mobile is not well-known for its service in smaller communities and rural areas, preferring to rely on roaming agreements to achieve national coverage.  With its proposed acquisition of valuable spectrum in the 700MHz range from Qualcomm, excellent for penetrating buildings and delivering reliable service, the FCC may be wondering if the proposed merger with T-Mobile is necessary at all.

Gigi Sohn from Public Knowledge doesn’t think so.

“We are pleased that the Commission has decided to consider AT&T’s purchase of Qualcomm spectrum in the context of AT&T’s takeover of T-Mobile.  It doesn’t matter whether both transactions are in the same docket; the fact that the Bureau will consider them together in any manner is a strong statement,” Sohn said.

“This April, several public interest groups, Consumers Union, Free Press, the Media Access Project, Public Knowledge, and the New America Foundation, asked for the Commission to take that action because we said that both deals together would ‘further empower an already dominant wireless carrier to leverage its control over devices, backhaul, and consumers in ways that stifle competition,” Sohn added.  “We look forward to working with the Commission on these issues which are so vital to the economy of this country.”

Companies that have acquired wireless spectrum at government auctions have not always put those frequencies to use.  At least one firm warehoused spectrum as an investment tool, earning proceeds reselling it to other providers.  Others have simply squatted on their spectrum, sometimes to keep it away from would-be competitors.

Of course, considering AT&T is a master of dollar-a-holler astroturf operations and lobbying, it’s only a matter of time before a renewed blizzard of company-ghost-written letters start arriving at the Commission telling them AT&T needs both the Qualcomm spectrum -and- the merger with T-Mobile.

Groups like the NAACP, United Way of Northwest Florida, the National Puerto Rican Coalition, and the U.S. Cattlemen’s Association ought to know, right?

Thanks to Stop the Cap! reader Bones for alerting us.

It’s Cell Company Customer Crackdown-month for AT&T and Verizon Wireless as the two carriers increasingly engage in aggressive “management” of their wireless data networks.  Days after AT&T announced it would throw customers off legacy unlimited data plans if caught using “unofficial” tethering applications, Verizon has reportedly locked out customers from accessing web pages over jailbreak apps like MyWi, redirecting requests to a Verizon Wireless $20 Mobile Hotspot offer instead.

Mobiledia reports Verizon now requires users have a hotspot-capable data plan if they want to tether data from their smartphones to other devices.  At regular prices, those plans start at $20 for 2GB of usage, with a $10/GB overlimit fee.  Certain LTE/4G customers have fared better, being offered unlimited tethering for $30 a month — an option not available to 3G phone owners.

The Federal Communications Commission’s Net Neutrality policy exempted wireless providers from observing its core principles, giving carriers carte blanche to block websites and third party applications from their networks, and Verizon has put the green light to good use.

AT&T has favored direct punitive measures against customers who don’t respond to their demands to upgrade by auto-enrolling customers in $45 tethering plans or threatening legacy customers with the loss of their unlimited data plan.

Some media reports — including those from Mobiledia — have declared third party tethering applications “illegal,” which is inaccurate.  While carriers may not like these applications and declare use of them contrary to their respective acceptable use policies, they do not violate any laws.

AT&T is keeping the pressure on their grandfathered unlimited data plan customers.  Earlier today, AT&T confirmed rumors they are prepared to revoke customers’ unlimited usage plans if they are caught tethering their phones without an authorized tethering and mobile hotspot plan purchased directly from the company.  BGR quotes an AT&T spokesperson:

Earlier this year, we began sending letters, emails, and text messages to a small number of smartphone customers who use their devices for tethering but aren’t on our required tethering plan. Our goal here is fairness for all of our customers. (This impacts a only small percentage of our smartphone customer base.)

The letters outline three choices:

1. Stop tethering and keep their current plan (including grandfathered unlimited plan)
2. Proactively call AT&T or visit our stores and move to the required tethering plan
3. Do nothing and we’ll go ahead and add the tethering plan on their behalf — after the date noted in their customer notification.

An AT&T customer told 9to5 Mac he was threatened with the unilateral loss of his unlimited data plan if he was still unofficially tethering his phone after Aug. 11th, a date AT&T has since said may not be everyone’s “cutoff date”:

I was just informed that as of Thursday, August 11th, if you use MyWi or any tethering on the phone or using the phone as a modem, AT&T will automatically change your unlimited plan to a 2GB tethering plan for 45 dollars without the customer’s consent. This is for those who received emails or texts about the use of tethering without an AT&T tethering plan.

It’s clear AT&T is going hard line on their unlimited data plan customers, first sending notice they will throttle the speeds of any customer on an unlimited plan deemed a “heavy user,” and now threatening to terminate unlimited usage plans for customers who violate the company’s tethering terms and conditions.

Verizon's 20' Monolith (Courtesy: Macro/micro Brooklyn)

Verizon Communications has found a way to outdo AT&T’s enormous and unsightly “lawn refrigerators.”  They have installed 20 foot fiberglass poles in the middle of historic neighborhoods in Flatbush, Brooklyn on top of which the phone company plans to mount boxes containing equipment to support its FiOS fiber to the home service.

The enormous polygonal poles went up suddenly without advance warning, and neighbors left their homes to gaze up at the mysterious new addition to the Victorian-era community.

“The neighbors started gathering around it like it was the monolith in ‘2001,’ ” Rev. Jeanne Person, told the New York Times.

Nobody seemed to know who installed the poles, or more importantly why.

It turns out they are Verizon’s answer to AT&T’s enormous and unsightly 4-6 foot tall metal cabinets that the latter has been installing on street corners and in front of homes throughout U-verse service areas.

John J. Bonomo, Verizon’s director of media relations, told the Times the poles provide an interface between underground cables and above-ground wires that thread through backyards.  Bonomo recognized the way AT&T does it attracts vandals and graffiti.  Verizon’s solution tries to hide the unsightly boxes in the canopy of neighborhood trees, to varying degrees of success.  It also prevents anyone other than Spiderman from stealing equipment inside.

Besides, Bonomo says, the company got all of the necessary permits from the Department of Transportation.  Well, almost all of the necessary permits.

They forgot the Landmarks Preservation Commission, which regulates the look and feel of protected, historic neighborhoods — like Flatbush.  Install 20-foot plastic poles without a permit at your peril.

A spokesperson for the Commission says they hope to reach a resolution with Verizon soon.

It’s not that neighbors are ungrateful that Verizon is extending FiOS into Brooklyn, where it will provide real competition to Cablevision.  Many applaud the fiber service and look forward to signing up.  They just don’t believe randomly placed 20′ poles are the way to do it.

“First we wanted to know what it was,” Rev. Person said. “Then when we figured out what it was, we wanted to get rid of it. What does landmarking mean if it doesn’t protect us?”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WCBS NY Verizon 20 Pole 6-7-11.mp4[/flv]

Brooklyn residents complained to WCBS-TV about the 20 foot unwelcome additions to their neighborhoods.  (2 minutes)