AT&T and T-Mobile filed a lesson in economics on Friday in response to Sprint's anti-trust concerns, which object to AT&T's proposed $39 billion acquisition.
Last week Sprint filed a formal petition going against the proposed merger, citing anti-competitiveness reasons like a unilateral price hike or a Verizon-AT&T duopoly. It was immediately backed by consumer groups.
But in a 228-page response filed with the Federal Communications Commission (FCC), AT&T and Deutsche Telekom (T-Mobile's parent company) called Sprint's arguments "dystopian."
"Sprint identifies no plausible basis for supposing that, post-merger, AT&T could benefit from raising its backhaul rates above today's levels. To the contrary, that strategy would likely generate lost upstream profits that the company could not hope to recoup in the downstream wireless market," the filing said.
"Nor, again, is it plausible to suggest—as Sprint does in another key step of its dystopian scenario—that AT&T's arch-adversary Verizon would decide to increase its own prices rather than win more customers from AT&T by keeping its prices low."
The report also says Sprint used a "flawed market definition" to describe the merger as an inevitable duopoly between AT&T and Verizon. The report lists subscriber figures and recent "success" of other telecommunications players, like MetroPCS, Cricket, U.S. Cellular, Cellular South, and Cincinnati Bell, as evidence that the industry would remain highly competitive.
"The leading no-contract providers—MetroPCS and Leap—have rapidly expanded into markets covering (between them) more than 200 million people," it said.
Lastly the report dismisses Sprint's claim that AT&T is purely in this for T-Mobile's spectrum, as AT&T develops a high-speed LTE network.
"Sprint and others also complain that AT&T has too much low-band spectrum and that such spectrum is superior to the higher-band Sprint/Clearwire spectrum," the authors write. "Even if Sprint's account of relative spectrum value were accurate, this complaint would not be remotely merger-specific because TMobile USA has virtually no low-band spectrum.
On Thursday, AT&T gave a more direct interpretation of Sprint's opposition at its policy blog. "The reason they oppose the merger is because they would prefer to compete against a capacity-constrained AT&T and a standalone T-Mobile USA that lacks financial backing from its parent and has no clear path to LTE," the company wrote.
On Monday, tangential tech titans like