AT&T: iPhone Is A Strain On The Network, T-Mobile Acquisition May Help

WASHINGTON -- AT&T Inc. is telling federal regulators that its proposed $39 billion purchase of T-Mobile USA would lead to fewer dropped and blocked calls and faster mobile Internet connections for subscribers, and would bring wireless broadband service to nearly all corners of the country.

In paperwork filed with the Federal Communications Commission Thursday, AT&T argues that the acquisition would enable the companies to make far more efficient use of the critical airwaves they need to handle mobile apps, streaming video and other bandwidth-hungry online services by letting them combine their limited wireless spectrum holdings.

AT&T warns that it is running out of airwaves as sophisticated new mobile devices, such as the Apple iPhone and iPad, put enormous strain on its network. That has degraded service quality, particularly in dense metropolitan areas. AT&T, which until recently was the only U.S. carrier offering the iPhone, says its mobile data traffic surged 8,000 percent between 2007 and 2010.

"AT&T faces network spectrum and capacity constraints more severe than those of any other wireless provider, and this merger provides by far the surest, fastest, and most efficient solution to that challenge," the company said in its filing.

Its plan is to integrate a significant portion of T-Mobile's cell sites into the AT&T network, which will increase cell density and double the amount of network traffic that can be handled using the two carriers' existing airwaves.

T-Mobile subscribers will also benefit from the deal since T-Mobile, too, is bumping up against capacity constraints in key markets, AT&T said.

AT&T's filing with the FCC comes one month after the company announced plans to acquire T-Mobile USA from Germany's Deutsche Telekom AG for $39 billion in cash and stock. The FCC and the Justice Department are expected to spend at least a year reviewing the deal.

AT&T's argument that the acquisition will position it to make more efficient use of existing airwaves is likely to strike a chord with federal regulators. FCC Chairman Julius Genachowski has been warning of a "looming spectrum crisis" as more Americans go online using smartphones, tablet computers and other handheld devices. Both the FCC and the Obama administration are exploring ways to free up more airwaves for wireless broadband services.

In its filing, AT&T also took aim at another top priority of both the FCC and the Obama administration: ensuring that all Americans – including those living in rural areas – have access to high-speed Internet connections. AT&T said the purchase of T-Mobile would enable it to cover more than 97 percent of the U.S. population with its new high-speed, fourth-generation wireless service. That's a slight increase from its original pledge to cover 95 percent of the nation's population after the acquisition is complete.