Alex Wong/Getty ImagesRandall Stephenson, the chief of AT&T, during a Senate panel’s hearing in May, with Daniel Hesse, right, of Sprint Nexte.June 7, 1:07 p.m. | Updated with the letters
In its quest to win approval of its $39 billion takeover of T-Mobile USA, AT&T just got a lot of help from its friends.
Eight technology giants, including Facebook and Microsoft, and 10 venture capital firms, filed letters supporting the acquisition late on Monday. The letters, filed with the Federal Communications Commission, lent their support to AT&T’s argument that the T-Mobile deal will help the company extend its next-generation data network across the country, helping to meet the growing need for wireless broadband services.
“Many policy-related efforts will not be able to quickly address near-term capacity needs,” the Microsoft-led group wrote in its letter. “The F.C.C. must seriously weigh the benefits of this merger and approve it.”
The letters are the latest salvo in the fight over AT&T’s effort to become the nation’s biggest cellphone service provider.
It is a fight that has pitted AT&T against consumer groups and smaller rivals like Sprint Nextel. Sprint and other service providers have argued strenuously that the deal would revive the “Ma Bell” situation of old, leaving AT&T and Verizon Wireless in a duopoly that controls most cellphone customers. Such a combination could lead to higher prices and reduced service, they say.
Sprint, the nation’s third-biggest carrier behind Verizon Wireless and AT&T, has been the most outspoken opponent of the deal. “I am here because Sprint believes in competition, which goes hand in hand with innovation,” the company’s chief executive, Daniel Hesse, testified at a Senate hearing last month.
Both sides have been racing to enlist as many prominent supporters as possible. Sprint has found common cause with consumer groups, while AT&T has lined up support from unions, particularly the Communications Workers of America. And both sides have sought political leaders to speak out.
The outpouring of support is taking place within the confines of reviews by the F.C.C. and the Justice Department, which are aimed at determining if the deal is in the public’s interest and whether it harms competition. The process may take about a year. The deadline to file supporting comments for the deal is Friday, while the deadline to file opposing comments was last week.
The letters filed Monday provide solid support for the deal from Silicon Valley. Other companies that have signed on are Yahoo, Oracle and the BlackBerry’s maker Research in Motion. The venture capital firms include Kleiner Perkins Caufield & Byers and Sequoia Partners.
As smartphones and tablets proliferate, so too have apps like one by Facebook that draw in ever-rising amounts of data. Monday’s letters cite AT&T’s contention that the T-Mobile deal will allow the carrier to expand its nascent 4G network to cover 97 percent of the country and an additional 55 million Americans.
“The access aspect of this is so, so important,” Fred Humphries, Microsoft’s vice president for United States government affairs, said by telephone. “We quickly came to the conclusion that this is a good merger.”
Promod Haque, a managing partner of Norwest Venture Partners, said in a telephone interview that constraints on network capacity were harming new mobile applications and offerings.
“The lack of adequate spectrum is killing the quality of users’ experience,” he said. “Customers say, ‘I can’t even get a phone call and can’t get adequate reception. So you want me to use this new service?’ ”
Allowing AT&T to consolidate its network spectrum with T-Mobile’s is easier and more cost-effective than alternatives, Mr. Haque added.
Microsoft approached “a select few” technology companies to support the deal, mostly those whose products would obviously also benefit from wider data pipelines, and received quick and positive replies, Mr. Humphries said. The software giant also contacted several trade associations to which it belongs, letting them know of the company’s position.
While Microsoft and Research in Motion have signed the letter, other notable smartphone players whose offerings consume large amounts of data, like Apple, have not.
Some of the signers said that while they had considered Sprint’s arguments that the deal would harm both competition and innovation, they disagreed. Jon Auerbach, a general partner at Charles River Ventures, pointed to smaller competitors like Leap Wireless and “virtual network operators” like Boost Mobile and Virgin Mobile USA as alternatives for consumers.
Mr. Auerbach and Mr. Haque also said that AT&T had repeatedly shown a willingness to work with its portfolio companies. They argued that those business relationships showed a willingness by AT&T to eschew existing technology in favor of new developments from unproven players.
“When a large provider is willing to take a bet on something that may not have the best balance sheet in the world or a long track record, that goes a long way,” Mr. Auerbach said. “AT&T really
wants to know what’s next.”
Update: Here are the four letters submitted to the F.C.C. One is from Microsoft, Facebook, Oracle, Yahoo, Research in Motion, Qualcomm, Avaya and Brocade. The second is from Kleiner Perkins. The third is from Sequoia. And the fourth is from a group of eight venture capitalists, including Mr. Haque and Mr. Auerbach.
Microsoft et al Letter Backing AT&T-T-Mobile Deal
Kleiner Perkins Letter Backing AT&T-T-Mobile Deal
Sequoia Letter Backing AT&T-T-Mobile Deal
Venture Capital Letter Backing AT&T-T-Mobile