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AT&T CEO: We Do Need T-Mobile Spectrum for 97% High-Speed Broadband Buildout

The House Judiciary Committee's Competition subcommittee probed the AT&T/T-Mobile deal Thursday, honing in on issues like jobs and the impact the combo would have on the wired backhaul service competitive wireless carriers need from AT&T.

On the jobs front, AT&T Chairman Randall Stephenson said that, short-term, there could be some job loss, but that long-term it should create jobs, particularly union jobs. While Parul Desai of Consumers Union pointed out that AT&T had been cutting jobs for most of the last decade, Stephenson said that was on the wireline side, not wireless, which had shown steady growth.

He said that companies only hire where they are investing, which was in wireless. He said that AT&T would be investing $8 billion over the next three years to integrate T-Mobile and build out a 4G LTE network. That means jobs and is why "all the major unions" support the deal, he said.

Several legislators, Republicans and Democrats, expressed concerns that smaller competitors, who rely on backhaul deals with AT&T and Verizon primarily, might not be able to make those deals at reasonable prices in a more concentrated market.

Rep. Darrell Issa (R-Calif.), the tech-savvy former chair of the Consumer Electronics Association, was particularly interested in the backhaul issue.

He said that considering that the deal would be reassembling a wireline duopoly -- Verizon and AT&T -- he was concerned that remaining wireless carriers who depend on leasing that capacity get it at a fair price.

Stephenson said that the backhaul market was competitive, that AT&T itself had to strike backhaul deals for 50% of 60% the country where it did not have a wireline footprint, and pointed cable operators as one growing source of competition in backaul that would remain a governor on prices.

He also pointed out to the FCC's ongoing proceeding on fair pricing.

Issa said he was sure the deal was beneficial for accumulating spectrum and for stockholders, but wanted to make sure it was also good for competing wireless carriers.

Stephenson was challenged during the hearing on AT&T's claim that it would need T-Mobile spectrum to build out wireless broadband to 97% of the country.

Rep. John Conyers (D- Mich.), Judiciary Committee ranking member and a critic of the deal, said AT&T did not need to buy T-Mobile to deliver on that promise.

Stephenson begged to differ, saying they needed both the spectrum and the marketplace incentive to build out next generation mobile wireless service to 97% of the country that the deal would enable. He said that the company's business plan was based on getting a return on investment, and that expanding its customer base by T Mobile's 30 million subs would help justify the business decision to build out 4G wireless to 55 million additional customers, particularly in rural areas where there had not been an economic model.

Rep. Mel Watt (D-N.C.) ranking member of the subcommittee said there was AT&T spectrum lying fallow in his home state, while many residents could still not even get wireless phone service.

Stephenson said that one of the biggest issue he faced was rural American, where he conceded the economics was an impediment to rollout. But he said the T-Mobile deal would allow it to put together sufficient spectrum to build the nationwide LTE net, which would take time, though he said five new markets were being added midyear. "We do need the spectrum T Mobile holds" to complete that 97% buildout, he said flatly.