AT&T Inc's
$39 billion bid to buy Deutsche Telekom AG's T-Mobile casts doubt on the
U.S. government's ability to swiftly deliver policy to meet the booming
demand for wireless services.
Wireless companies have long
lobbied for help to deal with what they see as a looming "spectrum
crunch" as more consumers turn to mobile devices including Apple Inc's
iPhone to surf the Web.
AT&T --
the No. 2 U.S. mobile carrier often criticized for dropped calls and
slow connection speeds -- is not waiting for government remedies
intended to free up airwaves for mobile broadband to help it meet
ever-growing demands for video and data.
But
the move could slow legislation needed to free up spectrum for auction
to wireless carriers, a potential thorn in the Federal Communications
Commission's agenda.
"The way
things work in Congress, there's competition for what issues get the
lawmakers' time and resources," Medley Global Advisors analyst Jeffrey
Silva said.
Top lawmakers have already signaled an interest in scrutinizing the large-scale transaction.
The
proposed merger would boost AT&T's spectrum holdings -- the
airwaves used for wireless communication -- nearly 20 percent from 0.86
to 1.02 megahertz per million subscribers.
AT&T's
Ralph de la Vega, chief executive of the company's wireless unit, said
in television interviews this week that AT&T faced a spectrum
shortage in the "short term."
A lack of spectrum would mean clogged networks, more dropped calls and slower connection speeds for subscribers.
The
deal would "add capacity sooner than any alternative" and offers a
quick solution "to the impending exhaustion of wireless spectrum," the
company said in a release.
"AT&T
is aware that there are regulatory initiatives to free up new spectrum
but, in their world, they can't afford to wait," Silva said.
LEGISLATION MAY STALL
The
U.S. government has been hunting for underused airwaves to make 500
megahertz of spectrum available over the next 10 years for wireless
services.
But much of the plan
hinges on TV broadcasters agreeing to part with portions of their highly
sought after airwaves and Congress granting the FCC authority to hold
incentive auctions that would compensate broadcasters for that spectrum.
Broadcasters
have raised concerns about giving up their airwaves, and have
considerable support among lawmakers because of their coverage of
home-town politics.
