House Republicans voice concerns on AT&T merger

Rep. Darrell Issa (R-Calif.), a former technology industry executive, asked whether the merger would create a duopoly in the market for backhaul. AT&T sells access to its landline network so that other cell companies can connect their cellular calls. 

“We’re reassembling a duopoly in the back end,” Issa said, adding that he is concerned for “the remaining non-wireline carriers” that “backhaul capability is delivered at a fair price.”

AT&T Chief Executive Randall Stephenson countered the special access concerns by saying that the market for backhaul includes a diverse array of choices, including cable companies. 

He also cited a special access proceeding at the Federal Communications Commission (FCC), and said he thinks it will ensure “fair pricing” for special access services. To this point, AT&T has strongly advocated against the FCC moving to intervene in the special access market. 

Rep. Bob Goodlatte (R-Va.), the chairman of the Competition subcommittee, had similar concerns about the market for backhaul. 

“Will AT&T and Verizon be able to manipulate their power in the backhaul market to raise prices?” he asked the witnesses. 

Goodlatte also questioned how the merger would impact the market for handsets and how it would change the landscape for data roaming agreements. 

George Mason University Professor Joshua Wright, who expressed generally pro-merger views, said the level of concentration in the backhaul market is sufficient to provoke scrutiny from the Justice Department, but doesn’t reach the level where it would spur an automatic probe. 

Other Republicans were worried about how the deal would impact employment. Rep. Mike Pence (R-Ind.) asked how jobs in his state could be impacted, prompting Stephenson to say there will be net job creation in Indiana. 

Still, Stephenson acknowledged that some job loss is possible. 

“There are redundancies … We will have to negotiate how we deal with redundancies,” he said, noting that the company “will not need two finance organizations” or two marketing firms where there is overlap.

On whole, he said the merger will be a “job creator” and that AT&T has worked with the Communications Workers of America to figure out ways to deal with labor issues in a way that incorporates the interests of employees. He pointed to AT&T’s unionized work force, a key selling pint for congressional Democrats. 

The signs of skepticism from Republicans come in the backdrop of full-fledged opposition from some Democrats, including committee ranking member Rep. John Conyers (R-Mich.). He and Rep. Edward Markey (D-Mass.) are making an effort to fight the deal. 

Conyers sarcastically commended the AT&T and DT executives for not making empty promises that the merger would not raise prices.

“I thank you for your evasiveness on this issue,” he said.