FCC Chairman: Rejection of AT&T’s T-Mobile Deal Isn’t Causing Higher Prices

AT&T has recently made the case that the failure of its effort to buy T-Mobile is behind recent price hikes.

Federal Communications Commission Chairman Julius Genachowski isn’t buying it.

In a speech at the CTIA trade show in New Orleans on Tuesday, Genachowski said that it shouldn’t lead to higher prices and that, indeed, more competition will ultimately lead to lower prices for consumers.

Signaling that the agency isn’t closed to all deals, Genachowski said that rejecting one over-the-line deal “simply proves that there is a line.”

Genachowski said that, by and large, the U.S. wireless industry is in good shape.

“The kinds of challenges we have in mobile are the kind we want — challenges stemming from mobile demand,” Genachowski said.

The industry is clamoring for more spectrum, an effort that has gained some momentum, but is moving too slowly for many in the industry. And unsurprisingly, AT&T took issue with Genachowski’s take.

“The merger AT&T proposed last year was all about creating more capacity by combining the spectrum holdings and networks of two companies,” responded Jim Cicconi, Senior Executive Vice President, External and Legislative Affairs. “The FCC was within its rights to withhold its approval. But it is incorrect when it denies the impact such decisions have on the price of wireless services. Basic economics, and the law of supply and demand, apply to the wireless industry as to all others. In the case of wireless, without additional capacity, which would have been created by our transaction, prices rise.”

Genachowski also used an appearance at a cellphone trade show to tout a list of recent accomplishments — everything from progress toward incentive auctions to approval of unlicensed “white spaces” spectrum, and an initiative to create a database of stolen phones.

“These successes are worth celebrating,” he said.

Genachowski began with a bit of stand-up, as he noted the long-awaited Senate confirmation Monday of two FCC commissioners.

“I’m not saying their confirmation was overdue, but they were nominated by President Truman,” he said.

Ahead of Genachowski’s speech, CTIA boss Steve Largent issued his familiar call for more spectrum, and incoming CTIA Chairman Patrick Riordan — whose day job is as CEO of Cellcom — showed a video explaining just what his company does. For those who have never heard of Cellcom, it is a rural carrier serving Wisconsin and Michigan.

Riordan is interesting, in that he gives voice to the issues of rural carriers, which often take a back seat to the “big four.”

“The issues of rural and large carriers aren’t always complementary,” Riordan said. “We can’t ignore them, but rather we must face them.”