LEAKED: AT&T Didn’t Want To Expand Rural Coverage Because Of $3.8 Billion Price Tag (T)

August 12, 2011

ATT HQ in SAn Antonio

Image: AP Images

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A leaked legal filing  reveals that ATT was happy to have its 4G network cover 80% of Americans, but didn’t want to spend the $3.8 billion needed to expand it to the rest of the country.

Instead, it decided to spend almost ten times that much to buy T-Mobile.

Wireless Week got a look at the letter from the FCC’s Web site before it was taken down. Here’s the relevant bit from an ATT lawyer:

ATT senior management concluded that, unless ATT could find a way to expand its LTE footprint on a significantly more cost-effective basis, an LTE deployment to 80 percent of the U.S. population was the most that could be justified.

That makes sense: rural areas are sparsely populated, so ATT didn’t want to spend all that money building towers for so few people.

ATT says the T-Mobile buy will help it spread the costs out over a larger revenue base.

But it doesn’t pass the sniff test: ATT was too cheap to spend $3.8 billion expanding its existing network, but is willing to spend $39 billion on an entire company … to expand its network.

Skeptics might argue that ATT is really hoping the merger will suck up two competitors at once — T-Mobile and number-three Sprint, which won’t be able to compete with the newly massive ATT.

ATT vigorously denied that possibility to Wireless Week, saying that the merger was the only way it could afford to roll out 4G coverage to 97% of Americans.

Article source: SAI http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/ct5wa3Nx568/leaked-att-didnt-want-to-expand-rural-coverage-because-of-38-billion-price-tag-2011-8

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