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Sprint, Clearwire Ask FCC to Reject Proposed Merger Provisos

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WASHINGTON (Dow Jones) Sprint Nextel and Clearwire intend to go head to head against the country's largest wireless Internet networks if their merger is approved, but that ability could be hampered if regulators call for new conditions, the companies told the Federal Communications Commission late Monday.

AT&T, Vonage Holdings and the Rural Cellular Association were the only organizations that protested to the FCC about the proposed merger. In contrast, Sprint and Clearwire noted that about 100 other parties filed comments supporting the deal.

Sprint and Clearwire announced their intention to merge in June, saying "New Clearwire" would facilitate a national wireless Internet network that would operate on a block of airwaves partly reserved for schools, cities and other nonprofits.

In its response to the opponents of the venture, Sprint and Clearwire devoted most of their attention to AT&T, which now has the largest wireless subscriber base in the country.

Sprint and Clearwire said the new company would "become a new, viable broadband competitor, offering consumers greater choice in service providers, broadband technology, and innovative services and applications."

Last month, AT&T said the merger should be subjected to heightened scrutiny, alleging that Sprint and Clearwire underepresented the airwaves they intend to use for their Internet service because the network isn't yet operational.

AT&T called for more FCC scrutiny of Sprint and Clearwire's spectrum, similar to the agency's screenings of AT&T last year when it approved the company's merger with Dobson Communications.

Sprint and Clearwire countered that they gave the FCC detailed county-by-county data on their combined spectrum, including information about channels the new company will lease from libraries and schools.

"The spectrum screen AT&T wants is merely a way to try to stymie a potential competitor to its DSL and wireless services," said Sprint spokesman Scott Sloat.

Sprint and Clearwire told the FCC that Sprint's current 450,000 Internet subscribers represent just 1.3% of the nation's high-speed wireless connections, meaning the new company would enter the mobile Internet market as a "comparatively small" national competitor.

AT&T spokesman Michael Balmoris said the FCC should apply the same standards in evaluating the proposed merger as it does with other carriers, noting that the Sprint and Clearwire deal is backed by major telecom and Internet players such as Google, Intel and Comcast.

"While we do not fundamentally oppose the transaction, the regulatory process must be consistent for all providers," Balmoris said.

Sprint and Clearwire said the airwaves they will use are fundamentally different than the swath on which AT&T operates, making comparisons between the two virtually impossible.

Sprint and Clearwire have promised that their new network will be open to other companies that want to offer Web or wireless services.

Comcast, Time Warner Cable, and privately held Bright House Networks already have committed to nonexclusive, wholesale arrangements with the New Clearwire, Sprint and Clearwire said.

Separately, Internet phone company Vonage and the Rural Cellular Association asked the FCC for additional conditions on the merger, which Sprint and Clearwire argued were unwarranted.

The Rural Cellular Association wants roaming guarantees, while Vonage wants stipulations that the merged company offer separate voice and Internet services.

Sprint and Clearwire told the FCC that they have already agreed to offer unbundled services. Moreover, they said, the new company will have every incentive to aggressively pursue roaming agreements.

"The commission should reject these requests to hamstring New Clearwire with unnecessary conditions," Sprint and Clearwire said.

The Justice Department also must sign off on the merger. Sloat said Sprint hopes the venture will be approved by both the FCC and DOJ before the end of the year.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com

(END) Dow Jones Newswires

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