Why Is T-Mobile's John Legere Mad At AT&T And Verizon Now?

By Markets Fool.com

You won't like him when he's angry.

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That line may have been true for the Incredible Hulk, but it doesn't apply to T-Mobile CEO John Legere, at least for stockholders and customers of his company. It's hard not to like Legere when he gets mad, because he turns his ire on targets that tend to deserve it. In his latest entertaining rant, the CEO of the upstart wireless company turned his attention toAT&T andVerizon.

It's not hard to sympathize with someone who goes after two companies that have done little to win the love of the public. It's even easier to get on Legere's side when you learn why he's angry in the first place.

Legere has made lashing out as his competitors part of how he runs his business. Source: T-Mobile

Legere does not hold back
Never one to censor himself, at least when it comes to talking about AT&T and Verizon, Legere recently released a blog post and accompanying video on the T-Mobile website where he let loose on his rivals. Headlined "If You're Not Pissed Off, You're Not Paying Attention," the CEO took issue with how the top two wireless carriers handle spectrum auctions.

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He explained that the FCC, which is governed by five commissioners, is preparing to set the rules for an upcoming auction of low-band spectrum. Those rules, he added, "will determine just how much of this ultra-precious spectrum each company will be able to buy," before noting that this will probably be the last auction of this type for decades.

Legere believes that AT&T and Verizon are using unfair tactics to stack the deck in their favor and wrote as much. His main charge is that the two companies have "deployed an army of lobbyists to gang up on these five FCC commissioners in hopes of controlling wireless access to the Internet."

He believes that's bad for consumers and, well, just plain not fair. He makes a good case for why.

Funny thing is, Big and Bigger already control the vast majority of the US low-band spectrum much of which was given to them by the government (for free!) decades ago -- and they want it to stay that way. Why? Because they know that keeping this low band spectrum out of the hands of competitors such as T-Mobile and continuing to control virtually all of it for themselves is their best weapon to prevent full and fair competition. They know that we challenge them in ways that benefit consumers every single day. They know that consumers want wireless options -- and when they have choices they leave in droves. And you know what else? They know we won't let up. Ever.

The CEO is being a tad self-serving, but he makes a good point. The FCC made it clear last year that it did not want T-Mobile to merge with Sprint because it would lessen consumer choice. Allowing AT&T and Verizon to control even more spectrum might accomplish the same thing and eliminate T-Mobile and Sprint as viable competitors.

Verizon disagrees
As you might imagine, Verizon does not think Legere has a point and believes that the auction should continue as planned. The company posted a response on its public policy blog that also scolded the T-Mobile CEO for the language used in the blog post and video.

Beyond the fact that the administrators of his alma mater St. Bernard's Central Catholic School, the Sisters of the Presentation of the Blessed Virgin Mary, would probably rap his hand with a ruler for that kind of language, Mr. Legere is simply wrong.

As we've said before, T-Mobile is more than welcome to participate in any auction the FCC holds. No company can prevent another from participating. The last time large swaths of low-band spectrum came to auction in 2007, for example, T-Mobile could have participated. It chose not to.

Verizon also pointed out that T-Mobile, which is owned by Deutsche Telekom,has considerable resources to compete financially. Verizon appears to miss the point a bit and it does little to counteract its reputation as being square and out of touch by pulling the "Well, I never" act over language.

What does Legere want?
Mostly he wants to put pressure on the FCC -- which has shown under Chairman Tom Wheeler that it responds to public shaming. He finished his blog post by laying out a doomsday scenario and issuing a call to action.

If smaller competitors can't get more spectrum in this auction, it could put an end to all that pro-consumer competitive pressure. Imagine what that would look like! Every consumer in America loses. You'll face higher bills, stifled innovation, crappy customer service -- all the usual AT&T and Verizon treatment! It would be a nightmare for American wireless consumers!

Don't let this happen!Tell the FCC to fight for you! Give them the power to ignore the duopoly! Take 2 minutes out of your day and fight for your wireless future. Tweet at the @FCC or send a letter (it's easy with this link).

Legere clearly buys his exclamation points in bulk, but hyperbole aside, AT&T and Verizon do charge more than T-Mobile and neither has a great reputation for customer service.

What should the FCC do?
The agency has to balance its needs to foster competition in the wireless space with its desire to maximize its return on the spectrum auction. The best way to do that would be to not have an auction at all.

Instead, the FCC should have an impartial third party determine the value of the spectrum and sell it at the appropriate price to appropriate bidders with preference being given to maintaining competition. That won't bring the highest return possible on the sale perhaps, but the agency won't be giving the spectrum away either.

Legere will get what he wants and he'll pay for it. That will ultimately be better for consumers than letting the big boys in the field flex their muscles and open their wallets to close out competitors.

The article Why Is T-Mobile's John Legere Mad At AT&T And Verizon Now? originally appeared on Fool.com.

Daniel Kline owns shares of Apple.He just bought a Mac from 2006 as a third computer and is shocked by how well it works. The Motley Fool recommends Apple and Verizon Communications. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.