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A sure sign of the wireless market's dynamism is the prevalence and popularity of prepaid, no contract pricing options. This segment of the wireless market offers wireless voice and data services at discount prices to cost-conscious consumers. By the end of 2011, there were nearly 71 million prepaid wireless subscribers. And over the last few years, new subscriptions for the prepaid wireless segment have typically outpaced net additions for the postpaid segment.

AT&T's proposal to acquire Leap Wireless is just the latest development in prepaid, no contract wireless market trends. Leap is a facilities-based wireless provider. Its prepaid, no contract "Cricket" brand is offered in several major metropolitan areas. Under the deal, AT&T would leverage the Cricket brand to cater to cost-conscious wireless consumers. Cricket would be made available to millions more through delivery on AT&T's 4G LTE network, which is more expansive than Cricket's network and technologically superior.

The ultimate purpose of this paper is not to expressly endorse or oppose the AT&T/Leap merger. Instead, its purpose is to show how the proposed merger - and other proposals that may be similar - likely enhance overall consumer welfare, which, after all, ought to be the FCC's chief concern. First, AT&T/Leap would, in all likelihood, increase competition for prepaid, no contract options by boosting Cricket brand availability, reliability, and service. Second, AT&T/Leap almost certainly would enhance spectral efficiency by enabling AT&T to utilize Leap's unused spectrum and by better using Leap's underutilized spectrum. Leap is using approximately 42% of its licensed spectrum located within its facilities-based geographical footprint. Meanwhile, outside its footprint, Leap holds AWS and PCS spectrum licenses that are going unused. Its unused spectrum reportedly covers approximately 41 million people. And third, AT&T/Leap would likely improve wireless broadband service capacity and reliability by integrating Leap's cell sites into AT&T's network.

In reviewing the proposed AT&T/Leap combination, it is critical that the FCC's review process follow a proper analysis and that it be completed in an expeditious manner. In particular, the FCC's process should apply market definitions and its spectrum screen in a manner that is consistent with agency precedents - such as its Verizon/SpectrumCo and T-Mobile/MetroPCS.

The FCC should not arbitrarily shrink its product market definitions in the course of conducting its review. Prepaid and postpaid wireless models are primarily price and functionality alternatives for the same product: mobile telephony/broadband services. Separating out the prepaid segment for special scrutiny and regulatory intervention in the merger review process would be unjustifiable in principle, and arbitrary in practice.

Also, the FCC should adhere to agency precedents regarding the amount of spectrum it considers suitable and available for purposes of its spectrum screen. It should not suddenly shrink its spectrum screen inventory count in the course of reviewing AT&T/Leap - or any other proposed merger. Ad hoc reductions in spectrum inventory would trigger false alarms over spectrum concentration and false pretexts for regulatory intervention. In any event, AT&T/Leap only triggers the FCC's spectrum screen - an analytical tool for commencing, not ending, analysis - in a small number of market areas. Overages above 5 MHz would result in an even smaller number of areas - all of which are subject to competitive pressures from three other nationwide wireless providers.

Finally, the FCC's analysis should concentrate on the potential benefits of AT&T/Leap. That analysis should also consider the serious difficulties Leap would face absent the merger. Namely, Leap's lack of annual profits for several years running, its obstacles to obtaining future capital financing, its lack of sufficient spectrum to offer wider LTE deployment, its subscriber losses, and its rising per subscriber costs. All of those difficulties come in the face of surging demand for next-generation wireless data capabilities and corresponding network traffic increases. At the same time, the FCC's analysis should avoid injecting non-existent hypotheticals about investments by imagined new entrants or competitors, unrelated to the parties to the merger. The FCC often has been guilty of this in the past. Rather, the Commission's analysis should give credit to the large investments that wireless carriers seeking spectrum licenses are actually prepared to make.

The prepaid, no contract wireless services segment continues to grow, with national carriers like T-Mobile and Sprint firmly established in this segment. Non-facilities-based mobile virtual network operators (MVNOs) like TracFone also serve millions of consumers, enhancing choice and value for wireless consumers. AT&T/Leap should be viewed in light of that market segment backdrop - and also in light of the wireless market's overall competitive conditions and innovative environment. This paper does not take out a position for or against AT&T/Leap, for that is not its ultimate purpose. Rather, its purpose is to show that AT&T/Leap deserves an expeditious review process at the FCC. That process should be consistent with agency precedent and focused on the likely consumer welfare-enhancing benefits that mergers like this one are likely to create.