Posted by: Ann Treacy | September 9, 2011

Update on AT&T T-Mobile merger

It’s been a while since I posted an update on the AT&T T-Mobile merger but a few folks has asked recently so I thought I’d try to pull together what some folks are saying and the proposed merger of two of the four largest national providers of mobile wireless services.

First – the latest activity. On August 31, 2011, the Department of Justice filed an anti-trust lawsuit to block AT&T’s acquisition of T-Mobile. The Department of Justice explains their move…

The Department of Justice today filed a civil antitrust lawsuit to block AT&T Inc.’s proposed acquisition of T-Mobile USA Inc. The department said that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives.

The department’s lawsuit, filed in U.S. District Court for the District of Columbia, seeks to prevent AT&T from acquiring T-Mobile from Deutsche Telekom AG.

“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole. “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

Reaction to that lawsuit has really cemented the pros and cons as well as friends and foes of the merger.

Who’s for the merger?

Other large tech companies have apparently rallied around the idea of the merger as a means to build a better network more quickly. WIRED reports

Sadly, some of the nation’s biggest tech players rallied to AT&T’s defense. Facebook, Yahoo, and Microsoft, among others, filed a petition in support of the merger, buying into AT&T’s threat not to build out a nationwide 4G network unless it got to buy T-Mobile.

Some folks have used the merger as a jumping point to open the spectrum discussion. Jeff Kagan, from E-Commerce Times points out that the merger is just an attempt to get more spectrum – a resource in scarce supply, which the author suggests should be reallocated…

If we are to survive, we have to come up with a bold solution. A wider hose. Otherwise the entire industry will face the same problems AT&T has been dealing with in recent years. So one idea is to take the spectrum back and pool it into a large group. Let every carrier and handset maker access it all. That way if one band is blocked because of heavy usage, the phone and the network can simply use another band. Simple solution.

In a very backhanded way, CNN Money points out that the merger has the potential to save money.

On page 51 of a long filing with the FCC in support of the merger, AT&T did get around to describing how the deal would save it $3 billion a year starting three years after it was complete. One of the ways will be “optimizing” the combined company’s retail and distribution networks (a process that traditionally involves more firing than hiring).

Unfortunately this is sort of a double-edged sword at a time when what the economy is really screaming for is jobs from private business – not saving and downsizing. Also, AT&T is saying that the merger will create jobs…

If the deal is approved, AT&T today said that it will be able to “bring back” 5,000 call center jobs to the United States that are currently outsourced to other countries. In addition, the company said that it doesn’t anticipate any job losses for U.S.-based call center workers after the merger closes.

Who’s against the merger?

The Center for Media Justice calls the Department of Justice block a major victory…

“Blocking this merger is a major victory for communities of color, rural communities and America’s poor. The Justice Department has taken seriously our real concerns about higher prices, fewer choices and massive job loss. This is the best possible end to our August Month of Action Against the Merger. The people spoke, and the Justice Department listened.”

Some maintain that Sprint must be happy with the delay – but even more interesting it outlines some of the issues facing mobile industry these days – like smartphone relationships and 4G networks…

But the most pressing issue facing Sprint, the analysts say, is its need to build a fourth-generation, or 4G, wireless network

WIRED also maintains that T-Mobile customers are happy to see the block..

“I’m so happy that I don’t have to be an AT&T customer.”

Again this important factor here is in the implication that T-Mobile is friendlier to customers. The Legal Talk Network also made that assertion and part of the concern for folks who are worried is that service will be adversely effected with a merger. T-Mobile is called out as a “disruptive factor” in the industry in terms of providing lower costs that have an impact on the prices competitors can charge.

I’m not sure how the lawsuit will end up – it was interesting to get a glimpse of the Judge Huville, who is presiding over the case. It will be interesting to see what happens next.


Responses

  1. I am currently a T-Mobile customer and I DO NOT WANT to become an AT&T customer.


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