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Summary:

Telecom giant AT&T dropped a bombshell on Sunday when it announced that it plans to acquire competitor T-Mobile for $39 billion, provided the deal is approved by federal regulators. Here’s what some bloggers, technology analysts, former regulators and other observers are saying about the deal.

Telecom giant AT&T dropped a bombshell on Sunday when it announced that plans to acquire competitor T-Mobile for $39 billion, pending regulatory approval. Within minutes of the announcement, critics attacked the arrangement as anti-competitive — including Om, who argued that the only one who benefits from this deal is AT&T itself . And my colleague Stacey pointed out that the takeover may not make it through the regulatory process intact. What follows is a sample of what some bloggers, technology analysts, former regulators and other observers are saying about the deal.

  • Former AT&T executive and author Tom Evslin called the acquisition a “blatant attempt to reduce cell and mobile data service in the US to a duopoly” and said that the U.S. Justice Department should block the proposed deal under existing antitrust law while the FCC should refuse to approve the transfer of T-Mobile’s wireless spectrum to AT&T.
  • Columbia University law professor Tim Wu, who coined the term “net neutrality,” noted on Twitter that “AT&T seems to have been reading “The Master Switch,” his recent book on the rise of technology and telecom monopolies. Wu may have something to say about how the AT&T deal is received, since he recently joined the Federal Trade Commission as an advisor on competition and consumer-protection policy.
  • Bruce Gottlieb, the former chief counsel and senior policy advisor for the FCC, wrote a post at The Atlantic looking at the proposed takeover, saying it will be “the tech and telecom issue in DC this year,” and that the stakes are high because:

    (1) wireless is the growth engine of all of tech and telecom right now and (2) wireless carriers are rolling out next generation 4G technologies, which will offer speeds several times faster than what are available today.

    Gottlieb said that several factors will come into play for regulators, including the fact that “the White House (which has substantial authority over the DOJ) and the FCC (which is technically independent, but often takes its cues from the White House) will have no interest in being labeled anti-business or anti-jobs.”

  • Dan Gillmor, director of the Knight Center for Digital Media Entrepreneurship at Arizona State University and a long-time technology watcher, said on Twitter that the clear message in the deal was “basic contempt for the FTC, FCC and Justice Dept. antitrust division” and added that:

    If the Obama administration doesn’t file antitrust case to block ATT-TMob buyout, then antitrust is officially meaningless

  • Tech blogger Dwight Silverman at the Houston Chronicle said that he “would like to see the feds man up here and say no to this deal,” or at the very least require that AT&T do something for consumers to offset the anti-competitive nature of the acquisition, as they did when AT&T and BellSouth merged in 2006, at which point the regulator required the company to offer affordable DSL access.
  • In a research note on the proposed takeover, Credit Suisse analyst Jonathan Chaplin said that he has “never seen a deal with more regulatory risk be attempted in the U.S.” and that AT&T may be willing to make “massive divestitures and concessions” in order to win approval for the acquisition.
  • Former Engadget editor and gdgt founder Peter Rojas said that the deal might be good for AT&T and possibly for T-Mobile also, but would likely not be good for consumers and would probably result in higher handset prices and less choice for users. Greg Sterling of Search Engine Land said that the regulatory considerations of the deal “make the Google-ITA antitrust issue look trivial.”
  • Sidecut Reports, a telecom analysis firm, said that the $39-billion acquisition is effectively an admission that the U.S. has a spectrum problem, since one of the main reasons AT&T is interested in T-Mobile is that it needs more spectrum to offer enhanced services such as LTE. Among other things, Sidecuts noted that Clearwire’s spectrum holdings probably just increased in value as a result of the AT&T news.
  • In an interview with All Things Digital on Sunday, the president of AT&T confirmed that spectrum was a big driver behind the deal, saying:

    The first thing is this deal alleviates the impending spectrum exhaust challenges that both companies face… when we combine both networks what we are going to have is more network capacity and better quality as the density of the network grid increases.

  • Glenn Fleishmann of WiFi Net News noted that “one of the dirtiest barely secrets of the modern mobile cell world is that AT&T doesn’t really have national 2G coverage, much less 3G” and that the deal means that the telecom giant will be leaning on T-Mobile “for a large number of areas it never spent to cover.”
  • Jan Dawson from Ovum passed along an interesting note from one of its network infrastructure researchers, who said that capital expenditures at a company that is being acquired usually drop significantly between the announcement of the deal and the consummation of the acquisition (the AT&T and T-Mobile deal is expected to take a year at least).
  • Anil Dash, founder of the non-profit advisory group ExpertLabs, said on Twitter that it would be “fun to watch the government break up AT&T again” because the company “keeps re-forming like the T1000 in Terminator 2.” Harry McCracken at Technologizer looked back at the history of the company and came to much the same conclusion. And Scott Wooley at Fortune said that while AT&T might claim it won’t raise prices after the acquisition, it may not be able to resist the temptation, since there will effectively be no competition with a GSM network.
  • In a Forrester Research note about the deal, analyst Charles Golvin said:

    The good news: high-speed mobile broadband service will improve in quality and coverage, including — in the long run — those in rural communities outside the reach of terrestrial broadband today. The bad news: the cost of that service won’t come down nearly as fast as customers would like.

  • Some argued that the AT&T deal was increasingly irrelevant anyway, given the rise of Skype and other services: Stocktwits founder and angel investor Howard Lindzon said that the deal was “just an extension of a runway for some miserable employees, overpaid executives, and antitrust politicians with bad breath.” Scott Raymond of ZDNet, meanwhile, echoed the feelings of many about the deal when he said that he moved to a T-Mobile account because he wanted to get away from AT&T and its low-quality service.

Post and thumbnail photos courtesy of Flickr user Mark Strozier

  1. ew…I’m so not into this deal. I will be switching providers if this happens…I refuse to support the tea party…credo anyone?

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    1. This has NOTHING to do with the tea party.

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  2. Kanti Purohit Monday, March 21, 2011

    There are no ifs and buts – this is anti-competitive in an industry that is already anti-competitive. If Obama administration lets the deal go through, it is “lobbyists over legislators”. And I don’t believe in so called “concessions”.

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  3. I expect ATT and its cabal of legislators and pundits will put enormous pressure on Obama to approve this merger, mainly by deploying the anti-business slur. However, I can’t see how they could call anyone who objected to this deal anti-jobs, for one of the big motivations for the merger is to reduce payroll. The combined entity would require less stores, less marketing, less phone models to market, and if ATT has their way, less support personnel. And they would not pass any of these cost savings to their customers. The merger would kill jobs, not create them.

    The only people this deal would be good for are DT shareholders (I am one, but my gains as a shareholder will be more than offset by my losses as a T-Mobile subscriber) and executives (who no longer have to deal with the losses of T-Mo), and ATT executives, who will reap increased compensation. Losers include all wireless phone users in the U.S., smaller mobile device manufacturers, and T-Mobile employees.

    This merger must not be allowed.

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  4. I’ve been with T-Mobile before they were T-Mobile, back to the Voicestream days. Heck, I still have a voicestream sim card in my phone. :)

    So it hurts me to say this, but if this goes through, I’m jumping from T-Mobile to Sprint probably.

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    1. I will do the same. I will not send ATT any more money.

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  5. I do not believe the goverment will approve this. T-Mobile is the best in value and customer service we have. ATT runs thier show like crap and acts like thiefs. They also have a proven track record of “raising the bar” (old cingular slogan btw) on prices while lowering it in other places.

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  6. I wonder if it’s possible to measure (through social networks?) the number of potential lost customers, since I presume a large amount of T-Mobile customers (like myself) would rather switch to Verizon/Sprint than end up under AT&T.

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    1. Could set up a survey on zoomerang just to get an idea. As a matter of fact I will do it.

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    2. http://www.zoomerang.com/Survey/WEB22C46X8F55S/ I made a survey to see what the reactions will be. You can share it if you would like. :)

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      1. Sorry wrong one :( This should be it. http://www.zoomerang.com/Survey/WEB22C46ZCF6FB/

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    3. http://www.zoomerang.com/Survey/WEB22C46ZCF6FB This should be the right one! Sorry!

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  7. All I want to know is how this is going to go over with other customers of T-Mobile like me who chose to not go with AT&T because they offer crap phones and plans are horrible. They a iPhone pimps and not open source friendly. T-Mobile has its issues but being open community friendly is not one of them.

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  8. AT&T has done a masterful job historically of working with regulators so if they feel this deal will get done and are agreeing to such a huge breakup fee it would be hard to bet against them. I would have thought it unfathomable but they obviously know more than others do about their likelihood. Either way, this is a huge homerun for AT&T, Verizon, and T-Mobile with Sprint seemingly being competitively marginalized and in a horrible competitive situation. I can’t see how this will be good for consumers long term and not be bad for them, so therefore it has to be great for the future of AT&T! Therefore, can this deal possible be approved? – Adrian Meli

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  9. lost Tmobile employee Tuesday, March 22, 2011

    I am single mom with kids who has given t-mobile comlete dedicated years of my life worked long hours 7 days a week and I feel betaryed. I believed in our values( T-mobile- I am T-mobile Count on Me) I have heard about so much (39B) money and what’s best for T-mobile DT and AT&T but no one is talking about the hard working people,talented and really smart who dedicated their lives and beleived and lived the values of T-mobile and have kid(s) to feed, how many hardworking,talented people who assisted in T-mobile gaining so many JDPowers awards & aprtm 34 millionn who maybe without a job…

    sign single mom mom who devoted her life to a company she loved who sold her out…I bled MAGENTA

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