AT&T + T-Mobile: What the Web Is Saying

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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

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