The Department of Justice’s move to block the AT&T(s t)-T-Mobile merger has thrown a major wrench in the $39 billion acquisition. The deal is far from derailed, but is much more uncertain now that the DOJ is suing to stop the deal. Many have stood up and decried the merger saying it was anti-competitive, but there always seemed to be a sense that AT&T would somehow get the deal done.
Now, there are a lot of questions about what happens next and renewed vigor from the anti-merger faction, which feels vindicated by the DOJ’s intervention. The FCC will ultimately have to decide what happens here, so we still have a ways to go. Here’s a sampling of what the Web is saying:
Sascha Segan, columnist for PC Magazine, said the DOJ action was a welcome surprise for consumers used to corporations getting their way. He said the outcome came about through the relentless pounding of average citizens and the tremendous arrogance of AT&T, which acted as if the merger was a done deal.
… the U.S. Department of Justice made a huge stand for the American people today, seeing through AT&T’s lies and its acres of Astroturf and saying: this has got to stop. Mega-mergers won’t create jobs. Fewer choices don’t mean lower prices. AT&T’s promises of better 4G are just that, only promises. Not guarantees.
Harold Feld, legal director of Public Knowledge, a non-profit that fights for the digital media rights of citizens, called the DOJ action the best Labor Day present anyone can give to the American people.
AT&T’s effort to recreate ‘Ma Cell’ by holding rural broadband hostage and threatening American jobs deserves nothing but scorn. The FCC should move as quickly as possible to follow the lead of the Department of Justice and reject the merger.
AT&T, predictably, was surprised and disappointed by the DOJ’s move and said it would work to expedite a hearing on the matter. The carrier, which could be on the hook for billions of dollars if the merger doesn’t go through, said it expects to prevail at trial:
This merger will:
- Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.
- Allow AT&T to expand 4G mobile broadband to another 55 million Americans, or 97% of the population;
- Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.
FCC Chairman Julius Genachowski, who must still help decide the fate of the merger, said the FCC’s review of the deal isn’t complete, but has already raised concerns about the impact to competition.
Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices.
Dan Frommer of SplatF warned that a failed merger wouldn’t necessarily benefit consumers as much as they might imagine. He said the blocking a merger won’t necessarily help with call quality and doesn’t necessarily address the changes already underway as Internet services disrupt voice and SMS. And he said blocking the deal wipes out major concessions the government could have gotten from AT&T that would have been pro-consumer such as requiring AT&T to offer reasonable wholesale access to its network or requiring AT&T to allow its subscribers to install any applications they want on their phones:
Sure, the government looks bold here, standing up to the big, bad phone company. That has to be worth something going into an election cycle. But is blocking the merger outright really what’s best for consumers? Maybe not.
Sprint (s s), meanwhile, played up the ruling saying it was a win for consumers. Vonya B. McCann, SVP of Government Affairs for Sprint, said the DOJ has put consumers first in its decision to file against the merger:
Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.
Senator Al Franken (D-Minn), a vocal critic of the deal who previously requested the DOJ and the FCC to reject the merger, reacted with pleasure at the news, saying the merger was always set up to be a terrible deal for consumers:
I’ve heard from families across Minnesota that cell phone expenses are an ever-rising percentage of their bills each month, and this merger could make wireless bills increase by as much as 25 percent—a burden families certainly don’t need in this tough economy. This merger would also hurt competition and concentrate enormous power in the hands of just two companies—AT&T and Verizon—who would control more than 80 percent of the wireless market. I’m glad the Justice Department recognizes that this merger would hurt consumers and I hope that the court will agree and block it from moving forward.
But it’s not over for AT&T yet. Analyst Robert Enderle tweeted that the deal could still get done:
On the AT&T T-Mobile merger, given two other market competitors and T-Mobile coverage and AT&T capacity issues, AT&T could still prevail.
And as Zach Epstein of Boy Genius Report points out humorously on Twitter that AT&T’s going to be fine:
Don’t worry guys, AT&T will be ok without T-Mobile. Pricing tablets at $700 on contract will definitely lighten the load on its network.