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T-Mobile USA and AT&T's CEOs will defend the proposed merger of their networks before the U.S. Senate today.  (Source: AP Photo)

The deal would reduce the number of big nationwide carriers to three. With Sprint in danger of failing, customers could soon be left with only two options.  (Source: Politico)
Consolidation would only leave three large players on the market

AT&T, Inc (T) hopes to soon complete an acquisition of Deutsche Telekom AG's (DTE) T-Mobile USA.  But to get there, the companies have to navigate through a Congressional inquiry -- which occurs today -- regulatory hurdles set up by a number of government agencies, and strong opposition from smaller rivals.

I. Birth of a Duopoly

The move would unify T-Mobile's 32.3 million subscribers with AT&T's 97.5 million subscribers to form the nation's largest carrier, easily surpassing Verizon Communications, Inc.'s (VZ) 104 million subscribers.  Together, Verizon and AT&T would have 80 percent of contract cell phone customers in the U.S.

The move would leave the struggling Sprint Nextel Corp. (S) with 51 million customers as the only alternative to Verizon/AT&T.  Sprint Nextel is viewed as a potential acquisition target as well.

Before AT&T can complete its purchase, it must gain approval from the U.S Federal Trade Commission (FTC), U.S. Department of Justice (DOJ), and U.S. Federal Communications Commission (FCC).

II. Congressional Inquiry

The road to that approval begins today in a special Congressional hearing on the deal.  AT&T Chief Executive Randall Stephenson and T-Mobile USA CEO Philipp Humm will have to defend the acquisition before the U.S. Senate's antitrust subcommittee.  

The Senate does not have power to approve or reject mergers, but it wields control over the DOJ and FCC to execute its objectives.  According to a Reuters report, staffers point to loss of competition and jobs as two key concerns for federal officials.

AT&T and T-Mobile vigorously promoted the alleged merits of the deal, saying it will provide faster data service to customers on both networks, and better voice network coverage.  They also argue it will allow them to use their collective spectrum more efficiently at a time when spectrum is at a premium.

Both companies have opted to shirk the expense of deploying true 4G networks now, instead opting to rebrand 3.5G HSPA+ as "4G".  Current HSPA+ deployments fall far short of the promised spec, much like current true 4G deployments by Sprint and Verizon.  Thus the incomplete HSPA+ "4G" remains slower in most tests than Verizon/Sprint's incomplete true 4G.

III. Mounting Opposition

The merger has a number of high profile opponents, including Sprint Nextel, Cellular South, and public interest groups.  They say the rise of two super carriers would allow for tactics that would force smaller competitors out of the market.  Sprint spokesman John Taylor comments, "We continue to believe that this transaction would be bad for consumers, bad for the wireless industry and bad for the economy."

The DOJ will evaluate antitrust concerns and the FCC will evaluate public interest issues.  The FCC is reportedly already growing concerned about the merger after a record number of T-Mobile subscribers jumped ship in Q1 2011 and sent it over 4,800 complaints about the proposed deal.  FCC Commissioner Michael Copps says the deal "may be an even steeper climb" than the controversial Comcast Corp. (CMCSAacquisition of NBC Universal.  Mr. Copps voted against that approval, but was narrowly defeated when the deal was approved in January by a 4-1 vote.

In an odd display, T-Mobile continues to air attack ads against AT&T, criticizing its "slow" networks.  The ads depict spokeswoman Carly Foulkes sympathizing at the plight of her friend "iPhone", who is forever burdened by his partner "AT&T".  The ads perhaps display that even T-Mobile's leadership on some level believes that the deal won't be approved. 

In related news, Verizon and AT&T are battling the U.S. FCC to try to prevent new rules that could force them to open their towers to smaller players.  Similar rules, backed by U.S. law exist with landline phones and cable internet connections, but do not apply to cellular providers.



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fundraiser and photo op!
By kattanna on 5/11/2011 12:20:42 PM , Rating: 4
quote:
The Senate does not have power to approve or reject mergers


so really.. this is nothing more then a way to squeeze out some donations and a photo op for the press to "show" how government is "working" for the public

LOL




RE: fundraiser and photo op!
By Reclaimer77 on 5/11/2011 12:56:53 PM , Rating: 3
Yup. Maybe they should get involved with baseball steroid use again. Soooo politically important.


RE: fundraiser and photo op!
By nolisi on 5/11/2011 2:11:13 PM , Rating: 4
quote:
this is nothing more then a way to squeeze out some donations and a photo op for the press to "show" how government is "working" for the public


Wow, you really do have a limited view of why this is happening. The acquisition represents over 100 million customers, at least 1/3rd of the citizen population of the U.S. and likely covers a substantial number of the constituents of each individual members of the Senate- the highest regulatory lawmaking body in the Union. This also likely directly impacts many of the members of the Senate

Do you honestly think that it is not in anyone's interests for the Senate to sit down and maybe have a talk with AT&T and T-Mobile? I don't think it was in my interests for them to discuss steroid use. But if they are going to discuss that, then I sure as hell want them to ask AT&T a few questions.


RE: fundraiser and photo op!
By Reclaimer77 on 5/11/11, Rating: -1
RE: fundraiser and photo op!
By HrilL on 5/11/2011 3:18:47 PM , Rating: 2
Umm there are anti-trust laws and this probably violates them.


RE: fundraiser and photo op!
By Reclaimer77 on 5/11/2011 3:27:49 PM , Rating: 1
Probably or does? Or are they completely subjective.


RE: fundraiser and photo op!
By YashBudini on 5/12/2011 6:47:56 PM , Rating: 2
Anti-trust laws are used to screw opponents. It's make believe fairness.


RE: fundraiser and photo op!
By kattanna on 5/12/2011 2:28:58 PM , Rating: 2
quote:
Wow, you really do have a limited view of why this is happening.


um..no. but you do have an awesome set of rose colored glasses i must say.

quote:
Do you honestly think that it is not in anyone's interests for the Senate to sit down and maybe have a talk with AT&T and T-Mobile?


LOL and when does the senate give 2 shiates about you or me.. never. this is nothing more then a stage to convince those who dont pay attention the other 364 days of the year that they care about the "average" american. this is re-election campaign fodder, and nothing more.


RE: fundraiser and photo op!
By youdope on 5/11/2011 2:13:12 PM , Rating: 4
quote:
but it wields control over the DOJ and FCC to execute its objectives.


You can't leave out the second half of the quote in this situation. This means that they're trying to make sure hundreds of people don't lose their job and ruining the economy worse than it already is. So yeah, I'm pretty happy that they're "wasting" their time with this...

job loss = bad economy


RE: fundraiser and photo op!
By Odysseus145 on 5/11/2011 2:30:35 PM , Rating: 2
But regulation is bad, remember? If the "invisible hand" wills these two companies together, then it must be good for us.


RE: fundraiser and photo op!
By Reclaimer77 on 5/11/2011 2:55:27 PM , Rating: 2
quote:
But regulation is bad, remember? If the "invisible hand" wills these two companies together, then it must be good for us.


You rather have Government pick winners and losers than the market? Because that's worked so well in the past for the consumer...


RE: fundraiser and photo op!
By Reclaimer77 on 5/11/2011 3:07:11 PM , Rating: 1
quote:
job loss = bad economy


Oh please. Hello! These are the same assholes that sat idle while we were going through the largest job losses since the great depression. They don't give a damn about the economy OR job losses. They only care about how they can spin it to keep the stupid masses voting them in.

And they certainly don't give a damn who your cell phone provider ends up being.


RE: fundraiser and photo op!
By youdope on 5/11/11, Rating: 0
And don't forget
By Dr of crap on 5/11/2011 12:37:36 PM , Rating: 2
Do most of the upper ranking leaders forget the reason AT&T was split up in the 80's?
It's happening all over again this time with wireless service.
They ( the three bodies that will approve this )can't possibly think this is a GOOD idea.




RE: And don't forget
By Targon on 5/11/2011 1:17:51 PM , Rating: 3
Considering that Verizon has been buying up companies left and right for the past few decades to become the huge company they are now, plus the way Verizon has a lock on landline service in many areas(which gives it land for cell phone towers), I don't see that the AT&T/T-Mobile merger is all THAT bad. Why have you not said anything about Verizon for the past few decades?


RE: And don't forget
By nolisi on 5/11/2011 1:48:56 PM , Rating: 3
quote:
I don't see that the AT&T/T-Mobile merger is all THAT bad. Why have you not said anything about Verizon for the past few decades?


Who says no one said anything? There were customers from Alltel and other smaller regional carriers who likely didn't want to go to Verizon, but the number of complaints during these acquisitions (given the size of the acquisitions) did not merit antitrust investigation. It's not that nothing was said, it's just that numbers didn't warrant action.

The purchase of T-Mobile, a regional carrier that has successfully grown to a national carrier in spite of the giants owning the playground is bound to spark some issues because of the size of the acquisition- the number of complaints and customers leaving T-Mobile is evidence of this.(including myself). Keeping my service with T-Mobile is both a testament to the great customer service I've recieved as well as a statement against the business practices of Verizon, AT&T and Sprint.


RE: And don't forget
By omnicronx on 5/11/2011 2:15:01 PM , Rating: 2
You are kind of missing the point. While everything you say about Verizon is true, there were still 4 major providers even with its massive acquisitions.

The AT&T T-mobile merger will essentially leave the industry with a mere 2 major players.

This is where his comment stems from, they split up AT&T in the 80's to allow for MORE competition. (in which at the time AT&T controlled almost all of the market)

While I do see your point, I don't truly see the relevancy here. Verizon was mainly buying up local smaller carriers, not over 1/4 of the entire US market. Furthermore there were still 3 other major competitors in the marketplace. As previously stated, this AT&T move will essentially bring that number down to two.. (who knows how much longer Sprint will last if this merger goes through, my guess is not too long)

This is counter productive, and even big business proponents will be hard pressed to detail how this could be possibly good for consumers. Please remember that most carriers in the US already hold a virtual monopoly in their prospective areas in the first place. This is only going to further worsen the cause.


RE: And don't forget
By Reclaimer77 on 5/11/2011 3:01:25 PM , Rating: 1
quote:
This is counter productive, and even big business proponents will be hard pressed to detail how this could be possibly good for consumers.


Why is that? The consumers are to blame. If more had picked T-Mobile, we wouldn't be having this discussion would we?

I love how everyone discusses this like it's optional. It really isn't. T-Mobile can merge now, while they are still relatively valuable. Or they can continue to watch their position decline and more and more people choose the bigger better carriers over them. Eventually they'll be facing having to sell at a MUCH lower price, or file bankruptcy.

Better to merge now while they still have a leg to stand on and can negotiate a better deal from a relatively strong position, rather than one of desperation.

Tell me omni, what would you have them do?


RE: And don't forget
By Wolff317 on 5/25/2011 1:59:46 PM , Rating: 2
How do we know the will go down in the future? Plus I believe it would be like when Sprint aquired Nextel, at that point is where Sprint Customer Service TANKED and BEHOLD! bigger Verizon and AT&T and T-Mobile.
I would love to have that Crystal Ball of yours, maybe you foresaw the lack of payraises for our Military and Vets while they got thiers. Sorry wrong Site for that discussion huh?


RE: And don't forget
By Wolff317 on 5/25/2011 2:01:05 PM , Rating: 2
How do we know the will go down in the future? Plus I believe it would be like when Sprint aquired Nextel, at that point is where Sprint Customer Service TANKED and BEHOLD! bigger Verizon and AT&T and T-Mobile.
I would love to have that Crystal Ball of yours, maybe you foresaw the lack of payraises for our Military and Vets while they got thiers. Sorry wrong Site for that discussion huh?


Theater
By fortiori on 5/11/2011 12:37:44 PM , Rating: 2
Let the Political Theater commence!




Act I Scene I
By YashBudini on 5/11/2011 1:53:23 PM , Rating: 2
The Divine Comedy is about to commence. This is where politicians pretend momentarily to give a rat's a$$ about the people when they've already rubber stamped approval on this deal.

So much fertilizer, no wonder out crops do so well.




First Big Oil now Big Com...
By espaghetti on 5/13/2011 12:52:24 AM , Rating: 2
Let's do Big Auto, Big Fannie Mae and Freddy Mac & Big Government Contractors next...OK
I wanna see that in the Senate...next week...please.




Get em!
By icanhascpu on 5/11/2011 12:07:07 PM , Rating: 1
I hope the legality of being able to change a customers contract or month to month plan without their consent based only on an educated guess of use is put into serious question as well with all the other issues they discuss.

Not to mention the huge issue having to do with corporations like ATT totally screwing the advancement of internet infrastructure advancement through competition in the States. The infrastructural should be of public domain and maintained by the government, not quite clearly stagnant corporations that have abused the hell out of old technologies that were in place and have done little (FiOS) to actually expand or improve the backbones on it.

Not entirely their fault, but something needs to be done.




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