Print 39 comment(s) - last by Teleco M&A Guy.. on Aug 24 at 8:53 PM

AT&T's document does a poor job of arguing its case for a merger and contains numerous contradictions and curiosities.  (Source: Business Insider)

AT&T reports dumping 1.2 million documents on the Department of Justice, and likely a similar number on the FCC, in what can be viewed as somewhat of a "Chewbacca Defense" and an attempt to avoid answering actual tough questions regarding the merger.  (Source: South Park Studios/Comedy Central)

AT&T claims that it doesn't even communicate with local managers on ads and that some local managers don't even ever write down what their ad strategy is. Perhaps this explains those Luke Wilson ads?

The planned merger will lead to an estimated $10B USD reduction in spending -- and like a corresponding reduction in job creation. Layoffs at T-Mobile also remain an active possibility.  (Source: TFTS)
1.2 million dumped docs can't hide that the expensive deal looks like an attempt to stifle competition

AT&T, Inc.'s (T) management have found themselves playing the role of televangelists in recent months, trying to sell the credulous public -- and the government -- on why a merger with Deutsche Telekom AG's (ETR:DTE) T-Mobile USA will be a great thing.  

You could say they have a tough sell.  After all, just about three decades ago the government broke up American Telephone and Telegraph [source: AT&T], eliminating its monopoly grip on the market.  Now after a series of acquisitions, AT&T is poised to become, once more, the dominate player on the market and pare customers' choice down to three major offerings -- AT&T, Verizon Wireless (VZ), and Sprint Nextel Corp. (S).

I. AT&T Lets Slip "Confidential" Document

The preacher may have made their own job a bit tougher in this case, as a leaked "confidential" document filed by AT&T to the U.S. Federal Communications Commission has launched a firestorm of media scrutiny.

Wireless Week was the sole site to take note of the document, that briefly graced the FCC's site on Thursday (which the publication mistakenly labelled as "partially redacted", when in fact the mistakenly posted version contained no redactions, according to our dialogue with an AT&T spokesperson).  Sadly, Wireless Week neglected to post the ten "confidential" redacted portions of the document, the thirty four "highly confidential" redacted portions, or even a single one of these redacted portions in its entirety.  They did, however, take note of one interesting fact (which we'll discuss later).

And while Wireless Week may have missed a chance to fill the public in on more details of AT&T's secrets, they did bring scrutiny on this document, which ultimately may prove more important than whatever confidential information might have been inadvertently and briefly exposed.

After all, the document in its redacted form had plenty of juicy details of its own.  Technically, despite what some publications claim, the partially redacted form of the document was ostensibly intended for public consumption.  But AT&T probably hoped it would never receive this much attention and scrutiny.

Indeed, for almost two months it languished, largely overlooked on the website [PDF] of The National Exchange Carrier Association, Inc. (NECA), a wireless trade organization -- understandable, given that the number of non-industry players digging around NECA's web space are likely few.  

Now that document is in the spotlight and AT&T has some tough questions to answer.

II. AT&T: Wasting Taxpayer Dollars With Chewbacca Defense?

U.S. federal laws state that any mergers or acquisitions in the communications space must pass FCC and U.S. Department of Justice scrutiny.  The FCC approves of the transfer of spectrum licenses and communications authorizations, while the DOJ approves the corporate aspects of the merger.

You might expect this process to play out something like a professional presentation, in which AT&T presents an executive summary and then a concise collection of supporting documents to government regulators.  Certainly this approach would seemingly provide the most transparency, give government regulators the best perspective on the prospective deal, and save taxpayer dollars spent on analyzing the deal.

But AT&T appears to be going a decidedly different route, as documented in its letter to the FCC.  AT&T recalls, "1.2 million files were sent to the U.S. Department of Justice in response to its request for information."

Similarly, in the letter to the FCC, AT&T often avoided directly answering questions in a concise manner, rather opting to direct officials to a single ubiquitous ("Exhibit A") dump of documents.  This dump-truck of a directory was created using "key word searches of custodian files." (e.g. pg. 5, pg. 6)

The letter mentions nothing about the results of these "key word searches" being reviewed by human eyes -- in other words, AT&T is forcing the FCC and DOJ to do the heavy lifting here, combing through a virtual public-library worth of pages.  It's hard to escape the perception that AT&T just searched through their corporate database and dumped a bunch of documents on the FCC and DOJ, hoping to overwhelm its way to approval.  

In essence AT&T appears to be using a strategy somewhat comparable to the legendary "Chewbacca defense" to try to clear its merger's good name -- overwhelming the deciders with so much superfluous information they are forced to accept its logic.

While AT&T's public relations team would surely disagree with this characterization, it's certainly the impression one may come away with after carefully reading through this letter.

This is particularly troublesome as it appears to dodge some of the FCC's most direct and serious questions.  For example the FCC requests detailed information (such as data from market researchers) on how the merger will affect the price of wireless services in the U.S. AT&T's non-response (pg. 12-13) is to present the same dump truck of key word searched documents ("Exhibit A"), which it uses as its ambiguous "answer" to a whole host of other (important) questions.

And if AT&T is avoiding giving direct answers and is indeed hoping to bury the FCC and DOJ under an insurmountable mountain of paperwork in an effort to gain a lax review, it's not only wasting federal time and taxpayer dollars, it's also obstructing the FCC and DOJ from doing their federally legislated duty to preserve free competition in the market.

III. Company Admits Its Statements Were Speculative, Lack Thorough Review

Remember how AT&T CEO Randall Stephenson claimed that T-Mobile and AT&T were suffering from "underutilized" networks.  Turns out those statements were highly speculative and could be utterly incorrect.  Writes AT&T (pg. 8):

AT&T does not maintain in the ordinary course of business a nationwide list of all CMAs where its individual network is underutilized. With regard to the areas where AT&T's and T-Mobile USA's networks may be underutilized relative to each other, AT&T does not have this information on a CMA by CMA basis, nor does AT&T have engineering data that would provide this granular information for T-Mobile USA.

In other words, it has no comprehensive review to back its claims.  Rather, it claims that a handful of analysis in "select" CMAs (market regions) back its assertions of "underutilization".  

This would be akin to if a company told investors the company was profitable, but really had only determined that one retail location was turning a profit.  Clearly such results can be cherry-picked, and are hard to trust.  Even assuming zero bias, the data is almost useless to draw general conclusions and indicates AT&T's past claims were overreaching and speculative.

Stranger still, the company seems to contradict itself, later in the document, writing (pg. 23):

AT&T is providing Exhibits that contain information responsive to this request, consistent with its discussions with the Commission's staff. The .csv file in Exhibit 19-1 contains current (as of March 11, 2011) data usage for each UMTS site (by USID) measured in kilobytes, during the monthly busy hour, and separately for the uplink and the downlink. The .csv file in Exhibit 19-2 contains current (as of March 11, 2011) data usage for each GSM site, measured in Erlangs, combined for the uplink and downlink, for the monthly busy hour. At the Commission's request, AT&T also provides an estimate of GSM data usage in terms of Kilobytes, using a formula that converts Erlangs to Kilobytes. Both exhibits identify the CMA associated with each site.

In other words, AT&T previously said it doesn't collect utilization data on a local level, but here it says it is collecting usage data on a local level.  The only way this usage data couldn't be used to provide utilization tracking is if AT&T (nationally) is unaware of how much total capacity it has locally and thus is unaware of how much capacity is going unutilized.  This seems extreme hard to believe, and is alarming to investors, if true.

Again, AT&T PR will likely try to spin this in some positive direction, but it's hard to argue with AT&T's own lawyers -- the company either doesn't have the information to conclusively back one of its very significant claims about the merger or is making deliberately misleading statements.

IV. AT&T Claims It Hasn't Planned How It's Going to Integrate T-Mobile

In the "that's kind of hard to believe" department, AT&T's lawyers claim to the FCC that the company has no idea how it's going to integrate its $39B USD prospective purchase into the company and that it has formed no plans to that extent.

It writes (pg. 10):

AT&T will not be in a position to make any final determinations about possible changes in T-Mobile USA until it is able to obtain more detailed information about the operations of the company, which will occur later in the acquisition process. In addition, any preliminary plans are subject to the outcome of the regulatory process. AT&T has not yet begun detailed integration planning efforts.

It reasserts its lack of planning later on, stating (pg. 18):

AT&T has not yet begun detailed integration planning efforts relating to its marketing or advertising efforts or other operations.

It later essentially claims that T-Mobile hasn't given it enough information to make concrete integration plans, writing (pg. 32):

AT&T has not yet begun detailed integration planning and its knowledge of T-Mobile USA's operations is necessarily limited at this early stage. The actual process of determining which specific T-Mobile USA sites to integrate and which to decommission will require substantially more data from T-Mobile USA regarding its network as well as a more thorough engineering analysis of each area's characteristics and capacity needs, which could change by the time the Transaction closes. Consequently, AT&T has not yet determined the exact number or location of T-Mobile USA towers or other locations used for transmission of signals that will be integrated into the combined company's network to increase network density.

AT&T does refer to handful of details on possible high-level integration plans, but it is essentially refusing to provide the FCC with a comprehensive plan of how it's going to integrate T-Mobile.  While it's true that integration is dependent on restrictions the FCC may impose, should the deal be approved, it's hard to believe that AT&T doesn't have complete and detailed plans of how it hopes to execute its biggest acquisition and integration in recent history.

Either AT&T's investors should be pretty nervous at AT&T's lack of detailed analysis in such an important decision, or AT&T isn't being forthcoming and the FCC auditors should be pretty irate.

If AT&T is being honest here, if anything, it lends ammo to those who believe the acquisition is an effort to stifle competition.  After all, AT&T is saying it's not really sure how it's going to integrate T-Mobile; but left unsaid is the fact that what is sure is that the acquisition will mean one less would-be competitor on the market.

V. AT&T Claims Its National and Local Management Often Don't Communicate

As mentioned in our third section above, AT&T claimed that it couldn't comprehensively state where spectrum was underutilized as it collects no comprehensive information on regional spectrum usage.  Similarly, it claims its national operations doesn't keep track of or plan regional/local advertising campaigns.

It writes (pg. 17):

AT&T does not maintain a central repository of plans, analyses and reports concerning local or regional advertisements. As explained by David Christopher, Chief Marketing Officer of AT&T's Mobility and Consumer Markets, in his Declaration and Reply Declaration filed with the FCC, AT&T has given its 27 vice-presidents/general managers ("VP/GM") authority to respond to local competition by varying and supplementing national advertising to respond to local market conditions, and VP/GMs may develop customized marketing plans for use in particular cities or areas within their respective territories. Such local advertising plans, therefore, may not always be reduced to writing, and even when such records are created, they may not have been maintained for the periods covered by this request.

It's understandable that AT&T would delegate advertising and network analysis to regional management.  But to claim that regional managers and national managers never meet with each other or share information about advertising and network analysis is somewhat amazing.

Further, to claim that local managers may not even be committing their advertising plans to writing sounds a bit hard to believe.  If AT&T is being honest here, again, investors should be very concerned.  After all, it's essentially claiming that local managers are receiving no direction on several critical business aspects and national managers are receiving no feedback on those aspects.  And it's claiming that its regional managers are making major business decisions, in some cases, using no written documentation.

VI. Spending $39B USD for a $3.8B USD Infrastructure Upgrade

AT&T writes (pg. 40):

Prior to the merger, AT&T's plan was to deploy LTE to 80 percent of the U.S. population by the end of2013. However, because of the scale, spectrum, and other resources resulting from the transaction, AT&T is now able to commit to expand LTE to 97 percent of the U.S. population.

Going from covering 80 to over 97 percent of the population will require AT&T to almost triple the land mass covered by its LTE network, from below 20 percent of the United States to approximately 55 percent. Additionally, it costs nearly twice as much per covered person in capital expenditures to provide mobile wireless services to sparsely populated areas than to densely populated areas. AT&T estimates that this expansion would cost approximately [Begin Confidential Information] [End Confidential Information] in additional capital expenditures...

Expanded LTE coverage has been one of the key justifications for the merger.  Writes an AT&T spokesperson:

In addition to the LTE goal, our proposed merger will:
· Increase cell density and effectively double the amount of network traffic that can be carried using existing spectrum in the areas served by those cell sites.
· Gain the equivalent of 8 years of new site build based on 2010 build rates
· Improve voice and data network performance in areas of various markets in as little as nine months.

Now we've already shown that the claim that a merger would "effectively double the amount of network traffic that can be carried using existing spectrum in the areas served by those cell sites" is speculative and not necessarily true by AT&T's own admission.  So AT&T's justification basically boils down to that the merger will provide it with better 3G coverage and more LTE.  

Given this assumption, and the fact that the total merger costs are pegged at $39B USD, you would expect the projected cost of stand alone LTE deployment to be around half of the cost of the merger -- so around $20B USD.

Actually, according to the sole confidential data scooped by Wireless Week, it's $3.8B USD.  In other words, AT&T is gaining $34.2B USD worth of 3G.  Given that it's still going to have to fulfill T-Mobile USA customers' data and voice needs, it's likely not going to gain that much spare 3G.  So it's pretty difficult to believe that AT&T isn't getting a very bad deal here.

Unless, that is, AT&T's massive payout brings a certain unstated value -- say by eliminating one of the last two low priced competitors on the market.

It's easy to see why AT&T wanted to keep this figure a secret.  In this light the deal just doesn't make sense, unless you consider it a design to stifle competition.

AT&T's spokesperson insists that there's other benefits, but as we point out, some of these supposed benefits are contradicted by AT&T's own letter, and those that remain essentially don't seem to add up to the $34.2B USD outstanding cost of the acquisitions, after the LTE gain is considered.

VII. AT&T Claims That it Will Add Jobs, But Admits It Will Cut Spending

AT&T says the merger will create thousands of jobs, and the letter claims (pg. 46)  to provide supporting evidence of this, but still unexplained is how AT&T plans to do this, when it's going to make a net cut to T-Mobile's infrastructure spending.

The company told the public that the deal would lead to $8B USD in new infrastructure spending over the next six years.  However, it neglected to mention that by historical averages an independent T-Mobile USA would be spending $18B USD over this time period.  AT&T then turned to investors and bragged that the deal would deliver $10B USD in infrastructure cost savings -- essentially the missing T-Mobile infrastructure investment.

In short AT&T is cutting spending, not increasing it.  Some jobs may indeed be "created", but overall the net result will almost certainly be layoffs and/or reduced job creation.

VIII. Summary

A thorough analysis of the actual document in question gives the following impressions:
  1. AT&T is not providing the FCC and DOJ with neat, concise answers to all of their questions.  Much of it's "evidence" is a ubiquitous dataset ("Exhibit A"), which it has dumped on these agencies, leaving it to them to pay to sort through the mess.

  2. AT&T admits that some of the claimed benefits of the merger are speculative and thus not necessarily true.

  3. AT&T expects the public to believe it has no concrete plan on how it's going to execute the biggest, most expensive merger in its recent history.  It claims only to have vague "high-level" plans, the details of which it largely refuses to share with the public.

  4. AT&T claims it local and national management don't coordinate their efforts on many topics, yet it contradicts itself, revealing, seemingly, some of the information it claims doesn't exist likely does exist (CMA utilization).

  5. AT&T can't explain why it's willing to spend $39B USD on what amounts to a $3.8B USD LTE gain, and likely a similar several billion dollar 3G gain.

  6. AT&T's own figures point to reduced job creation as a direct result of the merger.
Add to the mix our previous research that most of the Congressional (House and Senate) supporters of the deal have accepted campaign donations from AT&T -- arguably payouts for support.  Obviously this both raises the price of the prospective deal even higher and brings its integrity into question.
In this light it's hard to view the merger as anything less than a pricey attempt to stifle competition.  AT&T may yet argue its case more eloquently, but this new document "redacted for public inspection" does a clumsy job in trying to convince the public of the merits of the deal.

It should be interesting how the FCC and DOJ react to this mess.

Comments     Threshold

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F off
By icanhascpu on 8/15/2011 1:29:29 AM , Rating: 5
AT&T and anyone that would allow this merger. AT&T is just about ripe to be shattered into a dozen smaller bells again. How the hell it got back to what it is now is a fscking FAIL of our government.

RE: F off
By Brandon Hill on 8/15/2011 1:32:37 AM , Rating: 3
AT&T = T1000

RE: F off
By teng029 on 8/15/2011 1:36:47 AM , Rating: 5

RE: F off
By Black1969ta on 8/15/2011 3:49:15 AM , Rating: 2
AT&T = T1000

More like the T-X, very pretty in fact, extremely hot; but at its core a faceless Terminator, seeking to eliminate competition, and willing to say anything to justify its means.

RE: F off
By jdonkey123 on 8/15/2011 1:22:17 PM , Rating: 2
But like the T1000, you can get it to switch sides...

I think that AT&T is setting itself up for a forced divestiture. However, instead of a split into a bunch of regionals, it should just be two companies. One that owns/maintains the physical infrastructure and one that operates the services.

There could also be a provision that 3rd party operators would get the same pricing as the AT&T operator for 5-10 years.

BAM! Competition! The reason all MVNO's to date have failed is because they don't get good enough wholesale rates on network capacity. You can fix the market and restore competition if you specify that the hardware operator has to give all 3rd parties the same rates (within reasonable limits, until a free market is re-established.)

RE: F off
By corduroygt on 8/15/2011 2:03:11 PM , Rating: 2
But like the T1000, you can get it to switch sides...

When did the T1000 ever switch sides?

RE: F off
By room200 on 8/15/2011 1:55:53 AM , Rating: 2
Notice that someone rated you down. Apparently, they believe that monopolies/gouging customers is a wonderful thing. They most likely also believe that lobbyists are wonderful, corporations are people, money is good for politics, church belongs in schools, and that politicians REALLY do care about people.

RE: F off
By woofersus on 8/15/2011 3:21:34 AM , Rating: 1
And yet it's possible for somebody to disagree with his unsophisticated blanket assertion without standing for everything you despise.

While it does appear that this merger should be blocked given the information currently available, the competitive landscape is a touch more complicated than the old Ma Bell scenario in the telecom industry. There is a substantial web of regulation and public obligations surrounding the operation of a telephone company, which along with the incredible expense of infrastructure creates serious barriers to entry. (and tends to encourage consolidation for economies of scale) I used to work for a company that provided national dial-up, dsl, and wifi internet service and we tried to expand into VoIP. As soon as you switch from providing an "information service" to a "communications service" all kinds of things change. At the end of the day it wasn't unfair competition that caused the venture to fail. It was all the government programs that added ~17% to customer bills, liability exposure due to responsibility for emergency communications services, uncertainty caused by the patent system, and the ridiculous system of individual state charges for interstate calling. (although I bet the cellular companies love it)

AT&T should be given the same scrutiny as any other large company seeking a merger in a market with few competitors, but they are hardly the evil empire, and they certainly aren't the only game in town. I'm more concerned with the possibility of collusion and price fixing among competitors than monopoly-seeking behavior at this point anyway.

RE: F off
By tng on 8/15/2011 8:03:54 AM , Rating: 2
...they certainly aren't the only game in town. I'm more concerned with the possibility of collusion and price fixing among competitors...
With fewer competitors the possibility of price fixing or collusion is greater than if it is spread across a greater number of companies.
government programs that added ~17% to customer bills
Surprised that it was not more. Given the fact that there is some liability involved in providing 911 service via VoiP I am sure that the total would have been more than just 17%.

RE: F off
By dsx724 on 8/15/2011 10:21:05 AM , Rating: 4
I'm paying $0.20 for a < 200B text. I can call someone for 60 seconds for $0.10 which is the equivalent of 360KB. Thats an 2000x price difference. If thats not price fixing, I don't know what is.

Good Read
By The Insolent One on 8/15/2011 8:01:20 AM , Rating: 4
Nicely done Jason. You took a lot of data and a very complex bunch of issues and summed them up nicely.

I'd love to see the US govt give AT&T the banhammer and shatter it into 50 pieces again.

RE: Good Read
By gorehound on 8/15/2011 8:37:18 AM , Rating: 1
But Corporations are people so they will payoff in legal corruption.i will be surprised if this government even bothers to stand against this merger.

RE: Good Read
By Rage187 on 8/15/2011 12:31:03 PM , Rating: 3
If anyone in the FCC ever wants a job with the new ATT monopoly, probably not.

They are all a bunch of crooked fcks to begin with; all in cahoots with each other. People go to the FCC to become better criminals and then come out and go work for the corporations they were supposed to be protecting us against.

RE: Good Read
By shaidorsai on 8/15/2011 6:41:35 PM , Rating: 2
Just to sound the voice of dissent...not that I really care one way or the other about the merger of ATT & T Mobile.

It's been my experience that people over look a lot of the costs involved in breaking up monopolies.

Case in point...if the "banhammer" as you called it is dropped and ATT is broken up into say 10 small companies as opposed to the 50 pieces you'd exactly will prices go anywhere but up if 10 small ATT's now need to hire their own billing, dispatch, online portal, and yellow book units?

I understand the typically spouted issues with reduced competition but I also understand the vast benefits of scaling a big business.

I have yet to see any single monopoly whether Telecom or Power or TV broken up that did anything to reduce prices...indeed the case could be made that more players means thinner margins and the market suffers as a whole due to lack of profit/capitol to invest. All of the anti-monopoly rhetoric also ignores the fact that countries with monopolies or government run companies now account for the best services available. America meanwhile languishes in 14th place with our unregulated anti-monopoly free market system

Feel free to prove me wrong with factual data showing prices went down after a company was broken up.

RE: Good Read
By Fritzr on 8/16/2011 12:29:40 AM , Rating: 2
You have never heard of Standard Oil?

Just before the breakup, the situation in US oil was similar to the phone market today.

You will find very few people unhappy with the splintering of the oil market even though the number of companies in the industry has fallen drastically over the years.

Yes there are serious costs involved. There are also serious benefits gained.

RE: Good Read
By shaidorsai on 8/17/2011 5:55:42 PM , Rating: 2
Am I to understand your stating the price of oil has gone down ? Seriously ?

RE: Good Read
By The Insolent One on 8/16/2011 10:03:17 AM , Rating: 2
I would make a guess that you've never owned a competitive business based on your statements.

Small-medium sized businesses are far more agile and efficient than uber-sized oligopolies or bloated union shops could even dream of being.

Economies of scale don't go to infinity. Most CEOs say they do when they sell their takeover-of-the-month to the shareholders, but then reality kicks in.

Oh, lest I forget to give you some factual data...ever seen a nail salon or a convenience store staffed by white collar workers from a bloated oligopoly? No, of course not. They're franchised or owned and staffed by people trying to earn their way to the American dream.

Our country wasn't founded on big business. It was founded on the backs of the individual wanting to get away from an overzealous government, and a belief that their idea was better than the next guy's.

RE: Good Read
By shaidorsai on 8/17/2011 6:57:54 PM , Rating: 2
Actually I have worked in a very competitive business environment for more than a decade and I have done quite well at it. I did not make any claims about big business being agile or more efficient though I would be willing to explore efficiency of scale as a positive. I said that splitting big business into many small ones creates thin profit margins for all and that the margins are thin due, in part, to all of those same small businesses hiring what amounts to duplicate work force.
Not withstanding the suspect comment posted about Standard Oil's breakup reducing cost I still haven't seen a factual example. The comment about nail salons and convenience stores doesn't prove anything simply because they never existed as a single large corp.

By IlllI on 8/15/2011 3:27:19 AM , Rating: 2
i think anyone with 2 brain cells knew this from the very beginning. i dont know how the gov't cant see that as well.

i honestly cant think of one good thing that would come from this merger.

By bug77 on 8/15/2011 6:05:29 AM , Rating: 2
My thought exactly: this screams "anti-competitive", "monopoly" and "bad for the consumer". Why hasn't anyone shot this down already, since AT&T has failed to produce an argument in its favor?

By Targon on 8/15/2011 7:04:29 AM , Rating: 1
With legal documents, it is very possible to say conflicting things without any falsehoods. This is where a lot of complaints come from, and is also why it takes re-reading these things multiple times before you can really absorb what is and is not in there.

The merger itself is NOT a bad thing, considering that Verizon has many unfair advantages in the market, including using its landline business(which gets $1.5 billion in federal subsidies over a three year period) to help support the cellular business.

So, the merger: AT&T gets extra wireless spectrum for LTE, and access to new towers to improve coverage area. T-mobile customers would get coverage in many places they currently do not, and not just at 2G speeds the way it is now. Remember that T-mobile uses a different frequency for 3G than AT&T does, so even with roaming contracts from T-mobile to AT&T, it would be at 2G speeds. Plans from T-mobile may not directly make their way to AT&T customers, but many influences will come across, such as replacing hard data limits in plans to "X amount at full speed, then a lesser speed beyond that without paying extra money".

Really, the only area of concern for T-mobile customers SHOULD be the cost of plans. With a larger network comes increased costs of maintenance and operations, so yes, there would be SOME increase, but if T-mobile were to grow its network size to that of AT&T, those increased prices would also show up. Being small DOES allow a business to charge less due to fewer expenses.

Now, that talk about increasing jobs while decreasing expenses DOES make sense, when you look at it from the perspective of how much things cost. Eliminate the job of one $100,000/year employee, and replace it with two $50,000/year employees, more jobs, and if that $100,000/year employee isn't worth that much, it saves on "waste". Government is KNOWN for spending more on things and paying more in terms of overall benefits(competitive wages PLUS a pension and great health benefits is more than you would see in the private sector). So, cut back on some waste, and streamline some operations, it DOES pay off if they can do it.

People are screaming about this, yet no one has looked at Verizon, which has been buying up other companies for a long time now and then selling off the least profitable parts and harming consumers along the way.

T-mobile has been fairly clear in other documents that they are going to go away, if not by merger/buyout, then by divesting the assets of the company to multiple other companies. So, it's not like there will be any more competition since I expect T-mobile to be gone in five years, even if the AT&T/T-mobile merger doesn't go through. Sprint can't buy them due to a lack of money, Verizon purchase would be even more anti-competitive than an AT&T purchase.

So, really, people are just afraid of this merger because they associate AT&T with Ma Bell, while Verizon is really more like Ma Bell in terms of business practices already.

By Totally on 8/15/2011 2:10:40 PM , Rating: 2
Both scenarios you outlined, is not something we'd want. Company A making a powerplay is less evil than Company B making a powerplay isn't a very convincing arguement. Why not just let T-mobile bow out on their own if they really intend to leave the US market.

By cyberserf on 8/15/2011 7:11:13 AM , Rating: 4
because our government is corrupt at the highest levels that is why. Like I said before these mergers are NEVER good for the consumer.
if this goes through we will have less choices, less jobs, higher prices and even worse CS.

By monitorjbl on 8/15/2011 10:18:58 AM , Rating: 2
The auditors have to prove that AT&T is doing this for anti-competitive reasons. There are a ton of mergers/buyouts that go through which happen for different reasons but still reduce competition in the market. It's pretty obvious to all of us because we really don't like AT&T and tend to think the worst of them (I f*cking loathe them, and once my contract is up I am gone), but that's not the way things work at an official level. It's basically innocent until proven guilty, and I'm really hoping this will be evidence enough that AT&T is trying to muscle its way out of ever having to worry about satisfying their customers again.

By bug77 on 8/15/2011 10:35:50 AM , Rating: 2
Fair enough. But when you go from four big players to only three, there isn't much left to prove, is it?
Oligopoly means non-combat and no competition anyway. My common sense tells me that whenever you have less than 20 large players in the game (maybe 50 for some industries), all mergers should be forbidden.

By icemansims on 8/18/2011 3:31:39 PM , Rating: 2
No, actually they don't. This isn't a hearing to hit AT&T with fines or sanctions for anti-competitive behavior. This is a hearing to see if this merger should be allowed or not. The standards of evidence are much lower. All they have to prove is that the merger would be materially detrimental to competition in the industry.

By amanojaku on 8/15/2011 9:07:21 AM , Rating: 2
What seems to be lost on most people is that AT&T is not merging with T-Mobile USA; the former is buying the latter. T-Mobile USA's parent company, Deutsche Telekom, is actually looking to pull out of the American market and focus on Europe. The end result, of course, would be the death of T-Mobile USA. AT&T could make a case for the buyout on the grounds that it would be less disruptive than a liquidation for employees and customers, alike, despite the obvious realities of a triopoly (it's already an oligopoly), layoffs, and price hikes.

Deutsche Telekom needs to be convinced to stay, and I'm not sure that's possible. T-Mobile USA gave up when the iPhone came out, and has fallen way behind without doing anything since. I give Sprint credit for trying, which is why I'll switch to it eventually. I'm milking my T-Mobile contract, which is a sweet deal. I'll miss my unlimited calls Fri-Sat-Sun.

By Samus on 8/15/2011 10:02:02 AM , Rating: 2
DT isn't looking to pull out of the US market. It's actually a very profitable market for them. The only reason they're accepting to sell T-mob for 39B is directly related to funding stalled expansion plans in the rest of the world.

You can bet they'll be back.

By amanojaku on 8/15/2011 10:43:38 AM , Rating: 3
DT isn't looking to pull out of the US market. It's actually a very profitable market for them.
You are mistaken.
The only reason they're accepting to sell T-mob for 39B is directly related to funding stalled expansion plans in the rest of the world.
The European infrastructure needs funding, yes, but the American infrastructure does, as well. That is why DT is pulling out of the US; it does not want to take the risk of building its infrastructure, only to continue losing customers. That means the market is not profitable, not for DT, anyway.
You can bet they'll be back.
Do you have a source for this, or is this just idle speculation?

By Rey T. Fox on 8/20/2011 2:23:58 AM , Rating: 2
My prediction is Google buys T-Mobile is this merger fails.

RE: ...
By Rey T. Fox on 8/20/2011 2:26:51 AM , Rating: 2
if, meant to type

Easy fix
By wallijonn on 8/15/2011 11:13:01 AM , Rating: 3
AT&T is forcing the FCC and DOJ to do the heavy lifting here, combing through a virtual public-library worth of pages. It's hard to escape the perception that AT&T just searched through their corporate database and dumped a bunch of documents on the FCC and DOJ, hoping to overwhelm its way to approval.

Assign one person in each department to read, slowly, each and every page. AT&T may then get their approval in about 100 years. When the examiner dies, get assign a new examiner and have him /her start from the beginning. It may then take over 1000 years before the merger is approved.

Since the data presented hasn't been compiled within DOJ/FCC guidelines (forms filled out), the merger should automatically be declared as invalid due to non-supporting documents. If AT&T tried doing this data dump with the IRS the government would own AT&T tomorrow and all AT&T execs would be in jail for 20 to 30 years for obstruction.

By NellyFromMA on 8/16/2011 8:32:11 AM , Rating: 2
Judging by the way other parts of federal government act and reach decision, I think this still has a good change of passing scrutiny. Sad.

Remember now...
By NellyFromMA on 8/16/2011 8:33:24 AM , Rating: 2
...corporations are people too! hahaha

The anti-poison pill
By KnightBreed on 8/16/2011 12:57:06 PM , Rating: 2
The merger talk will probably kill off T-mobile anyway. The fight between AT&T and FCC will drag on forever and Deutsche Telekom publicly announced it's plans to leave the U.S. market.

Meanwhile T-mobile rots on the vine while consumers sit on the sideline waiting for stability. Are you going to switch to T-mobile knowing that infrastructure improvements have stalled and your account might eventually move to AT&T? Not a frickin chance. They'll continue to bleed consumers and money and die off anyway.

It really sucks because we need more competitors in the market not less. Especially because how the market is structured in the U.S.

By km9v on 8/16/2011 2:01:32 PM , Rating: 2
This does not make sense.

Post Merger Integration
By Teleco M&A Guy on 8/24/2011 8:53:15 PM , Rating: 2
The notion that Randall Stephenson and Forrest Miller both ex-of Ernst & Young do not have a post merger integration plan is absolutely laughable. The sheer arrogance of putting that arguement before the government shows just how corrupt our government has become due to pervasive campaign contributions.

Let's be clear, Randall has been around the block. He did the Cingular deal, he was around for the Ameritech and PacBell deals. I he does not have a specific plan in writing with detailed steps, he has several he can dust off and changes the names on in a heartbeat.

On my God, what a joke we have become in search of campaign financing sources.......

By Breathless on 8/15/11, Rating: 0
"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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