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  (Source: TechnicalJones)
AT&T fires back, saying politicians love the deal

The telecommunication industry’s bid to continue its consolidation hit a roadblock on Wednesday when the U.S. Senate's antitrust committee ruled against AT&T Inc.'s (T) proposed $39B USD acquisition of Deutsche Telekom AG's (ETR:DTE) T-Mobile USA.  The issue was not voted on by the whole Senate and the committee has no real power to enforce its suggestion; however, the U.S. Federal Communications Commission (FCC) and the U.S. Department of Justice (DOJ) often heavily consider the Senate committee's recommendation in such matters.

I. Senate Committee Concludes Merger Would Hurt Market

Sprint Nextel Corp. (S), the U.S. mobile phone industry's third largest carrier, has been rallying against the merger which would leave only two companies -- AT&T and Verizon Wireless (VZ) controlling over 80 percent of America's phone subscribers.  Sprint says the merger would destroy competition on the market and "stifle innovation."

Senator Herb Kohl (D-Wisc.), chairman of the antitrust committee, stated, "I have concluded that this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies."

The announcement comes shortly after high-ranking members of the U.S. House of Representatives expressed doubts of their own.  Representative Anna Eshoo (D-Calif., 14th District), chairwoman of the House Energy and Commerce Communications and Technology Subcommittee, Rep. John Conyers (D-Mich., 14th District), and Congressman Edward Markey (D-Mass., 7th District) wrote a letter to the DOJ and FCC complaining about the possible merger.

They write, "We believe that AT&T's acquisition of T-Mobile would be a troubling backward step in federal public policy–a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace. Such industry consolidation could reduce competition and increase consumer costs at a time our country can least afford it."

II. AT&T's Supporters, Including Tea Party Members Fire Back

The criticism ostensibly came as a shock to AT&T, who claims to have thought the merger to be on the fast track for a March 2012 approval.  AT&T claims that the merger will allow it to deliver "net job growth" to the nation and improve signal quality and coverage.

AT&T released a response to the U.S. Senate committee, commenting:

We respect Senator Kohl. However, we feel his view is inconsistent with antitrust law, is shared by few others, and ignores the many positive benefits and numerous supporters of the transaction. This is a decision that will be made by the Department of Justice and the FCC under applicable law and after a full and fair examination of the facts. We continue to believe those reviews will result in approval of this transaction.

AT&T claims the merger is supported by 26 governors, 76 (of the 193) Democratic members of congress, 72 mayors, and unions that represent 20 million members.

It also pointed to a statement by Senator Mike Lee (R-Utah), who opined, "The mobile phone market is a critical component of our nation’s economy and the proposed merger between AT&T and T-Mobile deserves careful review. In my view, the merger has the potential to provide significant network efficiencies that may help alleviate capacity constraints, enable enhanced service quality, and facilitate expansion of a 4G LTE nationwide network, which would in turn create opportunities for handset innovation and continued development of data-rich applications."

AT&T donated $377,500 in direct donations to Sen. Lee and his Tea Party colleagues in Congress this last year.  

Verizon also donated directly to Sen. Lee's election campaign and fellow Tea Party members in the Senate.  Verizon has declined to officially support or oppose the merger, with chief executive Dan Mead saying he was "not concerned" about the possibility.  Some analysts believe that Verizon wants the merger, as it could gain subscribers during the distracting and cumbersome business melding process.

Such donations are likely to play a bigger role in politicians’ opinions in coming issues after a January narrow 5-4 U.S. Supreme Court decision in Citizens United v. Federal Election Commission overturned two previous decisions, which had placed limitations on corporate cash funneling to federal politicians.  Many believe this will lead to corporations "buying" the laws that they want, and politicians who refuse to cooperate being run out of Washington by candidates with more well lined pockets.

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A roaming agreement would be far better!
By djdjohnson on 7/21/2011 11:07:10 AM , Rating: 5
I support the Tea Party's idea of cutting government spending, but I sincerely disagree with their assessment that this merger could be a good thing. If the idea of using resources from both networks is really at the heart of the proposed plan, why not just sign an agreement to allow both companies to use each other's towers? It doesn't require a full-on merger to make that happen!

This merger isn't good for anyone except AT&T's shareholders. They've clearly demonstrated over time that they don't really care about the quality of their service, and they've already indicated that they intend to remove "unnecessary" T-Mobile network equipment to prevent duplication, resulting in a substantial decrease in coverage for its customers, while at the same time increasing plan rates for T-Mo customers. This whole merger is a horrible idea for consumers, reducing choice and quality of service, at increased cost to the public. This thing should never be allowed to go through.

RE: A roaming agreement would be far better!
By Jeryko7 on 7/21/2011 12:35:21 PM , Rating: 1
I also support cuts in government rape of my wallet. If they want to share towers with each other that's fine but service as a whole will be worse with a merger. Sure AT&T customers will get more bandwidth and better service but we T-mobile customers will have far worse service as the AT&T customers gobble up our network, thereby negating any theoretical 'increase in service quality' of the AT&T side by negative network impact on ALL current T-Mobile customers. My T-Mobile works fine, I don't need fixed what isn't broken. The only thing that will increase are the monthly plan prices as Sprint goes out of business and you have no choice other than Emperor Verizon, or his Sith Lord protege Darth AT&T.

Oh, and one aspect a previous poster did not take into consideration is that at the 'Job Factories' they will form a union and demand higher wages and benefits than the market can bear, thereby making the 'jobs' they produce in the factory too expensive for most Americans to 'buy'.

RE: A roaming agreement would be far better!
By Samus on 7/22/2011 6:02:50 AM , Rating: 1
Jeryko, exactly. It's pretty obvious AT&T is going to phase out the T-mo network, its customers, and in 2 or 3 years, nobody will even remember T-mobile, the company that made wireless affordable. The company that brought us the Sidekick. The company that pioneered the Android market (HTC Dream/G1.) The company that ALWAYS had an option for unlimited data at a reasonable price. And most importantly, of all US carriers, a company that didn't actually care about customers using unlocked, modified, or even unauthorized equipment. Ultimate flexibility.

Try to get any of this stuff from Verizon. All they've given us over the last 10 years is locked down hardware, the most expensive prices in the industry, and REALLY slow data. But at least they delivered the Droid.

AT&T...God damn I don't even know where to begin. The company is a complete mess from top-to-bottom in every market they're in from DSL/U-verse to wireless to corporate infrastructure (communications, T1, etc.)

I don't think there is a single doubt AT&T has the flakiest network on the planet. I tried them for a week and figured it was my phone, so I returned it for a Nokia E72 and signal was just as inconsistent, call quality was a joke, and the data at the time was quite expensive, especially overages and international (traveling to Canada was 2 cents/KB)

I don't know why anybody has AT&T. The iPhone literally saved them. They must have paid Apple billions.

By shaidorsai on 7/24/2011 9:02:42 AM , Rating: 2
And yet AT&T continues to grow profits at double digit rates across all data platforms...this is fact.

You can say they are a mess all day long but apparently one of two facts is inescapable...either they are not as bad as you say...or people have no other option on who to do business with.

If the reason they are making money almost faster than they can give it to the CEO in ridiculous bonus packages is people have no other option then that's a truly sad state of affairs in America...

Maybe free market capitalism isn't always the right answer? What a concept...

RE: A roaming agreement would be far better!
By The Raven on 7/21/2011 1:57:29 PM , Rating: 1
I support the Tea Party's idea of cutting government spending, but I sincerely disagree with their assessment that this merger could be a good thing.

I'm with you and I am a tea party (note the lower case t&p) "member". If fact, you might be a 'member' too since there is no such thing. There is no real national "The Tea Party" but merely loosely affiliated groups with similar basic beliefs that speak to what you say you believe here (in line with The Boston Tea Party.

I mean look here where Lee has an 'R' after his name meaning he is a Republican. Not a "member" of a non-existent "The Tea Party".
Senator Mike Lee ( R -Utah)
Verizon also donated directly to Sen. Lee's election campaign and fellow Tea Party members in the Senate.

I swear if it had been "The Boston Tea Consortium" then we wouldn't have this problem due to the fact that most nightly news reporters are dumber than they look.

Having said that, there are local groups that are actual political parties such as the... you guessed it...The Boston Tea Party

But as I said Mike Lee has an 'R' after his name. So go figger.

By The Raven on 7/21/2011 2:19:15 PM , Rating: 2
lol, the link I posted kind of disproves my point!

I was unaware of the afore-linked Boston Tea Party. It actually is a national political party (since 2006)!! I just searched for a random link to one of the local parties that I was talking about and grabbed that one.

In the words of The Spleen, "Big missstake!"

What I should've done was grab one like this...

But to reset, my point is that Lee is an 'R' and not a 'T'. And you don't have to carry a card to be a teapartier. You can be a D or an R or an L or a G. Actually maybe not a G.

"This is from the It's a science website." -- Rush Limbaugh

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