backtop


Print 48 comment(s) - last by Gyres01.. on Jul 25 at 11:11 AM


  (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.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

By Reclaimer77 on 7/21/2011 3:56:35 PM , Rating: -1
quote:
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.


Cry me a river dude. AT&T isn't out to ruin your service. The blame is squarely on T-Mobile's shoulders for putting you in this position for NOT taking the initiative and expanding their business. Now it's either merge or die. Which would you choose?

Everyone is trying to overly emotionalize this and make someone a bad guy, like you with the Star Wars. Relax already, this is just business. It's really not a big deal.


"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki