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Verizon's chief executive defends AT&T, T-Mobile merger

Posted: , by Victor H.

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Verizon's chief executive defends AT&T, T-Mobile merger
The AT&T-T-Mobile merger has been among the hottest topics of discussions lately - Sprint was the first to bring counter arguments and the US Department of Justice followed by filing a lawsuit to block the deal. The FCC sided with those opposing the deal and it seemed that even smaller players like Cellular South wanted to have a say. But up until now, the biggest wireless carrier stateside, Verizon, remained mysteriously quiet.

Now, it turns out that just as in the saying - silence means consent. Lowell McAdam, chief executive officer of Verizon, chimed in by comparing the naturality of the AT&T-T-Mobile deal to gravity:

"We need to be very thoughtful on what the impacts would be to the overall industry if this is a way to regulate the industry without actually passing regulation," McAdam said at an investor conference. "I have taken the position that the AT&T merger with T-Mobile was kind of like gravity. It had to occur, because you had a company with a T-Mobile that had the spectrum but didn't have the capital to build it out. AT&T needed the spectrum, they didn't have it in order to take care of their customers, and so that match had to occur."

Now that’s an interesting statement. Why so? First of all, the statement comes before the first meeting between AT&T and the Government on Wednesday. Second of all, it indirectly suggests that Verizon may benefit from the merger.

McAdam added that he had dined with FCC head Julius Genachowski and discussed one of the main issues facing carriers: spectrum shortage. Interestingly enough, AT&T - which has argued that the T-Mobile acquisition is needed because the US second largest carrier needs spectrum - started offering some of its own precious spectrum to smaller carriers and even Sprint in an attempt to lessen monopoly concerns. 

At the same time, Sprint’s Dan Hesse went into some interesting rhetoric saying that if the deal doesn’t go through, DoJ’s objections wouldn’t stop Sprint from acquiring T-Mobile. Now, that was a purely hypothetical statement to illustrate a point, but nonetheless. Here’s his statement:

 "But you could make a very, very strong argument, I believe, that if you have two value players that, let's say, got together, that gave them more scale and a better cost structure to compete with the twin Bells, that is an advantage that outweighs having a smaller three and four."

So what does the future hold? Is the deal going through or not? Recently, Forbes gave a 40% possibility of it happening, but it’s your opinion that counts the most, so feel free to share in the comments below. 

source: WSJ

44 Comments
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posted on 22 Sep 2011, 08:27 6

1. Droid_X_Doug (Posts: 5783; Member since: 22 Dec 2010)


Sure VZW would welcome an AT&T-Mobile outcome. They would have one less competitor, and would be in a strong position vis Sprint and AT&T-Mobile. What is not to like about that?

posted on 22 Sep 2011, 09:29 9

8. Yeeee (Posts: 190; Member since: 02 Aug 2011)


And all the pissed of customers would go to Verizon so they benefit from it

posted on 22 Sep 2011, 08:46 8

2. SuperAndroidEvo (Posts: 4079; Member since: 15 Apr 2011)


This is getting scary, I love Sprint as a company, they are truly different from the competition. If the AT&T/T-Mobile merger goes through then it could spell the end for Sprint, in one way or another. If Spring doesn't go belly up then Verizon might just buy it once Sprint is on its last breath for basically nothing. Verizon is playing this well they know if the merger happens Sprint is up for the pickings. It's a sad truth, but Verizon DOES know what it’s doing. Let’s hope this merger doesn't go through because we all will be paying top dollar for wireless service in 2 to 5 short years. & I truly mean EVERYBODY!

posted on 22 Sep 2011, 08:52 3

3. Firedrops (Posts: 215; Member since: 06 Sep 2011)


Actually, you don't truly mean EVERYBODY. You only mean "wireless service" users in the United States of America. People like you give the rest of the world the impression that Americans are self-centered airheads.

posted on 22 Sep 2011, 09:16 8

6. Galen20K (Posts: 512; Member since: 26 Dec 2008)


Easy there Hater, no reason to jump all over him for speaking his mind.

posted on 22 Sep 2011, 09:33 12

9. SuperAndroidEvo (Posts: 4079; Member since: 15 Apr 2011)


Firedrops I assume YOU as a person who reads articles on PhoneArena.com can see that when I say “EVERYBODY”, other people can make the inference that I am talking about the U.S. especially when this is clearly an article that has nothing to do with the rest of the world. Please Firedrops why would anyone outside of the U.S. be affected by the AT&T/T-Mobile merger? Certainly people outside of the U.S. can make that assertion right? Or is your comment meant to belittle the rest of the world because you assume the rest of the world is as dumb as you? Or maybe you needed clarification on the subject but implemented the rest of the world with your views? Comments like "People like you give the rest of the world the impression that Americans are self-centered airheads" are not needed. That is a instigative comment & just because you are a fool doesn't mean the rest of the world is just like you! I don't know but it seems like YOU Firedrops came out as a "self-centered airhead” to me. I doubt the rest of the world is as “airheaded” as you. So next time please implement yourself & please don't drag the rest of the world with your foolish comments! Lol It was obvious that the comment I made was meant for only the people affected by this proposed merger. You had nothing positive to say & decided to come out like a “self-centered airhead” for your own amusement. On top of that you decided to put words on the rest of the worlds mouth. Next time buddy if you have nothing positive to say then don’t say it at all so you don’t come out as a “self-centered airhead” unless you like that of course. Here in the U.S. we call that a flake or a bimbo! Grow up buddy!

posted on 22 Sep 2011, 12:08 7

16. corporateJP (Posts: 1555; Member since: 28 Nov 2009)


He probably works for Deutch Telekom, T-Mob's eager-to-give-my-kid-up-for-adoption parent.

So, yes, it can effect somebody outside the United States.

But, very few by default.

posted on 22 Sep 2011, 12:43 6

23. SuperAndroidEvo (Posts: 4079; Member since: 15 Apr 2011)


lol You are right! I was talking about the U.S. customers but I neglected the employees of Deutch Telekom. Mr. Trump you are 100% correct! lol

posted on 22 Sep 2011, 09:34 7

10. pattypatterson (Posts: 48; Member since: 28 May 2010)


You are a troll. You do realize this is an American website correct? The article is about American wireless companies, not overseas.

posted on 22 Sep 2011, 16:26 3

37. RORYREVOLUTION (Posts: 2991; Member since: 12 Jan 2010)


Oh i'm sorry idiot, next time we will say "EVERYBODY IN THE US" just so idiots like you can tell the difference. And if anyone is acting like a self centered airhead its you for getting offended over nothing.

posted on 22 Sep 2011, 18:47

39. gallitoking (Posts: 4690; Member since: 17 May 2011)


firedrops... dont listen to them they dont know how to express to people. they use android and are always like that.. due the constant restarts of their cell phones..... first we thank you for being part of this great forum.... but SAE was speaking only for the ones affected. if you dont know what are we talking about.. then dont worry ..you wouldnt be affected... hope this clears up the air... and please express your opinion...

posted on 22 Sep 2011, 21:01 3

42. RORYREVOLUTION (Posts: 2991; Member since: 12 Jan 2010)


This....is...how....normal....people.....express....themselves....when.....they.....are....brainwashed....by.....apple...

posted on 22 Sep 2011, 12:11 6

17. remixfa (Posts: 13907; Member since: 19 Dec 2008)


it wont be the end for sprint. many of the mad tmo customers will go to sprint before VZW because of the price disparity between Tmo and VZW. Sprint will also be the last place for untampered Android phones which means a lot to many people. Pair that with the cheapest remaining big carrier plans, the only true unlimited plan left and a decent network, and sprint will come off fine. More than likely they will purchase spectrum and assets from the Tmo merger and end up having a stronger network then they do now.

posted on 22 Sep 2011, 12:45 4

24. SuperAndroidEvo (Posts: 4079; Member since: 15 Apr 2011)


I hope so remixfa, things are starting to look like this merger may happen after all!

posted on 22 Sep 2011, 15:54 2

30. Droid_X_Doug (Posts: 5783; Member since: 22 Dec 2010)


What makes you think the merger will go through? AT&T pandering to Metro PCS and company? That is just the latest attempt to turn a sow's ear into a silk purse. The fundamental fact that AT&T can't get beyond is that competition will suffer if the merger goes through. AT&T was trying to push the issue of expanded access to trump the loss of competitiveness, but DoJ and FCC aren't buying.

posted on 23 Sep 2011, 10:29 2

44. SuperAndroidEvo (Posts: 4079; Member since: 15 Apr 2011)


I just feel like this has been dragged out for too long. If the merger will not happen then why has this gone for almost half a year? Why is so much time needed to either say yes or no? I mean they won't make a final decision until Feb of '12? I feel that they are taking way too long to make this decision. That is why I feel this way.

posted on 22 Sep 2011, 13:51

27. darth8ball (Posts: 519; Member since: 02 Aug 2011)


IDK GSM and the ability to have multiple phones on the same line was one of the reasons I was with TMobile for as long as I was. On Verizon and Sprint that isn't possible

posted on 22 Sep 2011, 20:54 1

41. CRICKETownz (Posts: 980; Member since: 24 Oct 2009)


you have a point there...but unfortunately the amount of customers that will migrate to Sprint b/c of the similar pricing structure most likely won't be enough to make a diff. to Sprint's revenue base. I know everyone is rooting for Sprint b/c they are the underdog & b/c they still offered untampered-with unlimited data...but honestly, Sprint's days are numbered.

As far as Verizon's standpoint on the whole situation...beyond what people think (which is always some kind of conspiracy theory based on greed)...i think Verizon is also looking at what this will mean in the way of innovation and advancing technology.

posted on 22 Sep 2011, 09:09 2

4. superguy (Posts: 271; Member since: 15 Jul 2011)


At least we know why Sprint's really opposed. They don't want T-Mobile around as competition either. They want to buy them.

Sprint keeps becoming more and more like Verizon and AT&T with caps and prices. They're not about competition and innovation. They want to raise prices.

posted on 22 Sep 2011, 09:09 5

5. theBankRobber (unregistered)


If Sprint stop spending money on stupid things then maybe they would have money to finish building their own network. When was the last time you heard anyone mention about new cities for sprints Wimax? They put themselves into this position, then make us pay an extra $10, and stopped improving their own 3g network. With all the new recent changes from Sprint, I think it could turn for the worse.

posted on 22 Sep 2011, 09:22 2

7. cybervlad81 (Posts: 84; Member since: 04 Apr 2011)


Sprint has given up on WIMAX already. They have set their eyes to LTE with the rest of the crowd, they have mentioned multiple things to this account, and the only reason they would care about t-mobile is their LTE network, the rest is incompatible.

posted on 22 Sep 2011, 10:53 3

12. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)


also sprint just said they will throttle there data plans......why havent PA posted that.....

posted on 22 Sep 2011, 12:11 5

18. corporateJP (Posts: 1555; Member since: 28 Nov 2009)


Because, in their eyes, loading millions of dollars into NASCAR is a better bet than improving their network.

I will give Sprint credit, they are much better than they were ten, even five, years ago, but they still don't have their heads on straight.

And, no, NASCAR is not "great marketing", so I will add that before some tech hillbilly (yes, there is such a thing) posts some undefinitive answer to this post.

posted on 22 Sep 2011, 12:25 1

21. theBankRobber (unregistered)


Don't forget the NFL half time report LOL, I understand the pressure put on Sprint but that's why they need to keep moving forward with their current plans and advertise a lot more. I have seen Sprint advertise the EVO 4g last year more then all the phones they have come out after that. It's sad, I hardly ever see the Photon 4g commercial, and when I do its never about its features of the phone. Samsung is doing all the advertising for the Epic touch because they put the phones in one commercial as the SGSII line. Sprint has no game when it comes to advertising, BUT I bet when the iPhone comes, Sprint will run commercials for it more then the EVO.

posted on 24 Sep 2011, 12:20 1

46. MYTHiKAL (Posts: 33; Member since: 20 Aug 2011)


I gave up on SPRINT.. I recently moved all of my 7 lines to ATT mainly cause as soon as Sprint announced that they going the LTE route,, that pretty much meant no more WIMAX development or almost none new wimax in the future.. I had 2 phones that were supposed to be 4G and couldnt wait for WIMAX to come to us, but they drop the ball on us and millions of customers so I jumped ship.. Now I have way better reception and much faster data speeds then ever before.. :)

posted on 22 Sep 2011, 10:11 4

11. jtmarich1985 (Posts: 5; Member since: 17 Jan 2011)


Hey, if AT&T merges and gains the spectrum....good for them. I'm currently a VZW customer and I was with AT&T for a while. They're both good providers (where I live anyway) and the competition it would create would be rather interesting. Personally, I think prices would remain relevant to what they are now but I think "free phone" promotions would drop if even occur at all. If they merge, verizon and sprint should merge also and co-operate the "CDMA" version of the 700mhz spectrum to expand the LTE footprint across the US or maybe they could negotiate a way to co-operate roaming capabilities within the LTE coverage on both the GSM and the CDMA networks. All in all, it would mean a better overall experience nationwide and overhead costs would be greatly reduced for both sides. It should be Verizon and Sprint (Verizint lol) vs. AT&Tmobile

posted on 22 Sep 2011, 23:17 1

43. jtmarich1985 (Posts: 5; Member since: 17 Jan 2011)


Data capping and throttle only occur to maintain fair bandwidth for everyone. Carriers don't cap and throttle because they feel like being assholes, they do it because there are "data hogs" that they can make money off of as most customers (~95%) are not affected by it nor do they use near cap and throttle threshold. Another thing I noticed in this thread is that everyone is treating the merger deal like AT&T is out to rule the world. Just because they want to own more spectrum to expand their network doesn't mean they would need any less people (employees) to operate/maintain/sell their network. It would mean instead of wearing a shirt and name tag that says T-Mobile and Joe Shmo, it would say AT&Tmobile or whatever the name would change to. My point is, just because there would be one less company doesn't necessarily mean less competition in the wireless industry. Remember too.....phone manufacturers could play a huge role in who gets what devices and maybe the two remaining carriers would strike deals to get exclusivity on the hottest devices thus luring in the higher customer bases. Even if they merge who really gives a rats ass anyway? Seriously? Cuz when Verizon debuts their upcoming (within next few years) LTE Advanced network.......AT&T(mobile) will STILL suck and be left in the dust!

posted on 22 Sep 2011, 10:58 4

13. Slammer (Posts: 1032; Member since: 03 Jun 2010)


So the cartel between Verizon and AT&T continues. We are all doomed if this merge succeeds.

The market consolidation has already started to show its effects. Price plans being altered greatly in the carrier's favor. Throttling and capping of data. Enormous ETFs. MVNOs raising their prices to compensate for the prices they are paying to the larger carriers. And the most important: Less choice for us consumers to speak with our feet that we don't like the carriers policies and prices.

Does anyone else see this?

Welcome to the Telecom's version of the oil industry.

John B.

posted on 22 Sep 2011, 11:20 1

14. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)


no one has raised there prices except sprint...all etf are high because we as dont pay the retail price for devices, to avoisd etf fees of any kind simply buy your device at the none contract price.

posted on 22 Sep 2011, 12:13 3

19. remixfa (Posts: 13907; Member since: 19 Dec 2008)


everyone else is just decreasing the value in their plans while charging you the same.

only Tmobile is giving you more service WHILE decreasing the plans.. and they are about to dissapear.

posted on 22 Sep 2011, 14:07 2

28. darth8ball (Posts: 519; Member since: 02 Aug 2011)


Most people want what they want (high end smartphones) but cry about the cost of maintaining the devices.
If you feel you're paying for something you're not using why did you buy it in the first place(status symbol?)
If you feel your paying too much for the data plan, you should have realized before you bought the device you couldn't afford it.
I have a motorcycle payment for something I can't use everyday, or all year round(I live in Northern NJ) but do I complain, NOOOOO I knew what the deal was before I bought. Same with my smartphone. Now when I first bought I went unlimited because I'm not cheap. Now all the people who didn't switch to the smartphones earlier are locked into tiered data while I'm locked into unlimited for what they pay for 2GB.
Point here is an informed consumer is a wise and happy consumer

posted on 22 Sep 2011, 11:56 2

15. Slammer (Posts: 1032; Member since: 03 Jun 2010)


My post is a generalization of ALL carriers to point out what is happening in the industry as a whole. Retail prices are high because there is nothing to keep manufacturers in check. The carriers do not bargain nor do they need to, because they can just pass the price down to the consumers. The market consolidation allows this. No governing.

John B.

posted on 22 Sep 2011, 12:19 3

20. corporateJP (Posts: 1555; Member since: 28 Nov 2009)


People apparently forgot or never knew about the monopolistic gouging issues with the original Bell Telephone Company and why all these companies split in the first place.

Anyone who thinks prices will go down if there is only two carriers is crazy.

I am all for capitalism, but in some cases, the government needs to step in to protect the consumer.

There's already too much collusion in the wireless industries, look around and pay attention if you don't believe me.

posted on 22 Sep 2011, 12:34 1

22. theBankRobber (Posts: 647; Member since: 22 Sep 2011)


Amen to that, we need some new rules to be followed before we end up paying higher prices every year just like how our oil keeps going up and down for the most stupid reasons. People are not buying enough, people are buying to much, s**t happened in a country where we don't even get oil from. But still they keep raising the gas price and I feel that phone carriers are going to start going even further out of controll with prices.

posted on 22 Sep 2011, 15:56

31. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)


I agree with you some what but if the govenment needs to step in, then we (as consumers) should look at all companies....for exm.. pepsi and coke......target and walmart...pizza hut and pap johns...I dont agree with the merger completly (jobs lost exp) but if pepsi was to buy coke or pizza hut buys pap johns no one will say anything.

posted on 22 Sep 2011, 13:31 1

25. Slammer (Posts: 1032; Member since: 03 Jun 2010)


I'm not disagreeing on the contract argument. However, maybe you can afford to fork over 500-700 dollars for phones. For a family of 4, it would cost at least an initial 2000 dollars to walk out the door with service. Not chump change. The carriers have groomed the industry's consumers to go the cheapest route while allowing manufacturers to maintain the retail price. This crosses over to the carrier so they secure higher profit margins and keep the practice of having the consumers sign contracts in order to obtain cheaper purchases. It's all relevant and not so easy to change this far into the game. Two large carriers controlling all the spectrum will adherently play bad for the consumers from handset prices to services.

John B.

posted on 22 Sep 2011, 16:10 1

33. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)


I agree, and of course no one will buy a phone at the none contract price but you cant really expecta company to let a customer get a high end device with out any penalty if they stop the service.

posted on 22 Sep 2011, 13:33

26. Apo (unregistered)


The real question is if the merger will have a restrictive affect on trade? Section 2 of the Antitrust Act covers monopolies and has no duality requirement. The market after the merger would be represented by Verizon and At&T and the intent when Congress drafted the Act, was to have a free-flowing market of commerce. In this case, the public's option to choose would be affected and price ceilings and floors would be fixed. The argument of the pre-paid carriers being players in the market is a farce. The pre-paid companies are not significant enough to have a lasting imprint on the majority.

The court should deny the merger.

posted on 22 Sep 2011, 14:18 1

29. nancyfuqindrew (Posts: 31; Member since: 07 Jan 2010)


Translation: No one should have a problem when Verizon buys Sprint.

This is not good for consumers.

posted on 22 Sep 2011, 15:56

32. myclevername (Posts: 94; Member since: 07 Jun 2010)


People want phones first and carriers second these days. The iPhone exclusive made ATT into what it is today. If ATT is the only GSM option out there after the merger then they could start dictating to the OEM's what kind of phones they will carry and more importantly, what kind of phones they WON'T carry. That's too much power.
Come on LightSquared....get that nationwide LTE network up and running please!!!!

posted on 22 Sep 2011, 16:18

35. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)


But who knew the iphone would be what it is today....phone manufacturers will make exactly what the consumer wants if they dont they will end up like RIM and Nokia losing almost all there market share.

posted on 22 Sep 2011, 16:11 2

34. atrix 4g (unregistered)


Verizon laid it out nice and simple, and its true, AT&T know what to do with tmobile spectrum, but tmobile doesnt or is not looking towards that because the father company DOESNT WANT IT IN THE USA ANYMORE. Stop acting like att is forcing tmobile to merge with them tmobile need this.

posted on 22 Sep 2011, 16:21

36. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)


I agree...

posted on 22 Sep 2011, 16:34

38. snowgator (Posts: 3210; Member since: 19 Jan 2011)


I still do not believe that Sprint is in danger of being bought out by Verizon. Verizon has over 100 million customers and the largest, most advance service in America. It isn't even close. What would be the advantage of bringing in all the debt, the WiMax network, the iDen network, obligations and problems with logistics a buy out of Sprint would result in? It would be a way more expensive buy out than AT&T for T-Mobile simply due to it's size. It would face the same exact problems that AT&T is facing with regulators. Sprint is not a threat to Big Red, and to my knowledge provides very little that Verizon doesn't already have with the slight exception of a 3D phone. :-D

Now, U.S. Cellular, which is also a CDMA carrier, has quite a bit of Rural footprint that Verizon doesn't have. They are a lot smaller, a less expensive purchase, and would be an easier merger. U.S. Cellular isn't going broke, but they are not quite growing either. Maybe that is who they are keeping an eye on? Maybe that is why they are not standing in AT&T's way?

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