The AT&T-Mobile merger: A retrospective overview

The AT&T-Mobile merger: A retrospective overview
Well, folks, it seems this was it. With AT&T's and Deutsche Telekom's withdrawal of the pending applications concerning the merger between AT&T and Deutsche Telekom's U.S. wireless operation, T-Mobile USA, a story of epic proportions and numerous twists and turns is about to come to an end. Still, you know what they say — it ain't over till it's over — and there's still some slight possibility of the deal actually happening, but as a whole, it looks like the sky's starting to get a bit gloomy over AT&Tville. Somewhere right now, with a tired look on his face, Mayor Ralph de la Vega (AT&T CEO) is lifting a glass of amber liquid, slowly uttering something in the lines of “Well, so much for my happy ending...

How it all began

C'mon, guys, don't be blue! (You too, Mayor!) Look on the bright side – at least we'll continue to have a total of four (more or less) major carriers in the U.S., presumably meaning greater competition. The more, the merrier, right? Since we have absolutely no intention of having our mood ruined because of these developments, we wanted to spend our time a bit more productively – by jumping right into our time-machine, and traveling back in time, all the way to March 20, when the news broke that AT&T is planning a “small” expansion of the company by acquiring the nation's fourth-largest carrier, T-Mobile USA. It was like good-old AT&T knew what was coming, and seemed to be well-prepared – the arguments for the acquisition were available, the price was set at $39 billion. According to the official information issued by AT&T itself, the merger with T-Mobile USA would have allowed it to offer a significant boost in overall service quality, but more importantly, it would have created great prospects for its upcoming LTE network, which would supposedly reach 95% of the population of the U.S. For those looking beyond the surface, however, it was clear that there wasn't much substance behind AT&T's jolly presentation slides. Back then, the deal looked like it's going to happen, but the DoJ and FCC were yet to respond to this application.

Me against the world

One such person who made a habit of looking beyond the surface during all these months was Dan Hesse, Sprint CEO. Understanding that his company may soon find itself in great disadvantage, Dan Hesse had no other choice but be the loudest opponent of the merger. Not a single opportunity was missed by Mr. Hesse to explain his reasons to consider this deal bad for the industry, and by the looks of it, his efforts might have not been in vain. Interestingly though, there were some people who actually thought the opposite – that the AT&T-Mobile merger will be healthy for Sprint, due to a number of reasons. But make no mistake, Dan held firmly to his belief that he must stop this wicked deed.

Meanwhile, AT&T was playing its own game, trying to convince the FCC that it just has to allow the acquisition. Some of the primary reasons that were pointed out had to deal with eventual economic growth and new employment opportunities. Apparently, the carrier's vision was completely different from that of Sprint – AT&T claimed that the merger will actually promote competition and innovation, partly because of the better spectrum position AT&T was to acquire. Not only that, but it also thought that even after the acquisition, Sprint and Clearwire (of which Sprint owns 51%) would still be better positioned in terms of spectrum. So, apparently the FCC shouldn't have had to look so seriously at the proposed deal. However, final judgment was still a part of the distant future. Initially, it was expected that it'd be some time in Q1 2012 when we should see a final decision, however, this was later pushed back to June or July next year, due to the numerous legal issues that AT&T had to face.

Don't mess with the Feds

The first real blow for AT&T and T-Mobile's sweet little undertaking came at the end of August, when the Department of Justice filed to block the $39 billion acquisition, due to anti-competitive concerns. Apparently, unlike AT&T, the DoJ did see T-Mobile as a significant competitive force on the U.S. market, the elimination of which would cause “higher prices, poorer-quality services, fewer choices and fewer innovative products.” To make things worse, the FCC issued a statement of approval regarding the DoJ's decision. At this time, the enterprising folks over at AT&T have probably started to get a little nervous, knowing that if the deal doesn't go through, they'll have to pay Deutsche Telekom compensation fees to the tune of $3 billion. And who wants to split with such amount of money in these times of economic hardship? Oh, and of course, not to miss out on all the fun, Sprint was quick to join the lawsuit party, started by the DoJ. This time, however, the third-largest carrier was not alone in this, as it was suddenly joined by regional carrier Cellular South (now known as C Spire) as well, for the same reasons.

But the media should always present all points of view, and that's exactly what we're going to do. On the other side of the barricade, AT&T was getting the loyal support of... T-Mobile and Verizon. In the middle of September, T-Mobile's Senior VP of Government Affairs, Tom Sugrue, decided that the time has come to voice his opinion. Not surprisingly, his opinion largely mimicked the position of AT&T – that the proposed merger will generate innovation and job opportunities, as well as create “enhanced competition”. On the other hand, Verizon CEO Lowell McAdam was a bit more thoughtful, explaining that the AT&T-Mobile merger is something like gravity. (What?!) It had to occur, because T-Mobile had the needed spectrum to perform well, but didn't have the capital to build it out. Meanwhile, AT&T had the capital (obviously), but was short on spectrum, so, when you put 2 and 2 together, it appeared that Verizon's stance is that these companies should, kind of, get together.

Aaand this brings us to this Tuesday, when the other major institution in this case, besides the DoJ, the FCC, decided to have a say in this whole thing. More specifically, FCC Chairman Julius Genachowski sent a draft order to his fellow commissioners, concluding that the FCC has found that the proposed deal will lead to a lower level of competition, as well as job cuts (instead of more jobs, as claimed by AT&T and T-Mobile). The result of this was that the Chairman wanted an administrative law judge to review the deal. Apparently, this has made AT&T and T-Mobile rethink their tactics, as it was announced today that they have withdrawn their application papers from the Federal Communications Commission.

As we said in the beginning, it ain't over till it's over. And in this case, it isn't over yet, as AT&T and T-Mobile might still try to pursue their goal of merging together in the future, once the federal dust settles. For the time being, however, the weather forecast won't be pretty, over in the land of AT&Tville, where Mayor Ralph will have to think of new ways to build his LTE network up.

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37 Comments

1. Carlitos

Posts: 664; Member since: Oct 23, 2011

T-mobile, is going to slowly die away, but will probably last longer, since if this is completly true, AT&t will have to give up some money. The matter of the fact is that Father Tmobile from Europe, does not give a F...k about Tmobile USA. Now with all this AT&tWill roll out its LTE much slower because it has to wait for new spectrum tocomein, and raise prices. Sometimes i ask myself, if the U.S. Wants to save the economy, they had a shot at bringing thousands of jobs over seas, now they are letting it slip away. This are just the way i am ooking at this, so please dont reply to this comment all offended.

4. Galen20K

Posts: 575; Member since: Dec 26, 2008

you're and idiot

6. crankyd00d

Posts: 191; Member since: Oct 17, 2011

I agree

9. noahbf

Posts: 28; Member since: Apr 28, 2009

you're and genius

7. TerryCrowley

Posts: 194; Member since: Jul 31, 2011

I cannot help it. Your ignroance offends me.

10. remixfa

Posts: 14605; Member since: Dec 19, 2008

your an idiot, and I work for T-Mobile, so that offends me twice. what thousands of jobs? call center jobs? they were never leaving from overseas.. they were just going to be merged with ATT\'s over seas call centers.. or vice versa. The economy was definitely not riding on the Tmobile deal. Tmobile wont die away. They will find a new way to partner up and make competitive ventures the same way sprint has. If Sprint can turn around a sinking ship, then T-Mo can definitely get a stalled one moving.

11. Gawain

Posts: 437; Member since: Apr 15, 2010

The majority of AT&T's and Verizon's markets date back to the original A-Side/B-Side 800MHz spectrum allocated in the 70s and 80s. It was augmented by the auctions in the 90s (1900MHz). The only carrier out of the four that is complaining about spectrum is AT&T. It has nothing to do with the spectrum, it has everything to do with capacity. AT&T built out a GSM network without enough density to make it work (migrating from TDMA). Verizon and Sprint do not suffer these problems for a number of reasons, the first of which is the standard they use. CDMA/EVDO has greater capacity over a smaller channel of spectrum. AT&T can't make it work because they refuse to build out the infrastructure to do so. T-Mobile's network was built from the ground up and assembled through a series of acquisitions of the PCS carriers from the 90s (Ariel, VoiceStream, et al). They were GSM from the ground up and with their augmentation of HSPA on a separate license, they make an appealing target (aside from the fact that DT refuses to see this as their only growing wireless market). AT&T's lethargic rollout of LTE is proof positive over their seeming inability to invest in their infrastructure. VZW has had LTE out for less than a year, and the deployment has reached how many cities? 200? AT&T doesn't need an acquisition costing $39B, they need management that knows how to get in the driver's seat and manage their network.

19. Slammer

Posts: 1515; Member since: Jun 03, 2010

It is refreshing to see another poster with the technical aptitude to convey the finer points of AT&T's faults. It has long been known from individuals that study, that AT&T's MO is to dominate with doing the least possible. The recent proof here, is the network constraints and issues that came from their own negligence. As you eloquenty pointed out, they have not used their spectrum holdings efficiently. John B.

17. JGuinan007

Posts: 699; Member since: May 19, 2011

So does this mean Apple will buy them to start their own network?

2. robinrisk unregistered

Well, those 3 billion dollars will come in handy to develop T-Mobile´s Network, won´t it? Remixfa, looks like you´re going to keep your job! Congrats!

21. remixfa

Posts: 14605; Member since: Dec 19, 2008

yaay! :) maybe they will take out that 3 billion, throw up the remaining towers they need to become a bigger company coverage wise.. and then you will have a network as large as vzw and sprint, almost as fast as VZW, and still half the cost. who wouldnt like that?

22. LewsTherin006

Posts: 140; Member since: Nov 18, 2011

congrats bro, we can keep our jobs, and not have to tell every customer who ask about it that it may go through. Here is to getting the galaxy nexus and expanding coverage!

30. remixfa

Posts: 14605; Member since: Dec 19, 2008

lol.. i wish that were completely true. tmo has said officially that the merger is still on.. they are just pooling resources to fight the DoJ, then they will resubmit the paperwork for the FCC. I guess they are really worried about the DoJ if they are doing that.

34. godsarmylds

Posts: 36; Member since: Mar 05, 2010

Hey I work for T-mo also. According to my district manager thats pretty much all BS (i got the same e-mail). Att already getting money to pay out T-mo and the deal is completely dead. And i guess there is a ton of rumors runningaround in upper management abouta google and t-mo. That would be very much exciting.

37. LewsTherin006

Posts: 140; Member since: Nov 18, 2011

the DOJ is the easier fight, mainly because they just want ATT to give up things to make the take over go through (like 40% of Tmo to be sold off). they pulled out of the FCC because the FCC would have shown all truth about how they just want to take tmobile off the market.

38. ILikeBubbles

Posts: 525; Member since: Jan 17, 2011

as much as i don't nessisarily love t-mo i would take them over at&t any day....

3. snowgator

Posts: 3621; Member since: Jan 19, 2011

If memory serves, there was on article which was referred to on here that suggested there were other bidders interested in T-Mobile. T-Mobile will continue to provide service, and hopefully someone who would like to keep the 4th largest carrier independent will step up to the plate next.

5. darth8ball

Posts: 520; Member since: Aug 02, 2011

Not a surprise to me. I knew the US Gov. wouldn't let this deal go thru. Now will AT&T try to get out of the 3 Billion dollar no deal payout?

8. WakaFlakaD

Posts: 575; Member since: Apr 30, 2011

Honesty though, being the 4th and way behind the top 3, is there any way that T-Mo can push it higher? Deutsche Telekom exited out on them. Any foreign wireless companies in this industry would want to invest on them? I don't think T-Mobile will ever die away, but a company thats not going nowhere, any potentials? Will we see iPhone 5 on T-Mobile next year? xD

12. BaiGanyo

Posts: 308; Member since: Feb 07, 2011

What I've always wondered about the honesty of att capacity....If they don't have enough, why do they sell capacity to tmobile customers for roaming purposes? And how are huge numbers of Tracfone and Net10's 18 million customers using att's network? Not to mention, multiple other mvno's and nearly all of the foreign carriers customers who roam on att when in the US. Sounds like they have plenty to me. This deal was destined to fail and everyone except the incompetent management of att knew it.

32. choupino

Posts: 69; Member since: May 28, 2011

BaiGanyo you are referring to something VERY VERY different. You are talking about the network usage and roaming agreements that AT&T has with other service providers. The "Network Capacity" that is being helped by the AT&T & T-Mobile deal refers to the 4G LTE Spectrum, not some B.S. GSM & 3G network systems. You sound like a conspiracy theorist. "This deal was destined to fail..."... really?

13. RORYREVOLUTION

Posts: 3131; Member since: Jan 12, 2010

God I just wish Sprint would improve their service. Their 3G is so slow and useless when you are in any kind of building, it's pathetic. The "Now" network? Really? Because it takes 10 minutes to load Facebook Mobile. lol T-Mobile has great deals and a decent line up, their service is better than Sprint tho Verizon is still top dog for sure.

15. HTCiscool

Posts: 449; Member since: Jul 16, 2011

Good to have you back.

28. RORYREVOLUTION

Posts: 3131; Member since: Jan 12, 2010

I have been addicted to Skyrim, I got my gaming fix so I am back for now lol

31. remixfa

Posts: 14605; Member since: Dec 19, 2008

lol. love me some skyrim. my brother was messing with me because im now LVL24 and he had to goad me into completing the high hrothgar initiation mission.. lol

35. HTCiscool

Posts: 449; Member since: Jul 16, 2011

I know right Skyrim sure is EPIC

33. choupino

Posts: 69; Member since: May 28, 2011

RoryRevolution... The ability or inability for Sprint's signal to permeate through buildings is related to the area of the wireless 3G spectrum that they own. They have a higher frequency, which has major limitations on permeating through concrete & metal structures... Verizon's frequency is low on the spectrum and that gives them the edge with the signals. There are some positives to Sprint's frequency related to the fact that their signal can traveler a farther distance (when unimpeded). Verizon's local spectrum intensity is definitely a positive but that intense ability to reach through metal and concrete does not travel as far as a Sprint signal. Sprint's 3G service has always been horrible. I had been with Sprint 10 years before switching to a GSM carrier. I came from a place of thinking that EVDO was revolutionary and EVDO-Rev A. would change the world!!! Lol... For the record, Verzon's 3G data is the same exact crap that Sprint has. Verizon would have really been in trouble without that Hellified LTE Network that they currently have. In all honesty, the only viable data network Sprint has is the 4G/ CLEARWIRE setup

36. lsutigers

Posts: 832; Member since: Mar 08, 2009

Sprint is improving their service, they have been upgrading their network and adding new cell sites here in South Florida. I think they finally realized that the speed issues were true and not going away now that the iPhone is on the Now Network. Over the last 3 months, my 3G speed has gotten much better. Go to network.sprint.com to see the latest network enhancements in your area.

14. BattleBrat

Posts: 1476; Member since: Oct 26, 2011

It is amazing, if you go to full on apple based news sights (9to5mac, etc) Apple fans are RABID about AT&T. NOW AT&T is actually a good carrier, but it is NOT as good as Verizon. Some of these Apple fans don't realize that Steve Jobs was NOT happy with how AT&T handled their customers. All those customers coming into the Apple stores complaining about the bad reception and missed calls, Steve Jobs didn't like that, BUT AT&T was the only carrier that would drink Apple's Koolaid, When they finally did release an Iphone for Verizon, it was specially redesigned, not just for the network, but to fix the antenna issue, why? BECAUSE VERIZON MADE THEM!!! I have come to realize lately however, AT&T was never the problem, not even from the beginning. People I know on AT&T are actually happy with the coverage, and don't really have any dropped calls or anything. IT IS NOT AT&T, IT'S THE IPHONE, you see Apple makes Ipod's then they released the Iphone, but you see, Apple doesn't really make very good phones (for making calls) Everything else is awesome, but the actual phone part sucks. I've been happy with my MOTO phones for that reason, THEY KNOW HOW TO MAKE A PHONE, The Moto phones I've had always got great reception, and they hold on to a WI-FI signal quite well, I usually get 30% more wifi distance out of my Droid 1 over my Ipod touch 4th gen. Hell, Moto helped invent the damn cell phone. So don't blame AT&T because Apple phones get poor reception, One of my friends just got an Iphone 4s to replace his HTC, and the reception is NOTICEABLY worse. He is on Sprint

23. mschmal

Posts: 23; Member since: Sep 01, 2011

Rumor has it that the iPhone uses a radio that is optimized for the how the European GSM network is designed with towers closer together. This caused the phone to not work in the US. Chalk it up to Apple's arrogance.

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