NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Monday, December 19th, 2011

AT&T throws in the towel, abandons scheme to buy T‑Mobile from Deutsche Telekom

For once, fed­er­al reg­u­la­tors have done their job and stood up to Wall Street:

AT&T said late on Mon­day after­noon that it had with­drawn its $39 bil­lion takeover bid for T‑Mobile USA, acknowl­edg­ing that it could not over­come oppo­si­tion from the Oba­ma admin­is­tra­tion to cre­at­ing the nation’s biggest cell­phone ser­vice provider.

The com­pa­ny said in a state­ment that it would con­tin­ue to invest in wire­less spec­trum, but could not over­come oppo­si­tion by both the Jus­tice Depart­ment and the Fed­er­al Com­mu­ni­ca­tions Com­mis­sion.

AT&T’s deci­sion to throw in the tow­el means it now owes Ger­man wire­less giant Deutsche Telekom (the own­er of T‑Mobile) a big breakup fee. AT&T said in a news release that will “rec­og­nize a pre­tax account­ing charge of $4 bil­lion in the 4th quar­ter of 2011” to account for the amount owed to Deutsche Telekom.

T‑Mobile, which is head­quar­tered local­ly in Fac­to­ria (one of Belle­vue’s busi­ness dis­tricts) will remain inde­pen­dent for the time being.

Con­sumer pro­tec­tion and media reform advo­cates hailed the news.

“This deal has been as good as dead for months because the facts nev­er matched AT&T’s fab­ri­ca­tions about the ben­e­fits of the merg­er,” Free Press CEO Craig Aaron said in a state­ment. “As the pub­lic, the Jus­tice Depart­ment and the FCC long ago rec­og­nized — and now even AT&T must admit — this deal would have only meant high­er prices, few­er choic­es and tens of thou­sands of lost Amer­i­can jobs.”

“The Oba­ma admin­is­tra­tion deserves praise and cred­it for stand­ing up to AT&T’s relent­less lob­by­ing and pro­pa­gan­da,” he added.”

“And the Amer­i­can pub­lic can breathe a sigh of relief that this time the pub­lic inter­est trumped AT&T’s self-serv­ing attempt to kill off what lit­tle com­pe­ti­tion remains in the wire­less mar­ket.”

“In this age of cyn­i­cism, it is impor­tant for the Amer­i­can peo­ple to see that Wash­ing­ton [D.C.] does not always go to the high­est bid­der,” agreed Harold Feld, legal direc­tor for Pub­lic Knowl­edge. “The Depart­ment of Jus­tice and the Fed­er­al Com­mu­ni­ca­tions Com­mis­sion stood up to tremen­dous lob­by­ing pres­sure as AT&T spent tens of mil­lions of dol­lars try­ing to push this merg­er through.”

“We hope that AT&T and T‑Mobile will focus on deploy­ing the best, most com­pet­i­tive net­works pos­si­ble rather than try­ing to merge to duop­oly. These busi­ness­es are fun­da­men­tal­ly sound, and have what it takes to bring broad­band and jobs to Amer­i­ca on their own. We look for­ward to see­ing them rethink what’s pos­si­ble, rather than try­ing to rule the air.”

From the day it was announced, NPI has been strong­ly opposed to this merg­er, and we are very hap­py that it has been aban­doned. Had AT&T and T‑Mobile been allowed to merge, it would have set the stage for Ver­i­zon to poten­tial­ly buy Sprint down the road — which would have left us with an anti­com­pet­i­tive, entrenched duop­oly in the wire­less indus­try. Now, that won’t hap­pen.

Con­trary to what AT&T has claimed, this deal was not need­ed for either it or T‑Mobile to remain healthy. AT&T iron­i­cal­ly just proved this by dis­clos­ing the sign­ing of a new roam­ing agree­ment with Deutsche Telekom in its news release about the aban­don­ment of the T‑Mobile acqui­si­tion.

T‑Mobile, mean­while, will undoubt­ed­ly have oppor­tu­ni­ties to strength­en its com­pet­i­tive posi­tion. For instance, the CEO of Dish Net­work has pub­licly expressed inter­est in cre­at­ing a part­ner­ship with T‑Mobile to help it build a stronger nation­wide net­work. (Dish owns some spec­trum, but does­n’t have enough resources to build out its own wire­less net­work).

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