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December 19, 2011 2:48 PM   Subscribe

AT&T drops its bid to acquire T-Mobile. After wrangling with the justice department, AT&T ends it's attempt to take over T-Mobile. [via]

"To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom."
posted by cashman (45 comments total) 12 users marked this as a favorite

 
when was the last time Justice stopped a merger this big? seems like forever.
posted by Ironmouth at 2:50 PM on December 19, 2011 [5 favorites]


AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011

After a juicy tax break courtesy of American taxpayers, that figure will probably be closer to $1.5B.
posted by Blazecock Pileon at 2:51 PM on December 19, 2011 [1 favorite]


“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said

"by becoming massive, unreasonable monopolies." he added.
posted by fuq at 2:52 PM on December 19, 2011 [2 favorites]


FREEEEEEEEEEEEEEEEEEEEDOOOOOOOOOOOOOOOMMMMMMMMM
posted by delmoi at 2:56 PM on December 19, 2011 [7 favorites]


Wow, the justice department actually did their job. This is awesome news.
posted by jcreigh at 2:58 PM on December 19, 2011 [13 favorites]


woah, bureaucracies doing what they are supposed to. I must have taken the red pill.
posted by sourbrew at 3:00 PM on December 19, 2011 [1 favorite]


jcreigh: "Wow, the justice department actually did their job. This is awesome news."

Eh, it's not awesome news, it's what the justice department is supposed to do. It's like if your neighbor comes home every night drunk and beats his wife, and then one night he doesn't do it. It's only awesome because we're so accustomed to dysfunction.
posted by mullingitover at 3:01 PM on December 19, 2011 [21 favorites]


Oh, and after actually reading the press release, the second paragraph leads with this gem:
The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. [emphasis mine]
I want some of what they're smoking.
posted by jcreigh at 3:04 PM on December 19, 2011 [6 favorites]


Hooray, AT&T is still a huge behemoth of a company! We won one!
I mean, this is good news, but it's hardly a huge victory.
posted by entropicamericana at 3:10 PM on December 19, 2011 [1 favorite]


Bureaucracies gotta bureaucracy.
posted by blue_beetle at 3:11 PM on December 19, 2011


I'm surprised they gave up. $4Bn is a pretty big pill to swallow, even if they do get to write it off.
posted by GuyZero at 3:14 PM on December 19, 2011


"FREEEEEEEEEEEEEEEEEEEEDOOOOOOOOOOOOOOOMMMMMMMMM"

Freedom to go broke. Be careful what you wish for. The future of T-mobile going it alone is very uncertain. Deutche Telecom could just take the $4 billion dollar windfall home and leave T-mobile to die on the vine.
posted by JackFlash at 3:15 PM on December 19, 2011 [1 favorite]


I mean, this is good news, but it's hardly a huge victory.

Millions of T-Mobile customers just breathed a sigh of relief.
posted by knave at 3:19 PM on December 19, 2011 [10 favorites]


GuyZero wrote: I'm surprised they gave up. $4Bn is a pretty big pill to swallow, even if they do get to write it off

You have to keep in mind that this is a company that once paid cash for AT&T Wireless. $4 billion is pocket change to them.
posted by wierdo at 3:25 PM on December 19, 2011


jcreigh: "It is one of the most fiercely competitive industries in the world"

Oh my god. The irony (and sheer boneheadedness) of a representative of a company named AT&T using that argument to try to persuade the Federal Government to apply less regulation is just staggering.

I mean. They might as well have thrown in some compliments about how, thanks to regulation, the FCC has provided consumers with more choices, lower prices, and better service.

And, really, I have half a mind to not renew my Verizon contract next year. I like my unlimited data, and Sprint seem to be the only carrier actually pushing an agenda to make things better for their customers. If you could convince me that Sprint's cell coverage actually exists, I'd switch in a heartbeat.
posted by schmod at 3:34 PM on December 19, 2011 [3 favorites]


when was the last time Justice stopped a merger this big? seems like forever.

Just wait until the GOP gets the White House back, they'll fix this.
posted by tommasz at 3:34 PM on December 19, 2011 [2 favorites]


Well, I am a T-Mobile customer and I had been waiting to renew my contract until this mess got straightened out, so I am happy.
posted by vibrotronica at 3:34 PM on December 19, 2011 [7 favorites]


I want some of what they're smoking.

It's the school of business that says if you've got two guys duking it out, but they're fighting really hard, see, then it's really competitive! Not like that other thing with like a dozen guys just sort of milling about half-assedly. It kind of works as long as you don't think about it at all.
posted by mstokes650 at 3:38 PM on December 19, 2011 [4 favorites]


Schmod, I traveled all over the US on a project a few years ago, and had no problem getting coverage with Sprint. That was before 4G, but 3G had good coverage in metropolitan areas.
posted by KGMoney at 3:47 PM on December 19, 2011


Anybody have a link that explains why T-Mobile is struggling? They seem pretty competitive at the moment in terms of price and service offered.
posted by weston at 3:50 PM on December 19, 2011


I know, I know, this would have been bad for everyone. My brain knows that. But my heart, which has been on a T-Mobile contract for years and years and whose current terms don't end until May or something really wants an iPhone and was hoping that this would grant that wish. Oh well.
posted by hafehd at 3:51 PM on December 19, 2011


From the Associated Press:
But long-term prospects for T-Mobile are uncertain. The company's German parent has expressed a desire to exit the U.S. market.

You guys all realize that now, they're just going out of business, right?

You know what happens when someone goes out of business? They sell all their stuff.

So, instead of just high prices and layoffs, there'll be a fire sale, high prices and even more layoffs, and there'll still be only three major carriers.

What won't change is that there will still be plenty of proud little nerds that think the courts really stuck it to the Man, and there will still be a corrupt and wacky system of spectrum allocation, only the proud little nerds won't ever vote on the right things and oh look the new Dark Knight trailer shiny shiny...
posted by Cool Papa Bell at 4:12 PM on December 19, 2011 [1 favorite]


.
posted by MattMangels at 4:15 PM on December 19, 2011


T-Mobile have finally bit the bullet and have started reallocating 5MHz of their 8.3MHz GSM allocation to a UMTS network. If they get UMTS running on 1.9/2.1GHz they might have a fighting chance. They'll be able to support the iPhone properly along with every other 3G phone made in the past decade. Their number of handsets should go through the roof and it should attract more subscribers along with iPhone converts that want someone who "isn't AT&T" and can be switched to without buying a whole new god damned phone.

But while they remain glued to AWS (good work on that FCC you retards) they don't have a chance in hell.
posted by Talez at 4:43 PM on December 19, 2011 [2 favorites]


"T-Mobile have finally bit the bullet and have started reallocating 5MHz of their 8.3MHz GSM allocation to a UMTS network. If they get UMTS running on 1.9/2.1GHz they might have a fighting chance. They'll be able to support the iPhone properly along with every other 3G phone made in the past decade. Their number of handsets should go through the roof and it should attract more subscribers along with iPhone converts that want someone who "isn't AT&T" and can be switched to without buying a whole new god damned phone.

But while they remain glued to AWS (good work on that FCC you retards) they don't have a chance in hell."

I really really like my nexus one, free wireless hotspot or usb tethering, and truly unlimited data for 20 bucks a month. Which I just found out I can move to a 4g phone without changing my plan, so I hope you are wrong.
posted by sourbrew at 5:11 PM on December 19, 2011 [3 favorites]


Not everyone in the world has an iPhone people. More people have android phones at this point, and lots of T-Mobile users are already on 4G, while the iPhone is still a 3G phone. I don't think spending a ton of money to 'upgrade' their hardware to support soon to be obsolete technology is a good use of resources.
posted by delmoi at 5:21 PM on December 19, 2011 [3 favorites]


> Not everyone in the world has an iPhone people

Obviously being able to carry the iPhone is a big enough problem for T-Mobile that the CMO publicly apologized for not having it.

TMobile has pretty much said it desperately wants the iPhone, but they have the only GSM network in the world that doesn't use the same frequency as everyone else for 3G, so they are boned (since I doubt they have the money to give Apple even more money for a special TMobile-3G GSM phone). In fact, TMobile is already shifting some of their hardware to iPhone 3G compatible frequencies to give customers service.

I'd imagine they have been looking at the market data and seeing they still have customers leaving their service to get an iPhone. Obviously it is in their interest to retain customers, which is why they offer tons of services (including sending you micro sims and having support reps who will help you get your iPhone working on their edge network) to keep folks who buy unlocked / jailbroken iPhones happy on their network. And now they are changing spectrums in areas that they are able to.

Considering the investment that Sprint put in to get the iPhone as well, these companies who have smart people spending real money, may have some good reasons to want to have the iPhone and commit serious resources behind them. And I hope that something like that will eventually happen for TMobile so they can stay in the market and be another independent carrier in the market.
posted by mrzarquon at 6:10 PM on December 19, 2011 [4 favorites]


The bigger problems most carriers have is the spectrum. Even if you do get one or two or even 3 premiere phones your network better have the spectrum to support the big time user base AND all the apps that will ride on those phones. Assume the the app coders won't really care much about the bandwidth utilization.

For this reason it appears Verizon has been on a spectrum buying tear over the last year. Already winning a lot of spectrum in the last mega auction, they are busily acquiring any spectrum on the market from other bidders.
posted by iamabot at 8:37 PM on December 19, 2011


If you don't own enough spectrum, you can always turn down the power, and build more towers. This is a perfectly acceptable tactic in urban areas (where towers can be on top of buildings), although carriers don't seem to have used this tactic much for expansion in the past few years.

I've found that Verizon's service has gotten decidedly worse in the DC area over the past several years, even for regular voice calls.
posted by schmod at 9:49 PM on December 19, 2011


mrzarquon: "And I hope that something like that will eventually happen for TMobile so they can stay in the market and be another independent carrier in the market."

Hopefully that $4 billion will buy them some more of the iPhone-friendly 3G towers. I'm about to spend a chunk of change to break my contract and get an iPhone because I hate my android phone with a burning passion. I'd much rather spend it on an unlocked iPhone and stay with t-mo.
posted by mullingitover at 10:04 PM on December 19, 2011


So, AT&T's board made a business decision that has ultimately cost $4bn, apart from reams of bad publicity and loss of focus, and again attracted the scrutiny of the anti-trust authorities on a company that was already once dismantled by them.

Stupid question: is anybody resigning?
posted by Skeptic at 10:18 PM on December 19, 2011 [4 favorites]


when was the last time Justice stopped a merger this big? seems like forever.

Just this year, actually -- Nasdaq > NYSE Euronext. As you might imagine the WSJ keeps track of these things, as they don't get enough practice of high dudgeon.

M&A activity had been pretty negligible in the first couple of years following the financial crisis.

Oh my god. The irony (and sheer boneheadedness) of a representative of a company named AT&T using that argument to try to persuade the Federal Government to apply less regulation is just staggering.

Well, on the one hand, AT&T isn't the old AT&T -- it's what used to be SBC, which gradually swallowed several other Baby Bells, who were all part of the competitive landscape of the 90s. On the other hand, the fact that they've in many ways recreated a new AT&T, name and all reclaimed by the purchase of the wireless division, does indicate they have some practice railing against the government oversight. Call it a draw.
posted by dhartung at 10:33 PM on December 19, 2011 [5 favorites]


Stupid question: is anybody resigning?
They'll probably get a huge bonus to make up for their hurt feelings.
posted by delmoi at 11:49 PM on December 19, 2011 [5 favorites]


YESSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS!
*throws confetti*
posted by liza at 12:03 AM on December 20, 2011 [2 favorites]


One way or another, T-Mobile is going away. And Sprint is struggling. Something is wrong if a market is structured in such a away that only the two biggest players can survive. That will lead to reduced competition and increased prices. Ideally, there'd be 10 different national wireless companies fighting for our business, not 2.

I heard from a Stanford economist (forgot the name) that the problem is ownership of spectrum. Every wireless company has to own enough spectrum in every city to handle traffic peaks. That means two things: spectrum is under-utilized and only the biggest companies can afford to provide decent service everywhere.

If FedEx, UPS, DHL, TNT and the Post Office each had to build their own roads, you bet we'd see consolidation and less competition in that industry too! So what is the solution? Common carriage, the same way the freight companies all get to use common roads.

So, yay for the Justice Department for blocking this blatantly anti-competitive merger. But unless the fundamental structure of the wireless market is changed, we'll see more consolidation and less competition in the future.
posted by Triplanetary at 2:50 AM on December 20, 2011 [6 favorites]


when was the last time Justice stopped a merger this big? seems like forever.

The last really big one they opposed was probably Arco / BP for $27 billion in 2000. It was resolved by splitting up Arco a bit and selling some to someone who wasn't BP.

Other recent smaller mergers that were blocked or opposed by some part of the government:
* H&R Block and TaxACT (tax software)
* CCC and Mitchell (insurance adjusting)
* Snyders and Utz (pretzels)
* A bunch of hospitals
posted by smackfu at 5:07 AM on December 20, 2011


What won't change is that there will still be plenty of proud little nerds that think the courts really stuck it to the Man, and there will still be a corrupt and wacky system of spectrum allocation, only the proud little nerds won't ever vote on the right things and oh look the new Dark Knight trailer shiny shiny...

Wow, the internet makes you so angry.
posted by smackfu at 5:09 AM on December 20, 2011


Triplanetary: Something is wrong if a market is structured in such a away that only the two biggest players can survive.

This probably has a lot to do with the fact that this market deals in an extremely limited and hugely expensive resource: radio spectrum. In addition, no company wishing to break in can start small and build up with profits because customers demand the convenience nationwide coverage.

This means a new carrier will either need to raise money for an impossibly expensive spectrum purchase, which even will likely not even exist to buy at any price; or else they'll need roaming agreements with other carriers to make up for their lack of spectrum, which means they'll be losing money if they price competitively.

Maybe something is wrong, but you can't vote to increase the physical radio spectrum. However, as a former amateur radio enthusiast who has lost all interest due to the Internet and cell phones, I'd be for opening up some of that spectrum... there is tons, and even the worst of it is far more desirable for communications than what's currently available. The government claims that, aside from still being used by hobbyists (who do still lead some useful radio innovations), they also want to keep that spectrum open for emergencies.
posted by gilrain at 6:49 AM on December 20, 2011


gilrain: I think there's a lot less useful amateur spectrum in this context than it seems. I mean, you can probably dismiss everything over 10 GHz (not practical for this use now, if ever) and under about 500 MHz (chunks too small, too many incumbents, allocation conflicts with neighboring countries in the one band that is big enough to reuse for commercial data, the fact that nobody wants to go back to the days of external antennas on mobile devices, and that for greater data bandwidth you probably want to increase geographic reuse instead of decreasing it). Out of the five bands that are left, three of them are Part 15 cesspools (including both wifi bands), and 23 cm, while definitely prime real estate, would probably not be entirely reallocated because it actually is being used for emergency related stuff like the D*Star digital network in the southeast that was built with the support of DHS and various nonprofits for disaster relief.

That leaves 3300-3600, assuming it isn't also used by satellites or something else that isn't practical to move. I suppose they'll come for that eventually, although I'm really not sure how desirable it will be to the carriers, given how many sites it already takes to build out a 1700/1900/2100 MHz network. So I don't think reallocating amateur bands is going to save carriers from the spectrum crunch, at least not any time soon.
posted by robt at 10:08 AM on December 20, 2011


I'd imagine they have been looking at the market data and seeing they still have customers leaving their service to get an iPhone.

They lost me for that reason. When they put out that "apology" for not having the iPhone in September ("sorry - say, look at all our Droids!") I figured they were trying to deliberately sink the ship to make the AT&T merger a moot point. I had been using a first-gen iPhone on T-Mobile for years, and had finally gotten fed up with not having access to current apps and OS.
posted by dnash at 10:39 AM on December 20, 2011


How Gay Media Helped Sink the AT&T/T-Mobile Merger.
posted by ericb at 12:05 PM on December 20, 2011


This may be good news, but make no mistake, the Great Eye has not been defeated.
posted by homunculus at 3:45 PM on December 20, 2011


Talez wrote: If they get UMTS running on 1.9/2.1GHz they might have a fighting chance.

They can't legally do that. (the band plans aren't compatible although the frequencies partially overlap) However, Apple and could get off their lazy asses and ship a phone with a penta-band UMTS chip, like other manufacturers have been doing on their high end phones lately, which will work with every extant UMTS-FDD network.

gilrain wrote: In addition, no company wishing to break in can start small and build up with profits because customers demand the convenience nationwide coverage

Sure they can, they just have to sign roaming agreements, just like at&t and everybody else does.
posted by wierdo at 7:15 PM on December 20, 2011


> However, Apple and could get off their lazy asses and ship a phone with a penta-band UMTS chip, like other manufacturers have been doing on their high end phones lately, which will work with every extant UMTS-FDD network.

I have yet to see a penta band phone that is the same dimensions as the 4s, the Nokia N8 is close, but it is still thicker, and GSM only. The Nexus S is CDMA+GSM, and supports (in theory) tmobile frequencies from what I can glean from the specs, but it is way bigger than the iPhone 4s.

Apple would need a penta band gsm chipset + CDMA, that fits in the same space as the the current chipset. Verizon did get a CDMA phone out of Apple, but they had a lot more money and a much bigger subscriber base to justify Apple forking their product line (the first time they have shipped two "new" iPhones that are different hardware spec) than TMobile. Sprint couldn't guarantee the money or sales that Verizon could, so had to wait until the unified chipset in the 4s before they could get onboard as a carrier (and Verizons contract may have also included exclusive 4 CDMA sales until Oct, etc).

Apple is making a ton of money right now (in fact, making the most profit out of all the other smartphone manufacturers combined) selling a total of four iPhones (3Gs, iPhone 4 GSM, iPhone 4 CDMA, iPhone 4s). Considering the design and ramp up costs for an additional concurrent phone to support (iPhone 4s TMobile? and they couldn't offer a $99 iPhone like the other carriers?), if you are a smaller carrier in the US right now, you'd have to either be able to give Apple a lot of customers or money to make them build specialty hardware for you, or you are like C-Spire and luck out by using a compatible CDMA network that their hardware already supports (and be able to provide them with lots of money as well).
posted by mrzarquon at 12:20 AM on December 21, 2011


Researcher: T-Mobile UK is secretly disrupting secure communications, leaving customers vulnerable to spying
posted by homunculus at 10:21 AM on January 10, 2012


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