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How Even a Failed AT&T/T-Mobile Deal Hurts Rivals 51

An anonymous reader writes "The attempted merger between AT&T and T-Mobile has fallen on hard times amid antitrust concerns, but there's a potential silver lining for T-Mobile — one that would give them a boost over competitors anyway. Reuters reports that T-Mobile USA would be entitled to a hefty breakup fee including $3 billion in cash as well as spectrum and roaming agreements. 'In a research note, Moody's said that could also lead to a network sharing deal between the two companies, reasoning that it "would make sense given the spectrum that AT&T will have to cede to T-Mobile and the 3G roaming agreement between the two." That would make life especially hard for No. 3 U.S. carrier Sprint, which has been one of the most vocal opponents of the AT&T/T-Mobile deal, going so far as to file a lawsuit. ... Smaller rivals such as MetroPCS and Leap Wireless may be affected even more because T-Mobile is eyeing similar customer segments.'"
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How Even a Failed AT&T/T-Mobile Deal Hurts Rivals

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  • I got the first Nexus S with T-Mobile crystal sets in it but have an ATT sim card. If this comes to pass, I'll finally get 3G in the US (instead of just EDGE). I only get 3G when I'm travelling outside the US now.

    • And why did you do that? EDGE is terrible compared to 3G... especially in terms of latency. Couldn't you have ported your number to T-Mobile?

      You could just upgrade to the Galaxy Nexus, of course... pentaband, meaning it supports both AT&T and T-Mobile 3G bands. :)

  • Makes Sense to Me (Score:3, Insightful)

    by gamerdonkey ( 1129337 ) on Saturday November 26, 2011 @01:04PM (#38175166) Homepage
    So, to re-summarize this story: Because a deal that would have reduced competition has been blocked, competition will increase. But for everyone, not just AT&T.
    • Not just that depending upon how the FCC chooses to handle AT&T's request for a dismissal there's all sorts of documents involved that could spur regulatory reform and make it harder for conservatives to turn a blind eye to the cartel.

      • I'd love to believe that, but a modern politician is a master at turning a blind eye to the blatantly obvious. It's only gotten worse with time, as the amounts of money have increased exponentially in the last twenty years.

        Upton Sinclair had it right: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

  • by mkraft ( 200694 ) on Saturday November 26, 2011 @01:08PM (#38175184)

    All that's well and good, but it doesn't change the fact that Deutsche Telekom doesn't want T-Mobile USA. They don't want to run it and are putting the bare minimum into it to keep it going. Since the deal fell through, that means that basically Deutsche Telekom can't sell T-Mobile USA to any of the larger companies (I doubt Sprint would get approval either since it's one of the top 3 companies).

    That means that either Deutsche Telekom will try to sell T-Mobile to one of the smaller companies for less than they would have gotten or Deutsche Telekom will simply break up the assets of T-Mobile and sell them off in bits and pieces. The spectrum T-Mobile already has plus what they'll get from AT&T is pretty valuable. Actually AT&T could end up buying all of T-Mobile's assets, leaving just the company and it's customers behind []. That could end up being worse for T-Mobile customers than an all out buy out.

    • by todrules ( 882424 ) on Saturday November 26, 2011 @01:18PM (#38175226) Journal
      Good points. Plus, the article mentions that T-Mobile will get $3 billion in cash. That's only partially true. DT will get the cash. My guess is T-Mobile will see very little, if any of that cash.
      • by ScrewMaster ( 602015 ) on Saturday November 26, 2011 @01:37PM (#38175320)

        Good points. Plus, the article mentions that T-Mobile will get $3 billion in cash. That's only partially true. DT will get the cash. My guess is T-Mobile will see very little, if any of that cash.

        Deutsche Telekom has already stated that it will not be investing any of that money in T-Mobile.

      • What I want to know is just what idiot signed up to an agreement like that? "We want to merge with you, but if we get told no then we will pay you a fucktonne load of money and hand over a ransom in spectrum licenses and roaming agreements, just because."

        I can understand agreeing something similar for a party that walks away from the deal, but agreeing to that sort of thing when there's a large chance that the deal will get blocked, just screams of idiocy to me.

    • by koan ( 80826 )

      Good observation, now watch over the next 2 years and see how Verizon comes out of this fiasco because I suspect there is a link in this mess somewhere.

    • Exactly. DT has already made it clear that they want OUT of the US market. Maybve selling TMO off to some other operator would satisfy them, but I'm doubtful. And $3B isn't enough to change their mind.

      Than again, this could be pure masterful strategy; DT gets $3B for playing along, accumulates even more spectrum, locks in roaming, sells it off for payments to say Virgin or Boost or MetroPCS or even Sprint, who ABSOLUTELY SHOULD BUY TMO.

      Masterful strategy. Nearly as brilliant as Peyton Manning having du

      • Re: (Score:3, Interesting)

        by Anonymous Coward

        Virgin and Boost are both subsidiaries of Sprint and both Sprint and MetroPCS use CDMA so they would be unlikely to but T-Mobile outright. Even if no buyer is found for T-Mobile its still a good thing. The valuable spectrum they own will be sold at auction in blocks and their subscribers would then have to choose a different carrier. Either way ATT would have to compete for the customers and assets instead of just buying them outright. ATT, Verizon, Sprint and regional carries competing for a large number o

    • by guises ( 2423402 ) on Saturday November 26, 2011 @01:36PM (#38175314)
      There's been some speculation that CenturyLink might step up to buy T-Mobile. They're the third largest telecommunications company in the US and the only major one without cellular service.

      Speaking as a T-Mobile customer I've been ecstatic at the FCC's action here and I view the purchase of T-Mobile by almost anyone other than AT&T or Verizon with far less trepidation than I had previously. It would be nice if Deutsche Telekom changed their mind about the whole thing, that has been known to happen, but I can't really see a downside here.
    • Most of the issue with AT&T buying T-Mobile is that then AT&T would become the only national GSM cellular provider. The main point of GSM type providers from my consumer related point of view is that you can buy an unlocked phone and jump between services with a simple switch of the SIM card. You can't do that with Verizon or Sprint. Honestly, If I thought that Verizon would become GSM based, I'd be happy to see them buy T-Mobile but that would cost them a fortune in network changes so I don't th
      • Sprint is going to LTE, eventually. GSM is effectively an obsolete format and inferior in several ways to other standards. With LTE as the next step, there is no point in going to backward first to GSM or some weird GSM hybrid and then forward to LTE.

        The last thing Sprint needs now is yet another oddball wireless format struggling on life support for years. They need to be aggressive and push their subscribers on to LTE as soon as they can. They need to stand up and give people two years notice that th

        • GSM and LTE are not mutually exclusive items. AT&T uses LTE for its 4G.

          Now, you can talk about GSM vs CDMA, which is more of an apples to apples comparison. All of those services tho (except for T-Mobile, which uses HSPA+ (really 3.5G) as a stopgap) are using LTE for their 4G service.

    • by flash2011 ( 2486260 ) on Saturday November 26, 2011 @03:07PM (#38175748)

      It annoys me that people keep spouting this FUD, that if AT&T doesn't buy T-Mobile there are no other potential major bidders T-Mobile may break up and sell off assets piece-by-piece or shutdown completely.

      Off the top of my head I can see multiple potential bidders for T-Mobile at the right price (not the AT&T "I am rebuilding my monopoly price").

      For example it would make sense for both Telefónica (which already has a major presence in the Americas []) or América Móvil (which also has a major presence in the Americas, with almost twice as many subscribers in Mexico as T-Mobile has in the United States []. Both could find strong synergies in buying T-Mobile, up selling additional services to the Hispanic community.

      Vodafone as well has long wanted to use their own brand in the United States (especially since they are only a minority shareholder in Verizon wireless). The could sell their Verizon Wireless stake and use the money to buy T-Mobile.

      It could even make sense for China Telecom as they already plan to launch Wireless Service in the USA next year [].

      I am sure I am just scratching the surface of potential bidders so please, please stop the "OMG, T-Mobile will shut down if AT&T doesn't buy them" FUD.

    • by mgblst ( 80109 )

      Can't they just float T-Mobile as a separate company?

    • by mgblst ( 80109 )

      DT could just float T-Mobile as a separate company.

  • by neurocutie ( 677249 ) on Saturday November 26, 2011 @01:11PM (#38175192)

    The article is hardly a revelation and apparently thinks that greater competition in the low end of the wireless market is bad. But of course greater competition is EXACTLY what stopping this Tmo merger buyout is all about. Furthermore, stopping the buyout is no guarantee that Tmo will stay as a low end carrier. DT has made it very clear that it wants out of the US market, so Tmo most certainly will change in major ways. It may be chopped up. It may be sold to another owner that would have an entirely different business model for it.

    Finally, Sprint knew full well the pros and cons for this buyout and lobbying for stopping it. And Sprint's business is not the same as Tmo and does not seek to serve the same market segment as Tmo. Overall the article is plain rubbish.

  • If I ran ATT I would give Sprint and MetroPCS 100% free and unrestricted access to my network. ;)
    • Yep and customers would still get roaming charges.
    • by Anonymous Coward

      AT&T is GSM. Sprint and MetroPCS are CDMA.

      • AT&T is GSM. Sprint and MetroPCS are CDMA.

        Sprint is CDMA/EVDO/Wimax. MetroPCS is CDMA/LTE.

        Sprint's Wimax coverage is spotty. MetroPCS lacks EVDO in most areas and lacks their limited version of LTE in many other areas. So technically, MetroPCS is neither the same as Sprint nor the same as any of the other LTE carriers.

  • What the hell happened to just having a phone and making calls off it without worrying about how fast your web apps will load, how long it'll take to upload a batch of uninteresting family photos or how vane you'll look at the next cellphone showoff?

    This is why I still have a landline and restrict my usage of the Internet to my PC and laptop. The world didn't need to updated and logged on 24/7 a decade ago.

    • by Anonymous Coward

      What the hell happened to just having a horseless carriage? Or those giant triangular weights for bodybuilding?

    • by hedwards ( 940851 ) on Saturday November 26, 2011 @01:59PM (#38175396)

      I said the same thing until I got my Nexus One, the advice I was given was that I didn't know what I was missing. And he was absolutely correct about that, I use my phone regularly to do things that I never would have thought about doing. Not to mention being able to do things like check email when I'm just waiting for an appointment.

      Tracking my bus schedules, checking prices and verifying that a shop I want to go is still going to be open if I delay things a bit.

    • I was a big hold-out as well... Only had a smart phone for a year, and now I don't want to go without one ever again.

      The things you hear people arguing about are bikesheds, absolutely unimportant details.

      Having a cell phone, first, has a couple killer apps. Getting a call just as you start your trip that plans have changed... Getting a call while shopping that so-and-so remembered something they want you to pick up. Following-up with someone who gave you bad directions, or an incorrect name, or whatever

  • by Anonymous Coward on Saturday November 26, 2011 @03:27PM (#38175880)

    The issue is how customers, particularly consumers, would be affected if the deal, or anything like it, were approved.

    We've already seen this movie many times, in the telecom sector and elsewhere. Industry consolidation means rates and fees for consumers go up. Way up. While service and available choices get worse. Much worse. We already have it now but the proposed deal would make things even worse. Oligopoly means providers don't care and don't have to care. Meanwhile, their shills in Congress (including the entire Republican Party leadership, as well as many Democrats) keep talking up how consolidation is essential to enable American companies to compete in the global economy. What horseshit. What ridiculous self-serving horseshit.

    Meanwhile, the good ol' boy senior management team makes off like bandits []:

    Randall L. Stephenson
    Chairman of the Board, Chief Executive Officer and President
    AT&T, Inc.
    Dallas , TX

    Compensation for 2010
    Salary $1,533,333.00
    Bonus $0.00
    Restricted stock awards $12,749,977.00
    All other compensation $417,410.00
    Option awards $ $494,731.00
    Non-equity incentive plan compensation $5,050,000.00
    Change in pension value and nonqualified deferred compensation earnings $7,096,177.00
    Total Compensation $27,341,628.00

  • Sprint and T-Mobile should merge. That would create decent comptition for Verizon and AT&T.

  • by Anonymous Coward

    They already have the black fiber laid, and could focus on providing the high data rate that the consumers are slowly growing towards, as their competitors try to hold their own back.

    Also, with the purchase of Motorola, and the development of android, they can now focus on Apple's dream: to create the ultimate all in one experience. Sure other phones can be used on the network, but the google experience could be something special.

    It would also allow google to build out it's

    • The FCC doesn't allow one company to own both a handset manufacturer and a carrier. That was one of the rules they came up with the first time AT&T got broken up, and it's worked very well for us (we would never have had the fax machine or higher-performance modems otherwise). This was one of the main reasons I was disappointed at Google buying Motorola; they could have bought a telcom instead and broken up that oligopoly, but they basically had their hand forced by Motorola because they needed the pate

      • The FCC doesn't allow one company to own both a handset manufacturer and a carrier. That was one of the rules they came up with the first time AT&T got broken up, and it's worked very well for us (we would never have had the fax machine or higher-performance modems otherwise). This was one of the main reasons I was disappointed at Google buying Motorola; they could have bought a telcom instead and broken up that oligopoly, but they basically had their hand forced by Motorola because they needed the patents to defend against Android lawsuits.

        I know Google isn't evil yet, but it's not a good idea to give them free passes on the rules.

        Interesting points, but I think things have changed just a little bit since "THE" Phone Company was broken up and we got fax machines and 14.4k modems. For example, this discussion pertains to mobile phones, which are ubiquitous now but were rare just 15 years ago. I do agree however that Google could have done bigger and better things than buy Motorola (which isn't anything to laugh at), like become a major carrier. Mobile carriers do have some involvement in development of new devices, and have a history

  • by neurocutie ( 677249 ) on Saturday November 26, 2011 @07:26PM (#38177174)

    But, in an ironic twist, smaller U.S. wireless rivals may suffer more if the deal is blocked than if it is approved...

    1) the article's definition of "hurt" is apparently greater competition from a strengthened Tmobile. This is fallacious because: a) greater competition is not equivalent to "hurt" -- it can actually be beneficial and it certainly benefits consumers and competition is unlikely to be limited to just the low end of the market, b) Tmobile may not be strengthened at all. DT is likely to pocket the $3B and continue to find a buyer for Tmo. Nothing guarantees Tmo's improved position.

    But the other piece that is stupid is that, in order to argue that smaller rivals are hurt more, you have to spell out "Compared with WHAT???" The whole rationale that Sprint and other smaller carriers have stated is that the duopoly formed by a gigantic AT&T and Verizon is that they will have so much market power that they will have power over handsets, backhaul agreements, marketing, etc, etc. The duopoly will be unstoppable. These are points that are TOTALLY ignored by the article when it saids that "smaller rivals may suffer more" without the Tmo buyout than with.

    So, without Tmo buyout: more competition in the low end MAYBE, but with the Tmo buyout, DUOPOLY that strangles the market, likely eventually squeezing smaller carriers to death. Which situation "hurts more" ?

  • T-Mobile could try and approach Google to buy them. They have tons of cash and could pay for it and considering they either have or are in the process of acquiring Motorola, this would give them all they need to host their own cellular telephone service and actually force Verizon, AT&T and Sprint to play ball or lose millions of customers to them.

    They are already attempting to break into the land based internet service for similar reasons, this to me seems like a prime target for them and would further

"I don't believe in sweeping social change being manifested by one person, unless he has an atomic weapon." -- Howard Chaykin