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.'"
complaining about greater competition? (Score:4, Interesting)
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.
Re:Deutsche Telekom still doesn't want T-Mobile (Score:4, Interesting)
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.
Re:Deutsche Telekom still doesn't want T-Mobile (Score:3, Interesting)
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 of customers is a good thing.
The other stupid premise of the article: Hurt more (Score:4, Interesting)
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" ?