AT&T Wants to Spend $39 Billion on Insignificance - The UpStream

AT&T Wants to Spend $39 Billion on Insignificance

posted Sunday Sep 11, 2011 by Jon Wurm

AT&T Wants to Spend $39 Billion on Insignificance

Back in March AT&T told the world they wanted to acquire T-Mobile for $39 billion. Then in August AT&T had to do some damage control when a letter stating the real reasons AT&T wants the merger to happen was posted on the FCC's website by someone at a law firm who is working with AT&T on the merger. This evidence, that was so conveniently delivered to the FCC's virtual door step, by a currently unemployed paralegal or lawyer, prompted the Department of Justice to open an investigation.

Last week the DoJ made a statement about their lawsuit to block the AT&T - T-Mobile merger,

AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market.

AT&T's argument against the merger block takes a very different stance,

The new network will be more than the sum of its parts: as a result of engineering efficiencies enabled by the transaction, the combined capacity of the new firm will be significantly greater than what the two companies could do separately. That means increased output, higher quality service, fewer dropped calls, and lower prices to consumers than without the merger. Rather than substantially reducing competition, the combined firm will usher in more intense competition to an already vibrantly competitive market.

Despite their optimistic tenor with regards to this merger, AT&T's take on T-Mobile and it's own LTE network is polar opposite. Will acquiring T-Mobile help AT&T to deliver your world in a better way? Find out after the break.

The DoJ is saying this merger is not in the best interest of consumers. The past mergers of Verizon/Alltel, Sprint/Nextel, and Cingular/AT&T have amassed more of the market into fewer companies and merging the last two GSM carriers would exacerbate the problem further possibly creating even more of an oligopoly. They also have concerns about AT&T trying to get T-Mobile simply so that Sprint can't. This would be a rather anti-competitive move that could hurt consumers.

AT&T says they need T-Mobile to complete the roll out of their LTE network which is currently slated to have around 80% coverage. They also said that T-Mobile isn't significant in terms of competition or devices, yet the merger will increase their quality of service and output allowing them to charge better prices. The problem so far is that AT&T hasn't justified exactly how this merger would allow them to achieve the effencies they claim it will allow them to. The costs for them to complete their LTE network is around $3.8 billion which is considerably less than the $38 billion they are willing to shell out for T-Mobile. When AT&T and the DoJ come face-to-face in Washington D.C. next month, I think AT&T will have their work cut out for them, even though proving this merger is not in the best interest of consumers is the burden of the Federal Government.


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