In what might be the most shocking news in many years given AT&T's potent political influence, the Department of Justice has moved to block AT&T's planned acquisition of T-Mobile. The DOJ has filed papers in federal court in Washington to block AT&T’s $39 billion deal, insisting it would harm both consumers and the market. "AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market," the DOJ said in its filing. The DOJ also announced this afternoon that blocking the deal would protect the elimination of a significant number of jobs.
Indicating that AT&T was well aware the government wasn't buying their justifications for the deal, the company made new promises this week to bring 5,000 jobs back from overseas call centers, despite the fact the deal could eliminate up to 20,000 jobs.
The company also recently shot itself in the foot by posting documents destroying their argument that they need T-Mobile to build LTE service out to 97% of the population. That was a major problem, given the hard proof that AT&T could complete their LTE build for far less ($3.8 billion) than the cost of this deal meant the deal didn't meet the DOJ's standard for merger-specific benefits.
Again, given AT&T's political power (they've contributed more to political campaigns than any company since 1989), the government blocking this move is a significant shock. However, AT&T's claimed deal benefits were so hallucinatory in nature, the DOJ had little choice but to acknowledge the competitive problems created by giving AT&T and Verizon 80% marketplace domination. The fact that the deal was rejected by a merger-loving government bathed in AT&T political cash indicates just how bad of a deal it really is.
As we noted back in May, AT&T owes T-Mobile owner Deutsche Telekom $3 billion in cash, plus another $4 billion in spectrum assets and network sharing obligations if the deal falls through. To be clear, it's possible and perhaps even likely that this deal does still happen, but AT&T is going to have to make some fairly major concessions -- or at least put on a high-quality dog and pony show that gives the illusion of major concessions.
Update: The FCC is sending this statement to the press:
quote:By filing suit today, the Department of Justice has concluded that AT&T’s acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws. Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices.
Update 2: In a story at the Wall Street Journal, the paper quotes Deputy Attorney General James Cole as saying the "'door is still open' to AT&T to propose remedies in the deal."
Update 3: AT&T's sticking to their guns in a statement, and continues to insist the deal is great for consumers and the market alike. Despite the fact that was just caught lying about needing T-Mobile to reach 97% LTE coverage, AT&T's policy folk apparently thought it was a good idea to stick to the lie:
quote:We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.
We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.
At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:
•Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.
•Allow AT&T to expand 4G mobile broadband to another 55 million Americans, or 97% of the population;
•Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.
We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.
Re: And there was much rejoicing by T-Mobile's customers
Maybe Sprint and the misfiled document caused enough embarrassment that the DOJ had to move to block the merger. Next question, how serious is the DOJ, and will they be able to block the merger?
If they are serious, could AT&T withdraw it's offer, and wait for another more tolerant administration (one they have better ownership of)?
quote:"Any objective antitrust lawyer expected this," Reed Hundt, a former chair of the Federal Communications Commission, said in a brief phone interview. And Hundt, who chaired the FCC from 1993 until 1997, predicted a win for the government. "The Department of Justice will prevail," he said. "The Justice Department in its entire history has never lost a telecom case of this sort."
It will be amusing if Tmob gets the $3B and spectrum and then DT dumps Tmob later to Sprint. Could happen as the Feds would much more likely allow Sprint/Tmob to merge.
ATT would have been better off to let the earlier Sprint/Tmob merger efforts to proceed. If all this goes as I just described, ATT will have essentially funded a Sprint/Tmob merger. Would be really bizarre if this whole thing transpires.
Re: And there was much rejoicing by T-Mobile's customers
I don't see how the DOJ could have done any different. I have not met one person yet who thought this would be a good deal, surely they felt this pressure.
Re: And there was much rejoicing by T-Mobile's customers
Really this would be bs, they might as well let att and verizon merge and then eat the last two. This country is slowly turning in to a communist state as it sits.
We have to wonder if this is an attempt at politics. Later they might approve the merger quietly.
How the hell do you sue to block a merger on antitrust grounds and then QUIETLY approve it later? It's not likely they are going to pass it in a secret FISA court, the companies merge, and then they go public.
We have to wonder if this is an attempt at politics. Later they might approve the merger quietly.
How the hell do you sue to block a merger on antitrust grounds and then QUIETLY approve it later? It's not likely they are going to pass it in a secret FISA court, the companies merge, and then they go public.
Easy, they do everything to stay out of the media. Then they approve it later saying ATT changed enough in the deal.
Things like this have happen all the time in government. There is a big outrage for an approval, but then it gets approved under the shadow of some other big news event and without news coverage no one knows about it.
Re: And there was much rejoicing by T-Mobile's customers
No, the President appoints the The United States Attorney General, Deputy Attorney General, and the Associate Attorney General. Don't you think the President has a little pull with them?
kind of...you know if this fails that $7 billion that they will owe to Deutsche Telecom is going to be paid by AT&T customers in the form of new "fees" or "government required taxes"
kind of...you know if this fails that $7 billion that they will owe to Deutsche Telecom is going to be paid by AT&T customers in the form of new "fees" or "government required taxes"
kind of...you know if this fails that $7 billion that they will owe to Deutsche Telecom is going to be paid by AT&T customers in the form of new "fees" or "government required taxes"
It's the "Failed lawsuit, non governmental recovery fee"
kind of...you know if this fails that $7 billion that they will owe to Deutsche Telecom is going to be paid by AT&T customers in the form of new "fees" or "government required taxes"
It's the "Failed lawsuit, non governmental recovery fee"
ha, that is a good one. i'm surprised they haven't tried that one before.
The only result I see as a T-moble cutomer is a stunted or bankrupt T-Moble.
I do not see how this helps me.
How does getting $3billion from ATT, plus much needed spectrum = stunted or bankrupt T-Mobile? They're still making money. And their network outperforms ATT.
The only result I see as a T-moble cutomer is a stunted or bankrupt T-Moble.
I do not see how this helps me.
Presuming the merger is successfully blocked, it's done nothing to change T-mobile. They always have been the red-headed stepchild of the cellular companies that has stunted growth, and they would remain that way, albeit with $3b cash and an additional $4b in spectrum.
FINALLY the government looks out for the consumer.
About frigeen time I was about to say the same.. it was so obvious I don't see how anyone could not see it was going to have anything positive going for it.
FINALLY the government looks out for the consumer.
Yeah, right!
It was the total stupidity of AT&T lawyers and their blatant arrogance that got this deal shot down. Otherwise, our stupid a** government would've let this go through in a minute.
Our government doesn't and hasn't looked out for the consumer in ages. They look out for #1 (meaning themselves)
I am impressed - I was expecting this to be another rubber stamp approval. It seems like someone at the DOJ is actually paying attention out there. There is no way any rational person could believe this was going to help competition and lower prices.
Then the dirty trick AT&T pulled this morning of basically saying "if you approve this, we'll bring back some outsourced jobs to the US" (which they would have just turned around 3 months later and outsourced them to a foreign company again anyway).
And that is why they all of sudden they had press release about bring back 5000 jobs to US. They know that "jobs" is a key word in DC right now and some congress scum will be quick to defend the proposed merger.
quote:...We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.
I suspect that this will be true, but AT&T will have a reason to hate that song when they realize the "facts" will take them down like the Titanic. Spinning will just be a waste of time and resources that could be better applied to getting their rear-ends in gear and start competing.
Thanks for that YouTube post BTW, it made my whole day
up until you read karl's second update that they are willing to cut a deal...
"Update 2: In a story at the Wall Street Journal, the paper quotes Deputy Attorney General James Cole as saying the "'door is still open' to AT&T to propose remedies in the deal."
up until you read karl's second update that they are willing to cut a deal...
"Update 2: In a story at the Wall Street Journal, the paper quotes Deputy Attorney General James Cole as saying the "'door is still open' to AT&T to propose remedies in the deal."
This was unexpected to say the least. A government agency actually doing its job and stopping one of the largest corporations on Earth from having its way?
Call me cynical, but given the rather hefty merger breakup fee AT&T agreed to, I don't see T giving up so easily. My money is on AT&T and DoJ coming to some agreement which allows the merger to proceed while the government claims victory by getting AT&T to agree to some small meaningless concession.
Then again, this is the DoJ, not the FCC....Justice doesn't get involved in these things usually unless it means business. So, to paraphrase something the POTUS himself recently said...let's hope for the best while bending over for the ass fucking that is virtually certain to arrive in the form of a bigger meaner AT&T.
This merger would bring LESS competition in the USA, not better service. Year after year, at&t's "quality" is always rated dead last in the USA. Until such time that at&t gets its act together, I wouldn't allow any more mergers with at&t.
While I'm not saying their isn't some degree of rigging to JD power I will say this, I've been on every major carrier and I'm a heavy user. Verizion in my experience is by far the best. Sprint was second, thanks to the roaming on Verizion to expand it's coverage area. T-mo was third because of limited coverage, but where I had coverage it worked great AT&T is by far the worst, I paid a huge ETF to get out because their service was so bad, constant dropped calls, slow texts, slow internet and before you ask no I wasn't using an iPhone.
I have AT&T as a work cell, so I get to compare the services every day.
The ratings still manage to reflect what my real world usage has always said. I'm currently on Verizon and I'm staying, the quality is worth the price to me.
I am truly surprised. In this age of "come as you are" government and AT&T paying off just about any politician and association around (read all the filings in support of merger and who they are from) and one just assumed it was a done deal. AT&T can still go to court but I think DOJ has a strong case and perhaps the FCC will fall inline too.
This is a wake up Call to AT&T. They have been 'tightening the noose' on customers recently and I really think they thought that this would go through without question.
I'm hoping the fact that their competition will remain will have them loosen their grip vs. punishing their customers with higher prices. However, something tells me that the latter will happen.
Great news! I'm not in US but this decision will affect me also, I'm with a smaller Wireless in Canada that uses same frequency as T-mobile, handsets are hard to come by already, without T-mobile we would be screwed big time. Just hope this not just a game, to show government doing something while working out back door deal. Just read the press release from FCC, that made me happy, seems like they agree with DOJ, maybe "this" deal is dead, lets see what new deal ATT comes up with.
It is too bad that your voice, being a Canadian, doesn't matter in this debate but your point is worth noting...this merger will have an anti-competitive effect on more than just T-Mobile customers...or Americans for that matter.
Its surprising that the deal was shot down this soon but after the damaging leak it was expected,I personal thought We would not hear any news until end of the 4th quarter and the DOJ would just let ATT dig them self a deeper hole. I wonder how soon will it be before ATT stops running that commercial ad saying ..." Our combined network with Tmobile will be...." ATT thought they had this in the bag, wait, wait ... its not april 1st is it? nope! just making sure...
Now what was that all those who were saying "its a done deal" ..RFLOL
As Ive said before and happily say again Im typing this tethered wirelessly with unlimited data from my G2X on Tmobile !
You can gurantee the coffers are wide open and AT$T is on the horn with every politician in the US. They will loose more money if this deal fails...then had they just updated their network...so they will be smashing the politicians before end of day...this deal will go through no matter whom attempts to stop it.
The fact that "Sprint Nextel Files Antitrust Suit Against ATandT, Deutsche Telekom, T-Mobile" »www.eweek.com/c/a/Mobile ··· 2011STR4 might help a little