AT&T-T-Mobile Wrangling: What A Waste - InformationWeek

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Government // Mobile & Wireless
05:08 PM
Rob Preston
Rob Preston
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AT&T-T-Mobile Wrangling: What A Waste

Imagine if all the time and money spent on the wheeling and dealing around this merger were channeled into actually creating something of value.

The 11-month-long spectacle that is AT&T's attempt to acquire T-Mobile is a microcosm of this country's economic atrophy: billions of dollars set aside and countless man hours consumed to pander to regulators and special interests rather than create anything of value.

There are really no good or bad actors here, just a bunch of financiers and bureaucrats and lobbyists and litigants working a dysfunctional system. On one side we have the Justice Department, the FCC, and the likes of Verizon and Sprint. On the other is AT&T, flanked by Big Labor, which agreed to support the $39 billion T-Mobile deal in exchange for AT&T's pledge to bring thousands of wireless call center jobs back to the U.S.

Among the arguments against the merger: By reducing the number of major industry players to three, it would raise prices, degrade service, weaken competitors, eliminate jobs, and lock in customers. One nonprofit "public interest law firm" went so far as to say "this is arguably the most anti-competitive move in recent American economic history." Apparently the firm is unaware of the vibrant oligopolies that have emerged in the steel, aluminum, auto, tire, beer, and other mature U.S. industries. Even in highly regulated sectors like telecom, new competitors always spring forth.

The hyperbole from the AT&T camp has been no less rampant. It has argued that the merger would create thousands of jobs rather than eliminate them, expand mobile broadband to millions more people, and spur economic growth through billions of dollars in additional investments. It also has said the acquisition would help solve the shortage of available wireless spectrum, which it calls a "spectrum exhaust" situation. Hanging over AT&T has been the specter of owing T-Mobile parent Deutsche Telekom $6 billion in cash and other compensation should the deal fall through. AT&T would claim the merger will ease global warming (through less spectrum exhaust?) if it thought that claim would get it off the hook for $6 billion.

As of press time, AT&T's deal to buy T-Mobile was looking shaky. As my colleague Eric Zeman reports, AT&T announced early Thanksgiving morning that it had withdrawn its application from the FCC and said it would focus instead on winning the antitrust lawsuit the DOJ had filed against it on Aug. 31. AT&T also said it would take a $4 billion charge in the fourth quarter as it prepares for the breakup fee it will have to pay Deutsche Telekom should the deal unravel, a move seen as a precursor to AT&T submitting a revised merger proposal. Meantime, AT&T was reportedly trying to sell a sizable portion of T-Mobile's assets to a smaller wireless carrier to even out the competitive landscape and appease the regulatory gods.

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Imagine if all the time and money spent on that wheeling and dealing--on both sides of the merger aisle--were channeled into actually creating something: higher-speed networks, more-efficient operations support systems, more-responsive customer service teams, more-productive and -responsive regulatory regimes, more-transparent pricing, more-robust competition. Instead, it's a finger-pointing free-for-all.

The super committee players on Capitol Hill, an unproductive lot if there ever was one, must be in awe: So much wrangling, so little progress.

Rob Preston,
VP and Editor in Chief, InformationWeek
[email protected]

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