The AT&T Acquisition of T-Mobile USA

Carl Weinschenk

Judging by the coverage it has gotten since its announcement on March 20, perhaps the most interesting element of the proposed $39 billion acquisition of T-Mobile USA by AT&T is whether an individual thinks it should be approved or not, and what, if any, concessions should accompany an approval. It is a fairly straight-forward decision.

It's not too complicated. The companies are the second and fourth largest wireless carriers in the United States. The conjoined entity would pass Verizon Wireless to be the largest. Staking out a position on whether or not the deal should be allowed comes down to a set of core beliefs.

  • Does the person considering the prudence of the acquisition think that a lack of competition within an industry segment will really stymie competition, or will companies obliged in this new world continue to innovate despite not having to worry as much about market share?

  • Is the nature of telecommunications changing enough to the extent that carriers face enough price and service competition from related sectors-cable and wired telcos-to reduce concern about the dearth of large-scale, carrier-class companies? It's important to remember that while the technology and services are different, they are drawing on the same universe of consumer wallets.

  • Is wireless competition essentially absent even before the consummation of this deal? If so, is the marriage of AT&T and T-Mobile in a strange way a positive because it will make the lack of competition too obvious to ignore? That's the theme of a Huffington Post story by Yepoka Yeebo. Here's a key paragraph:
"Competition in the wireless world has been largely a charade," said Jonathan Askin, a Brooklyn Law School professor who specializes in telecommunications law. "Companies are still charging close to whatever they want without any real government oversight, or without any real innovation."
  • During this era of exploding use, is the cost of maintaining and upgrading a network-and supplying it with spectrum-so high that the carriers will have a freer hand than in the past to work with little or no competition?

  • The next big thing in wireless is 4G. Will the deal speed deployment, as AT&T Chief Executive Randall Stephenson argues? And, if so, is that a good thing since the speedier ramp up will disproportionately benefit the combined entity?

The funny thing about mega-deals is that in many cases there isn't too much to say about them when they are announced. There are some exceptions, such as this nicely done post by Wayne Rash over at CTO Edge. Wayne took a look at the past-i.e., the carrier that will disappear, and why it was inevitable-as opposed to guessing what the nature of the new entity will be. That makes sense. There is such a long road-probably a year in this case-and the final contours of the arrangement, if it indeed goes through, are different than they were on the day the press release went out.

Indeed, the final deal usually is so different that it makes assessing the original announcement-which really is the opening bid in a negotiation between AT&T, the FCC, the Justice Department and, by extension, the public and companies opposing the deal-pointless except perhaps in the broadest possible terms.

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