5 Reasons the AT&T, T-Mobile Merger Is as Good as Dead

[one...two...tree 2,762]

Poor AT&T. Up until recently, I bet its execs thought they were on a hero’s quest: Combining two big mobile companies (AT&T and T-Mobile) to make one giant that could serve the masses with more handset choices, better 3G and, eventually, more 4G coverage. They’d improve the economy and bring jobs to the jobless. How devastating it must be for them to finally realize that AT&T isn’t Superman, it’s Don Quixote, and it’s not flying through the air, it’s riding a donkey and tilting at windmills.

The mobile giant comes to this crushing realization as the Federal Communication Commission does what no one really expected it or the Department of Justice to do—reject the proposed deal outright.

This is, friends, the end of this deal. You know it, I know it, and AT&T knows it. It withdrew its application from the FCC and is now talking about taking a possible $4 billion charge when the deal officially collapses.

Why has this happened? Well, I think the FCC laid out the case more clearly than anyone else thus far.

Too Big

A senior FCC official said the commissions had “never seen anything like the deal described in this record.” It would create “unprecedented concentration in the wireless industry.”

This is not news. From the moment the deal was announced in March of this year, everyone voiced the same concern. This would hyper-consolidate an already shrinking industry. Worse yet, if AT&T succeeded, it could’ve emboldened Verizon to snap up its CDMA counterpart Sprint.

Not in the Public Interest

The FCC said that under the guidelines of the Communications Act, there’s no way an AT&T and T-Mobile merger could served the public interest. That’s also true, but also kind of funny. Since when is business acting in the public interest? AT&T’s plans were about it getting bigger and squeezing the competition until it screamed uncle. Public interest would be a nice by-product, if it occurred—which it would not.

No Benefit

Any time one big company proposes buying another big one (or even mid-sized one) they pitch it with a long list of benefits. Perhaps the biggest among AT&T’s list was job creation—sorry domestic job creation. The FCC picked up on this promise and said simply this would not happen. When I think about the claim, I get a little angry. People are hurting in the U.S. Joblessness sits at 9% and seems stuck there. AT&T’s claim that a mega merger would somehow create jobs is simply galling. The FCC sounded kind of peeved, too, and noted that an AT&T, T-Mobile merger would “result in massive job loss.” Of course it would. I can’t recall a merger of any kind that didn’t result in some kind of consolidation and then shedding of duplicative operations, services, departments. It’s what happens.

4G Won’t Grow

AT&T’s 3G networks travails are well-documented, but with the merger, AT&T promised that it would offer a better, faster 4G network in far less time than it could alone. This is akin to waving one hand wildly so no one notices that you’re missing the other one. AT&T never promised that the merger would improve the widely used 3G network. Instead it moved on to the sexier 4G network promise. Thing is, T-Mobile’s 4G is kind of a kludge. It’s HSPA+, a sort of juiced up 3G, that some generously call 4G.

Once again the FCC wasn’t buying and simply dismissed the idea that the merger would help AT&T speed up its high-speed network build out.

It Could Kill Competition

Some of us in this industry are old enough to remember when the telephone company was called Ma Bell. This maternal label conveyed a sense of warmth, and protection, but it was really more ironic than sincere. Ma Bell was the massive telco that basically ran communication services for the U.S. The government eventually forced the monopoly to split up into many baby bells.

In proposing this merger, AT&T must’ve been hoping that we were all suffering from a kind of collective amnesia. No one would remember that AT&T used to be part of Bell Telephone (not a direct descendant, but it was bought by one of the many baby bells in 1983) and that it knows from “Too Big.” Perhaps AT&T thought it could slowly but surely get the old band back together until there is just one U.S. mobile service company.

This time the FCC offered the understatement, the merger “would diminish competition.” Again true-enough.

When I first heard of the deal, I didn’t believe the U.S. government would block it. I assumed that it did not understand the intricacies of the cellular industry. Clearly I was wrong. Today’s DOJ and FCC are savvier and warier of consolidation. I have to wonder if they would have approved the Cingular/AT&T merger.

For those who bought AT&T’s story and are sad that the deal is all but dead, I promise you, your lives will not be worse off without an AT&T, T-Mobile merger and they most certainly would not have been better if it had gone through.

http://mashable.com/2011/11/28/att-t-mobile-merger-good-as-dead/

[Ryan H 3,812]

As a T-Mobile customer who was not thrilled about the prospect of becoming an AT&T customer, I welcome this news.