AT&T quietly announced yesterday that it will withdraw its FCC application to merge with T-Mobile and take a $4 billion charge against earnings for the breakup fee for the acquisition.
The withdrawal of the F.C.C. application “is a tacit acknowledgment by AT&T that this story is all but over,” said Craig Moffett, an analyst at Sanford C. Bernstein. “The fat lady hasn’t started singing yet, but she’s holding the mike, and the band is about to play.”
The efforts by the Justice Department’s antitrust division and the F.C.C. to block the merger reflect a reinvigoration of federal efforts to rein in excessive business practices after a prolonged period of deregulation that preceded the 2008 financial crisis.
The wireless market is already an uncompetitive oligopoly, and this merger would have made it worse. The Obama administration killed this one and deserve some credit, since it’s almost certain that a Republican administration would have not only approved, but consecrated, this plan.
Elizabelle
I was thankful.
Schlemizel
As you noted, this is not going to make the mobile market better & it really would not have gotten any worse if it had gone through. American consumers are completely screwed already.
But it might send a message to other megaliths that they will not always get their way in the destruction of American industry so its a plus for the administration.
Jay C
Ummm, … FOUR BILLION dollars as a “breakup fee”??
Can somebody explain who gets paid this, and why?
arguingwithsignposts
@Jay C: IIRC, T-Mobile will get the funds.
debit
@arguingwithsignposts: That might make up for all the people who bolted from T-Mobile when the merger looked inevitable.
Anonymous At Work
Don’t forget the accidental “assist” by the paralegal who posted AT&T’s real rationale for the merger.
batgirl
But I’ve been told there is no difference between the Democratic and Republican parties! How can that be? /firebagger
Ooparts
I’m so glad to hear this. I’m a T-mobile customer, and I wasn’t looking forward to being consumed by Ma Bell.
MGB
This T-Mobile customer is quite happy that I won’t have to deal with AT&T. Now when can I get a damn iPhone on my T-Mobile plan (grumble, grumble). And yes, I know I could get a jailbroken phone.
Wilson Heath
Learning that there really is some functioning anti-trust law is like learning in my mid 30s that Santa is real. Who would have thought it still possible.
Woodrowfan
Ed Schultz is gonna be PISSED.
gbear
Another thankful T-Mobile customer.
carpeduum
They saw the writing on the wall.
Suffern ACE
@MGB: T-Mobile actually has one of those functioning and fast 4G networks that I’ve been hearing so much about for the past few years? I thought that was just some kind of myth available for 2 blocks in Omaha.
Creature_NYC
Glad in the larger sense, but pissed because I was hoping the merger would help with my crappy AT&T service. Oh well.
Michael G
They announced this on Thanksgiving? Can’t bury it more than that, I guess.
burnspbesq
While it’s nice to see that there is some level of commitment to enforcing the antitrust laws, this does no cell phone user any good.
The inescapable reality is that due to the sheer geographic size of the United States, it takes tens of billions of dollars to build out a national network that is even remotely close to state of the art. T-Mobile doesn’t have the money, and Deutsche Telekom has made it clear that it isn’t making those funds available. The T-Mobile death sprial simply continues, and eventually it will be gone.
Americans are never going to have cell phone service as good as (to cite only one example) South Korea’s, because they will never pay the monthly charges necessary to support the level of capex that is required. Deal with it.
Brandon
Seriously? T-Mobile is the only provider that currently offers unlimited data. AT&T thinks 500MB of data per month is reasonable for $30. By contrast, T-Mobile recently had a promotion with unlimited voice, text and data for $60/mo. I cannot think of a single T-Mobile customer that thought their service was going to improve.
losgatosca
$4 Billion for no good purpose. AT&T shareholders gave to be so happy.
The number of new ways that corporate managers ‘manage’ to destroy shareholder value seems to be limitless.
Brandon
Just more par for the course ignorance from my favorite internet lawyer. This comment is just about as bad as all the stupid you were posting about Penn State the other day. You may want to consider Indonesia as another example. They have high market penetration resulting healthy competition from 6 providers focussed on providing service to different income demographics, with a 7th provider getting Saudi financing for building out a mobile network focussed on middle class urban users. Even more amazing, you get 3G service from no less than 3 providers in both the Malukus and Kalimantan. Why? Because the Indonesian government requires them to as a condition of providing a license. The issue has nothing do with anything other than regulation of the market creating barriers to entry to protect current providers from competition so that they can extract economic rent. Why should any provider invest in their networks when they have an oligopoly position government ensured by the government? And for the record, I do not recall that you ever responded to DougJ’s question of whether you were paid to troll here.
Brachiator
This is very odd. Could AT&T come back with another offer? The German company that owns T-Mobile desperately wants to unload it. Is T-Mobile compatible with Sprint or another company? No matter what happens with this merger, I do not see the company surviving for long.
As to the notion that Americans will not pay the monthly charges necessary, this just doesn’t wash. We have, for example, that memo that suggested that AT&T could improve and expand its network for less than it was offering for T-Mobile. And there is an ongoing discussion among knowledgeable tech heads that a lot of the noise over charges and data caps has little to do with the actual costs of providing service.
And the bottom line is that, barring some new revolutionary technological change, the demand for Internet and streaming services is only going to increase, and companies that can meet that demand will be sitting pretty.
burnspbesq
@Brandon:
Say what, now? You need to shop harder. My $30/month data plan for iPhone gets me 4 gigs and the ability to use my phone as a hotspot.
burnspbesq
@Brandon:
For the record, when you start posting intelligently, I might deign to tell you. In the meantime, stick it.
JGabriel
Yip yip, hooray!
Among companies I despise, AT&T is down there with lowest scum like Verizon and tobacco companies. I know T-Mobile isn’t perfect, but I’ve always had relatively good experiences with them, and I’m glad the FCC’s actions convinced AT&T to put the kibosh on this merger, while simultaneously putting $4B in T-Mobile’s hands to (hopefully?) build out their network a little more.
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JGabriel
@Brachiator:
Which, with good reason, no one believed. The merger would have created a duopoly of AT&T and Verizon. When you have a duopoly, the companies don’t even have to meet with each to collude on pricing — they can just check each other’s price lists. As long as neither starts a price war, they can each maximize their profits through price gouging.
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slag
Huzzah!
Ruckus
@Brandon:
To your last point, we may now have at least some more circumstantial evidence.
Cap'n Magic
It’s not over till its over-AT&T is saving its firepower until they officially throw in the towel with the DOJ.
Herbal Infusion Bagger
Good. That means the T-mobile adverts with the hawt tall brunette woman in purple will continue.
Oh yeah, and competition.
Herbal Infusion Bagger
“AT&T thinks 500MB of data per month is reasonable for $30.”
Some of us got grandfathered in with the unlimited plan. Yay us.