There’s always that one catch before the merger goes live. Before AT&T gets to play Frankenstein with T-Mobile, the deal will, thankfully, have to pass through the FCC and the Justice Department first. No one can forecast what’s going to happen, but if the deal falls through, a lot more happens than T-Mobile getting to keep its name.
If it doesn’t pass muster with the regulators, the first thing AT&T will have to do is shell out $3 billion dollars to T-Mobile. T-Mobile also gets more than just the cash; it gets valuable spectrum and a roaming agreement. This stipulation is a win-win for T-Mobile’s owners, Deutsche Telekom. Deutsche Telekom wins in either situation: customers have been leaving and profits have been falling at T-Mobile USA in recent years.
Beyond raising alarm in the consumer world and the technology industry, members of Congress were definitely alarmed. Democrat Senator John D. Rockefeller IV made his displease immediately known, saying that regulators should leave absolutely “…no stone unturned.”
On the other hand, it may bode well for AT&T – well, that’s if they can get past public scrutiny first – since they have played a large role lobbying in past years. According to the Washington Post:
Bolstering its chances, AT&T has one of the most muscular lobbying operations in Washington. Last year, it enlisted an army of about 90 lobbyists and has had on its roster well-known former lawmakers, including Trent Lott (R-Miss.) and John Breaux (D-La.) of the Senate and J.C. Watts (R-Okla.) of the House of Representatives, according to the Center for Responsive Politics.
Historically, AT&T is also reportedly one of the biggest campaign contributors, and has spent about $15 million on lobbying each year since 2005. Oh, these big corporations.
Also, AT&T says that the wireless phone market is highly competitive, at the local level. According to them, 18 out of the largest 20 markets have five or more wireless carriers. A law firm sourced by the New York Times says that the Justice Department traditionally takes a local view of the matter.
But then there’s also the FCC. Last May, in an annual report the FCC did not declare the wireless market uncompetitive, but did say industry concentration had increased significantly since 2003. In prior years, the industry was only “effectively competitive.”
Michael Copps, commissioner of the FCC, said that competition had “dramatically eroded and is seriously endangered by continuing consolidation and concentration in our wireless markets.”
Regardless, AT&T’s Wayne Watts showed a lot of confidence about the transaction. “We’re very confident that we can achieve a successful regulatory review,” he mentioned Monday.
On a more serious note, does this remind anybody else of Stephen Colbert’s wonderful history of AT&T?
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