7 ms·

Leaked AT&T Letter Demolishes Case For T-Mobile Merger

303 points by rosser 15y ago

object404 15y ago
Additional related articles where a lot of this was sourced (3 of them sourced from each other): --------- Unredacted AT&T Filing Shows $3.8B Price Tag By Maisie Ramsay Thursday, August 11, 2011 http://www.wirelessweek.com/news/2011/08/unredacted-ATT-filing-shows-high-price-tag/ http://www.wirelessweek.com/news/2011/08/unredacted-ATT-fili... --------- AT&T Letter Damages Case For T-Mobile Acquisition Rue Liu, Aug 12th 2011 http://www.slashgear.com/att-letter-damages-case-for-t-mobile-acquisition-12171486/ http://www.slashgear.com/att-letter-damages-case-for-t-mobil... --------- AT&T’s “Ooops” Damages Their Biggest Argument In Favor Of T-Mobile Takeover By David, Managing Editor August 12, 2011 4:10 pm EST http://www.tmonews.com/2011/08/atts-ooops-damages-their-biggest-argument-in-favor-of-t-mobile-takeover/ http://www.tmonews.com/2011/08/atts-ooops-damages-their-bigg...
- cowkingdeluxe 15y ago
  Wasn't $3.8 billion around the amount the AT&T has to pay T-Mobile if the merger fails to go through?
  - fpgeek 15y ago
    I think so, but I don't see how the two amounts would logically be related, so I presume that is a coincidence.
- djeikyb 15y ago
  Is the leaked document available anywhere? I'd love to read it for myself. I'm searching for it, but as yet it eludes me.
cookiecaper 15y ago
The proposition of this merger is one of the most blatantly negative outcomes for the public I've heard in some time. Anyone with even an inkling of sense regarding this industry understands that it would be very dangerous and troublesome for consumers if T-Mo were absorbed into AT&T -- not only would it pare down the oligopoly that is mobile telco and allow further price gouging (which is already quite excessive; cf. 20¢/text), but AT&T would have acquired the entire GSM market in the US, leaving current T-Mo customers with no choice but to use AT&T or get a new phone and foreign visitors with no choice but to roam on AT&T. > (somewhere there's a paralegal looking for work today) I like to think that somewhere there's a paralegal holding his head high for the "accidental" damage he inflicted to this potential merger. Good for you, man.
- NoPiece 15y ago
  I think that is overstating the negative. You basically are going to get significant coverage improvements for TMO and ATT customers, and the cost will be potential price increases due to decreased competition. As an ATT customer, I really want the Tmo bandwidth. I'll take the risk.
  - fpgeek 15y ago
    I think you missed the point of the leaked letter. It claims that AT&T could have gotten the relevant coverage improvements for roughly 1/10 the price of the merger ($3.8 billion vs $38 billion). Why is AT&T willing to pay the extra $34+ billion? Taking out a key competitor seems like the obvious motive.
    - ericd 15y ago
      I wonder why they haven't gone ahead and made coverage improvements, then. Perhaps they've calculated that increased user satisfaction won't net them $3.8 billion more in profit.
      - gvb 15y ago
        The coverage improvements would take years to build out their existing infrastructure with new base stations (erect new towers or lease space on existing towers, purchase and install equipment). By buying TMO, they would get an instantaneous coverage increase and instantaneous capability increase. There has to be a substantial cost of opportunity if it takes them (e.g.) 5 years to build the infrastructure themselves. There also is the risk that ATT could not achieve the full coverage because it has gotten increasingly difficult to get zoning permissions to build unsightly cell towers.
        kwantam 15y ago
        > By buying TMO, they would get an instantaneous > coverage increase and instantaneous capability > increase. Not really. Most of the coverage AT&T is lacking and proposed to build out to expand from 8x% to 9x% coverage is in rural areas where T-Mobile's network is even weaker than AT&T's. In other words, there are very few places where T-Mobile has coverage and AT&T doesn't already; most of the new coverage they'd get in this deal is redundant.
rokhayakebe 15y ago
I just cannot wait for a startup to disrupt this space.
- ahi 15y ago
  How? ATT and Verizon control the spectrum.
  - lsc 15y ago
    there have been several stabs at similar problems using unlicensed spectrum; you pay people to use wimax or wifi wireless routers running software you provide. Your software allows your other customers to connect to the internet through those routers. From there it's easy enough to provide voip phone service. If you control the software on the routers, it's easy enough to set up authentication so only third parties that pay you can connect, and to rate-limit those third parties to something reasonable. But it's a difficult thing to carry off. Several companies, I believe, have tried and all have failed. (I can't remember the names of any of those companies right now; I don't know if that's 'cause I'm tired, or if that's 'cause I'm actually remembering a conversation about a business that someone wanted to start that never happened, or if I'm just making this up wholecloth. None the less, it seems like a direction from which you could attack the market using unlicensed spectrum. You would have many obstacles, but it seems possible, at least in high-density urban areas.)
    - robterrell 15y ago
      Cringely proposed that Wal-Mart install wimax routers in every store and thereby essentially blanket the country in coverage. I don't know enough about wimax or wimax phones like the HTC Evo to know if you could provision any wimax router to make voice calls, but I do like the thought that someone in an entirely different business could disrupt the ridiculous monopolistic profit machine that is today's cellular market.
      - iamdave 15y ago
        Do you have a link to this? I'd like to read more.
rauljara 15y ago
There is already too little competition in carriers (and telecoms in general). Even completely ignoring the document, I can't imagine who thought public good would have been served by allowing such a merger.
- cowkingdeluxe 15y ago
  Doesn't matter to the politicans. They don't work for the American public, they work for the corporations who give them money and high paying jobs later in life.
  - danilocampos 15y ago
    The state of regulatory capture in this country makes corrupt Latin American dictatorships look like bastions of ethics and accountability by comparison. edit: Downvote away. At least in Latin America, everyone accepted the corruption was going on. Here we pretend the revolving door between policy enforcement and well-paid private sector jobs in the enforced-upon industries is totally fine and not at all subject to conflicts of interest. Fuck, man, one of the people who approved the NBC/Comcast acquisition later took a very cushy job with... Well, I'll leave it to you to guess. Spoiler: she didn't join a consumer advocacy nonprofit.
    - Spyro7 15y ago
      I didn't down-vote you (I think that its lame to ninja down-vote - it defeats the purpose of conversation), but I think that your initial comment was just a bit hyperbolic. I disagree with your edit too though. Who here in the US is pretending that there is no revolving door? I don't think that anyone is ignoring the problem. I just think that most ordinary people are completely ignorant of the problem. Big media has very little interest in reporting on the extent of the problem (for obvious reasons), and most people don't read the kind of news sites that discuss the issue openly. For most ordinary people, the issue isn't ignored so much as it is out of site, out of mind. The problem is that ordinary people make up the majority of the population. It is a real problem, even when the revolving door is a huge issue[1] it is hard to keep the interest of the general public. The general public is kind of like my cat; intent on stalking something for a few seconds then off scampering around after the latest amusements. [1] http://www.nytimes.com/2008/09/11/washington/11royalty.html http://www.nytimes.com/2008/09/11/washington/11royalty.html
patlo11 15y ago
Thank goodness. This was always a terrible idea and I'm obviously glad this document has come to light. Let's not forget the Bell System divestiture.
deleted 15y ago
[deleted]

303 points by rosser 15y ago

Additional related articles where a lot of this was sourced (3 of them sourced from each other): --------- Unredacted AT&T Filing Shows $3.8B Price Tag By Maisie Ramsay Thursday, August 11, 2011 http://www.wirelessweek.com/news/2011/08/unredacted-ATT-filing-shows-high-price-tag/ http://www.wirelessweek.com/news/2011/08/unredacted-ATT-fili... --------- AT&T Letter Damages Case For T-Mobile Acquisition Rue Liu, Aug 12th 2011 http://www.slashgear.com/att-letter-damages-case-for-t-mobile-acquisition-12171486/ http://www.slashgear.com/att-letter-damages-case-for-t-mobil... --------- AT&T’s “Ooops” Damages Their Biggest Argument In Favor Of T-Mobile Takeover By David, Managing Editor August 12, 2011 4:10 pm EST http://www.tmonews.com/2011/08/atts-ooops-damages-their-biggest-argument-in-favor-of-t-mobile-takeover/ http://www.tmonews.com/2011/08/atts-ooops-damages-their-bigg...

cowkingdeluxe 15y ago
Wasn't $3.8 billion around the amount the AT&T has to pay T-Mobile if the merger fails to go through?
- fpgeek 15y ago
  I think so, but I don't see how the two amounts would logically be related, so I presume that is a coincidence.
djeikyb 15y ago
Is the leaked document available anywhere? I'd love to read it for myself. I'm searching for it, but as yet it eludes me.

cookiecaper 15y ago

The proposition of this merger is one of the most blatantly negative outcomes for the public I've heard in some time. Anyone with even an inkling of sense regarding this industry understands that it would be very dangerous and troublesome for consumers if T-Mo were absorbed into AT&T -- not only would it pare down the oligopoly that is mobile telco and allow further price gouging (which is already quite excessive; cf. 20¢/text), but AT&T would have acquired the entire GSM market in the US, leaving current T-Mo customers with no choice but to use AT&T or get a new phone and foreign visitors with no choice but to roam on AT&T. > (somewhere there's a paralegal looking for work today) I like to think that somewhere there's a paralegal holding his head high for the "accidental" damage he inflicted to this potential merger. Good for you, man.

NoPiece 15y ago
I think that is overstating the negative. You basically are going to get significant coverage improvements for TMO and ATT customers, and the cost will be potential price increases due to decreased competition. As an ATT customer, I really want the Tmo bandwidth. I'll take the risk.
- fpgeek 15y ago
  I think you missed the point of the leaked letter. It claims that AT&T could have gotten the relevant coverage improvements for roughly 1/10 the price of the merger ($3.8 billion vs $38 billion). Why is AT&T willing to pay the extra $34+ billion? Taking out a key competitor seems like the obvious motive.
  - ericd 15y ago
    I wonder why they haven't gone ahead and made coverage improvements, then. Perhaps they've calculated that increased user satisfaction won't net them $3.8 billion more in profit.
    - gvb 15y ago
      The coverage improvements would take years to build out their existing infrastructure with new base stations (erect new towers or lease space on existing towers, purchase and install equipment). By buying TMO, they would get an instantaneous coverage increase and instantaneous capability increase. There has to be a substantial cost of opportunity if it takes them (e.g.) 5 years to build the infrastructure themselves. There also is the risk that ATT could not achieve the full coverage because it has gotten increasingly difficult to get zoning permissions to build unsightly cell towers.
      - kwantam 15y ago
        > By buying TMO, they would get an instantaneous > coverage increase and instantaneous capability > increase. Not really. Most of the coverage AT&T is lacking and proposed to build out to expand from 8x% to 9x% coverage is in rural areas where T-Mobile's network is even weaker than AT&T's. In other words, there are very few places where T-Mobile has coverage and AT&T doesn't already; most of the new coverage they'd get in this deal is redundant.

rokhayakebe 15y ago

I just cannot wait for a startup to disrupt this space.

ahi 15y ago
How? ATT and Verizon control the spectrum.
- lsc 15y ago
  there have been several stabs at similar problems using unlicensed spectrum; you pay people to use wimax or wifi wireless routers running software you provide. Your software allows your other customers to connect to the internet through those routers. From there it's easy enough to provide voip phone service. If you control the software on the routers, it's easy enough to set up authentication so only third parties that pay you can connect, and to rate-limit those third parties to something reasonable. But it's a difficult thing to carry off. Several companies, I believe, have tried and all have failed. (I can't remember the names of any of those companies right now; I don't know if that's 'cause I'm tired, or if that's 'cause I'm actually remembering a conversation about a business that someone wanted to start that never happened, or if I'm just making this up wholecloth. None the less, it seems like a direction from which you could attack the market using unlicensed spectrum. You would have many obstacles, but it seems possible, at least in high-density urban areas.)
  - robterrell 15y ago
    Cringely proposed that Wal-Mart install wimax routers in every store and thereby essentially blanket the country in coverage. I don't know enough about wimax or wimax phones like the HTC Evo to know if you could provision any wimax router to make voice calls, but I do like the thought that someone in an entirely different business could disrupt the ridiculous monopolistic profit machine that is today's cellular market.
    - iamdave 15y ago
      Do you have a link to this? I'd like to read more.

rauljara 15y ago

There is already too little competition in carriers (and telecoms in general). Even completely ignoring the document, I can't imagine who thought public good would have been served by allowing such a merger.

cowkingdeluxe 15y ago
Doesn't matter to the politicans. They don't work for the American public, they work for the corporations who give them money and high paying jobs later in life.
- danilocampos 15y ago
  The state of regulatory capture in this country makes corrupt Latin American dictatorships look like bastions of ethics and accountability by comparison. edit: Downvote away. At least in Latin America, everyone accepted the corruption was going on. Here we pretend the revolving door between policy enforcement and well-paid private sector jobs in the enforced-upon industries is totally fine and not at all subject to conflicts of interest. Fuck, man, one of the people who approved the NBC/Comcast acquisition later took a very cushy job with... Well, I'll leave it to you to guess. Spoiler: she didn't join a consumer advocacy nonprofit.
  - Spyro7 15y ago
    I didn't down-vote you (I think that its lame to ninja down-vote - it defeats the purpose of conversation), but I think that your initial comment was just a bit hyperbolic. I disagree with your edit too though. Who here in the US is pretending that there is no revolving door? I don't think that anyone is ignoring the problem. I just think that most ordinary people are completely ignorant of the problem. Big media has very little interest in reporting on the extent of the problem (for obvious reasons), and most people don't read the kind of news sites that discuss the issue openly. For most ordinary people, the issue isn't ignored so much as it is out of site, out of mind. The problem is that ordinary people make up the majority of the population. It is a real problem, even when the revolving door is a huge issue[1] it is hard to keep the interest of the general public. The general public is kind of like my cat; intent on stalking something for a few seconds then off scampering around after the latest amusements. [1] http://www.nytimes.com/2008/09/11/washington/11royalty.html http://www.nytimes.com/2008/09/11/washington/11royalty.html

patlo11 15y ago

Thank goodness. This was always a terrible idea and I'm obviously glad this document has come to light. Let's not forget the Bell System divestiture.

deleted 15y ago

[deleted]