3 ms·

The DOJ may be using its leverage to get better concessions out of AT&T. Basically, because AT&T set such a big cancellation fee for itself, the DOJ can bargain

by ansy 15y ago

The DOJ may be using its leverage to get better concessions out of AT&T. Basically, because AT&T set such a big cancellation fee for itself, the DOJ can bargain up to just less than that amount. It's saying, "shape up or we'll seriously make you eat that $7 billion fee!" I actually think the huge cancellation fee means the deal is more likely to happen because AT&T will tolerate a lot of regulatory arm twisting before walking away. Exactly what AT&T will need to do I'm not sure. AT&T will probably be forced to sell any T-Mobile operations that overlap with AT&T's existing service just like in the Verizon-Alltel merger a couple years ago. Presumably this will be to small regional carriers so choice is preserved for people in those areas. AT&T will probably need to agree to some kind of consumer price protection at the very least to keep AT&T prices at current levels or lower for a number of years and protect existing T-Mobile customer contracts. AT&T might also have to sell or spin off its TV and home internet operations. The issue of ridiculous text messaging fees might come up, but nothing will be done about them.

cjoh 15y ago
If they made AT&T agree to use sims and antennas compatible with Verizon's LTE network, that seems worthwhile.
- joelhaus 15y ago
  Absolutely. Device portability would add real competition to the market, but in reality, AT&T would never agree to that because their whole rationale for the merger is to reduce competition (per the leaked memo). Verizon would also take major issue with this and most likely not allow any such AT&T devices on their network... and if VZW did certify a device, they would only permit the most crippled hardware from AT&T on their network. True competition between the two telco giants is an exciting proposition though, hopefully this is eventually accomplished. Just look at what it did to the long-distance market: http://video.wttw.com/video/1949293907/ http://video.wttw.com/video/1949293907/ (this is a PBS documentary on MCI breaking up AT&T premiering this weekend--good timing!)
  - djeikyb 15y ago
    Here is the leaked memo I think you're talking about: https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0ByoTmm2HOgC_ZmM2NTNlYTYtOWY0NC00NTYwLWI0MzYtY2Y2NTY3MDYyZWE4&hl=en_US https://docs.google.com/viewer?a=v&pid=explorer&chro...
- ansy 15y ago
  There are at least a few problems with that happening from what I'm aware. 1) That would require Verizon's cooperation and it isn't the company under scrutiny. For all Verizon cares AT&T's merger can fail and those guys can get stuffed with the breakup bill. 2) Verizon and AT&T use almost completely different LTE frequencies. Although they are both in the 700mhz band, they have separate subsets between 700mhz and 800mhz that don't overlap much. 3) Verizon and AT&T currently only use LTE for data. Voice is still carried over the existing 3G network until some future date. Even then, whose network would these hybrid phones be designed to fall back on in the absence of LTE? All the hardware to support multiple network standards isn't free in terms of financial cost or design constraints. 4) If the US government really wanted spectrum to be shared in this way it would have enforced it when it freed up the 700mhz spectrum a few years ago instead of auctioning bits of it off to individual companies for virtually exclusive use.
- woobar 15y ago
  Verizon already uses GSM compatible SIM cards in their LTE devices. Same as in any at&t phone. Not sure what antennas you're talking about.
  - cjoh 15y ago
    To my understanding the antennas in the phones are incompatible though. What I'm aiming for here is what the FCC was aiming for when it released this spectrum: device/carrier interoperability.
mortenjorck 15y ago
I hope not. The concessions from the SBC-ATT merger five years ago dried up pretty quickly, but the lack of choice in local DSL providers is as fresh as the day the papers were signed.
OstiaAntica 15y ago
This is wrong. The DoJ is suing to BLOCK the deal, there's no opportunity for negotiations. It is up to the judge now.
- ansy 15y ago
  The deal may get blocked, but your argument and thinking are completely wrong. Just like in any criminal or civil trial in the United States both sides can settle and the plaintiff (i.e. the DOJ) can drop the suit. Once the plaintiff drops the suit the trial is done. The judge and court are immediately removed from the equation. Also, the DOJ just filed the suit. A lot of preparation needs to happen before a judge even decides if the court will hear the case. Much less actually go to trial and reach a decision. While the trial moves forward AT&T will desperately try to reach a settlement with the DOJ to get them to drop the suit. Taking a case all the way to a judge or jury decision is the least desirable for both sides. It costs way more in legal fees, mountains more at this level, and the trial could drag on for months or years. Then there is the appeals process. Horrifyingly expensive and time consuming and in the end AT&T could still end up losing. The DOJ has AT&T by the balls so if it wants something there's a good chance AT&T will agree to it now that the suit is in motion. And the only reason the DOJ got AT&T in this position is because it initiated this lawsuit. Without the lawsuit the DOJ had zero leverage. AT&T has enough skin in the game it might try to fight to the end, but it could be almost as bad as giving up and paying the fee if it won and twice as bad if it ended up losing. What is interesting is that AT&T is saying the DOJ didn't ask for concessions before filing the suit. Or maybe it did and AT&T didn't think the negotiations were going this badly. Either way, the DOJ probably wants more than it thought it would get with or without more leverage.

by ansy 15y ago

cjoh 15y ago

If they made AT&T agree to use sims and antennas compatible with Verizon's LTE network, that seems worthwhile.

joelhaus 15y ago
Absolutely. Device portability would add real competition to the market, but in reality, AT&T would never agree to that because their whole rationale for the merger is to reduce competition (per the leaked memo). Verizon would also take major issue with this and most likely not allow any such AT&T devices on their network... and if VZW did certify a device, they would only permit the most crippled hardware from AT&T on their network. True competition between the two telco giants is an exciting proposition though, hopefully this is eventually accomplished. Just look at what it did to the long-distance market: http://video.wttw.com/video/1949293907/ http://video.wttw.com/video/1949293907/ (this is a PBS documentary on MCI breaking up AT&T premiering this weekend--good timing!)
- djeikyb 15y ago
  Here is the leaked memo I think you're talking about: https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0ByoTmm2HOgC_ZmM2NTNlYTYtOWY0NC00NTYwLWI0MzYtY2Y2NTY3MDYyZWE4&hl=en_US https://docs.google.com/viewer?a=v&pid=explorer&chro...
ansy 15y ago
There are at least a few problems with that happening from what I'm aware. 1) That would require Verizon's cooperation and it isn't the company under scrutiny. For all Verizon cares AT&T's merger can fail and those guys can get stuffed with the breakup bill. 2) Verizon and AT&T use almost completely different LTE frequencies. Although they are both in the 700mhz band, they have separate subsets between 700mhz and 800mhz that don't overlap much. 3) Verizon and AT&T currently only use LTE for data. Voice is still carried over the existing 3G network until some future date. Even then, whose network would these hybrid phones be designed to fall back on in the absence of LTE? All the hardware to support multiple network standards isn't free in terms of financial cost or design constraints. 4) If the US government really wanted spectrum to be shared in this way it would have enforced it when it freed up the 700mhz spectrum a few years ago instead of auctioning bits of it off to individual companies for virtually exclusive use.
woobar 15y ago
Verizon already uses GSM compatible SIM cards in their LTE devices. Same as in any at&t phone. Not sure what antennas you're talking about.
- cjoh 15y ago
  To my understanding the antennas in the phones are incompatible though. What I'm aiming for here is what the FCC was aiming for when it released this spectrum: device/carrier interoperability.

mortenjorck 15y ago

I hope not. The concessions from the SBC-ATT merger five years ago dried up pretty quickly, but the lack of choice in local DSL providers is as fresh as the day the papers were signed.

OstiaAntica 15y ago

This is wrong. The DoJ is suing to BLOCK the deal, there's no opportunity for negotiations. It is up to the judge now.

ansy 15y ago
The deal may get blocked, but your argument and thinking are completely wrong. Just like in any criminal or civil trial in the United States both sides can settle and the plaintiff (i.e. the DOJ) can drop the suit. Once the plaintiff drops the suit the trial is done. The judge and court are immediately removed from the equation. Also, the DOJ just filed the suit. A lot of preparation needs to happen before a judge even decides if the court will hear the case. Much less actually go to trial and reach a decision. While the trial moves forward AT&T will desperately try to reach a settlement with the DOJ to get them to drop the suit. Taking a case all the way to a judge or jury decision is the least desirable for both sides. It costs way more in legal fees, mountains more at this level, and the trial could drag on for months or years. Then there is the appeals process. Horrifyingly expensive and time consuming and in the end AT&T could still end up losing. The DOJ has AT&T by the balls so if it wants something there's a good chance AT&T will agree to it now that the suit is in motion. And the only reason the DOJ got AT&T in this position is because it initiated this lawsuit. Without the lawsuit the DOJ had zero leverage. AT&T has enough skin in the game it might try to fight to the end, but it could be almost as bad as giving up and paying the fee if it won and twice as bad if it ended up losing. What is interesting is that AT&T is saying the DOJ didn't ask for concessions before filing the suit. Or maybe it did and AT&T didn't think the negotiations were going this badly. Either way, the DOJ probably wants more than it thought it would get with or without more leverage.