Our Lead today comes from a Blog. And, we’re commenting on the regulatory front.
AT&T has withdrawn its application to merge with T-Mobile. That’s big news in the regulatory world. But, it also may have political implications for the Administration of President Barack Obama.
Following the Federal Communications Commission’s decision to send the $39-billion proposed merger of AT&T and T-Mobile USA to an administrative hearing on Tuesday, AT&T has withdrawn its official application to combine its spectrum with T-Mobile’s.
Source: Stacey Higginbotham, “AT&T backs off the T-Mobile fight,” GIGAOM.COM
Higginbotham notes further in her post: “[t]he company also said that it will take a $4-billion charge against earnings should the deal fall through.”
The deal could be dead. As noted by Seth Weintraub (quote):
But, AT&T has taken a $4B pre-tax charge in recognition that the deal isn’t likely to be going through and they are likely going to have to pay T-Mobile for the effort as part of the original merger agreement. That means the deal is pretty much over, at least in the eyes of AT&T’s own accountants.
Source: Seth Weintraub, “AT&T-T-Mobile Merger looks to be over, companies pursuing a tactical workout,” 9TO5MAC.COM
Justice Department Suit Continues
The U. S. Department of Justice filed an antitrust suit to block the merger.
As Higginbotham has written further in her post (quote):
AT&T still plans to fight the antitrust case that the Department of Justice has filed and has not said it plans to walk away from its deal just yet, but it clearly has realized that the forces arrayed against this combination will be hard to quell. As I noted on Tuesday, unless AT&T or T-Mobile pull the plug between now and then, the next big date should be the Department of Justice lawsuit hearing in February.
The administrative phase of this matter before the FCC has concluded. It could be reopened later.
The immediate beneficiary of the withdrawal of the merger approval application apparently is Verizon. Kevin Fitchard argues (quote):
Of all the possible outcomes in the AT&T-Mo fallout, the FCC approving the merger with a laundry list of new regulations would have been the worst-case scenario for Verizon. It appears to have dodged a bullet.
The FCC could have required AT&T to divest spectrum and networks in numerous markets; FCC staffers had competitive concerns in 99 of the top 100 markets. It could have imposed deadlines for deployments and stricter requirements on the population and geographic areas those networks covered. It might even have dictated commercial terms on how it used that spectrum, spelling out the terms of data roaming agreements and maybe even imposing restrictions on what AT&T could charge for data service. All of these would have been anathema to Verizon.
Why? Because whatever restrictions and stipulations AT&T is forced to abide by if this merger goes through would return to haunt Verizon down the road. Verizon may be sitting pretty on a big fat LTE network today, but it readily admits it must go back to the market for more spectrum at some point.
Source: Kevin Fitchard, “Why Verizon needs AT&T-Mo to just disappear,” GIGAOM.COM
Possible Political Implications
MJB’s take is that continuance of the Justice Department’s antitrust suit could have some political implications for the Obama Administration.
If AT&T prevails in the litigation, or if the suit is settled, AT&T can reboot the process and file another merger approval application with the FCC. A settlement of the suit probably would require the approval of Eric Holder, the Attorney General, who is one of the top Obama Administration cabinet officials and political appointees who is close to the President.
It can be expected that the handling of the litigation, particularly if the Justice Department loses, or the resolution of the case by a settlement, will make Holder a political target for criticism by the GOP and close scrutiny by Congressional committees in the GOP controlled House of Representatives.
That would not be good news for the President in an election year.
On the Sidebar, under MJB News VIDEOS, we have uploaded a C-SPAN VIDEO from The Communicators segment, hosted by Peter Slen, on 09-18-2011, in which a panel discussed the implications of the AT&T/Mo merger.
The VIDEO is on C-SPAN’s YouTube Channel, and is described as follows (quote);
On The Communicators, Vonya McCann, senior vice president for government affairs at Sprint Nextel, and Larry Cohen, president of the Communications Workers of America, discuss the proposed merger of AT&T and T-Mobile. The guests will discuss the merger’s impact on the wireless industry, on jobs in the U.S. and on prices consumers pay for wireless service
Source: C-SPAN YOUTUBE CHANNEL