AT&T Merger: More Heat

Posted by Sam Churchill on

Minnesota Sen. Al Franken on Tuesday formally voiced his objection to the merger of AT&T and T-Mobile and urged regulators to reject the deal.

“This transaction is not in the public interest,” Sen. Franken said in a statement. “If approved, it would result in greatly reduced competition, the potential loss of thousands of jobs, higher consumer prices, and less innovation in technology. I urge the FCC and the DOJ to deny AT&T’s application for approval of its acquisition of T-Mobile.”

In a 24-page filing with the Department of Justice (pdf) and the FCC, Franken argued that allowing the deal to proceed would create a duopoly between AT&T and Verizon Wireless, “substantially lessen competition” and would harm the economy. A deal with conditions would not assuage his concerns, Franken said, and both agencies should “deny this proposal in its entirety.”

AT&T should instead spend $39 billion “to build out its existing spectrum and to deploy additional technologies to make more efficient use of its current spectrum holdings,” Franken said.

Senator Herb Kohl, chairman of the Senate Subcommittee on Antitrust, has chimed in with opposition to the deal.

On the flip side, more than six dozen lawmakers have expressed support for the merger as have several high-tech giants such as Microsoft and Facebook.

Late yesterday AT&T submitted to the FCC a new economic model. The analysis, which AT&T developed after the FCC began reviewing the merger, focuses on how the merger would lower costs and, ultimately, pricing as the two companies gained efficiencies through combining their networks.

In response, Sprint says: “It does nothing to change the negative consequences of the takeover for consumers in the form of higher prices, reduced innovation and decreased investment. The facts do not justify allowing that to happen, and we believe the ongoing investigations by the Department of Justice, the Federal Communications Commission and 11 state attorneys general and various state regulatory commissions will reach the same conclusions.”

Verizon COO Lowell McAdam, though, thinks otherwise. He thinks the deal will be allowed to close, though he worries the government could place restrictions on the new company that could impact Big Red as welll.

The AT&T merger, of course, won’t create new spectrum, and T-Mobile is using most of their AWS spectrum now. The AT&T merger may gang available spectrum together, however, and lower the number of necessary towers. Stock holders may be the primary beneficiaries of that move.

The DOJ and the FCC are reviewing the merger. It’s expected to take the agencies a year to complete their evaluation of the merger. The FCC said this week that it has stopped the clock on its review as it obtains additional information from AT&T.

AT&T might also buy 10 MHz of 700 MHz “D-Block” spectrum for one tenth the cost. That would generate generate money for the Treasury. Right now, Congress seems bent on giving away the spectrum to first responders, and promising to spend tens of billions of dollars in taxpayer money to build out the infrastructure.

How likely is that to happen?

Meanwhile, T-Mobile is offering its first dual-core Android smartphone for $0 (with a contract).

The T-Mobile G2x by LG features Gingerbread 2.3.3 and is the U.S. version of LG’s Optimus 2X. The T-Mobile G2x is powered by NVIDIA Tegra 2 processor, which is now quickly becoming the standard processor of Honeycomb tablets.

Posted by Sam Churchill on Wednesday, July 27th, 2011 at 5:40 am .

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