Choice Quotes From The AT&T And T-Mobile FCC Public Interest Filing

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After taking some time and reading the full Public Interest Filing AT&T and T-Mobile filed yesterday, I’ve put together a metric TON of choice quotes from the document to give some perspective. To preface these quotes, some of them require context (and I therefore urge you to read the whole filing found at the link at the end of the post) but in the interest of time and energy, I’ve tried to choose quotes that are self-explanatory. My own takeaway from this document is that:

  1. Both companies are better off with each other than apart.
  2. The document pretty much adopts a “woe is me” attitude for AT&T and that both companies are dead in the water without each other.
  3. AT&T desperately needs T-Mobile spectrum and T-Mobile doesn’t need T-Mobile spectrum since they are no longer a significant competitor in the marketplace.
  4. I’ve literally lost count of the number of times AT&T calls T-Mobile irrelevant in the market. Seriously, I’ve lost count.
  5. Leap, Cricket, US Cellular and MetroPCS have begun dominance in the value leader role that T-Mobile once held and as such, have lead toward the T-Mobile descent into a lack of relevancy.
  6. AT&T is far too worried about Verizon, Sprint and those “mavericks” like MetroPCS and Leap to worry about T-Mobile.
  7. AT&T believes T-Mobile has no clear path to an LTE rollout.
  8. The wireless world is doomed if they don’t merge. DOOMED.

 

  • T-Mobile USA and AT&T are not close competitors, and other providers already fill—or could easily move to fill—the competitive role T-Mobile USA occupies today.”
  • T-Mobile USA likewise faces capacity constraints in a number of key markets.  It also has no clear path to deploy LTE services because it has already dedicated its spectrum resources to today’s less spectrally efficient technologies.  T-Mobile USA also faces new questions about its long-term capital support, in part because its parent company, Deutsche Telekom, must dedicate significant capital resources to broadband deployment in Germany and the rest of Europe. Indeed, Deutsche Telekom recently announced that, in light of its capital constraints, T-Mobile USA can no longer rely on its parent for investment funding and must instead “fund its future itself.”
  • This transaction will also give TMobile USA’s 34 million customers access to LTE services that will surpass T-Mobile USA’s current services in performance and network efficiency.  In addition, T-Mobile USA’s customers will have greatly expanded in-home and rural coverage and rapid access to a broader device portfolio.  And, as in AT&T’s prior acquisitions, consumers will have the option to keep their current T-Mobile USA pricing plans for existing services.
  • T-Mobile USA’s network and spectrum resources will add substantial value to this highly competitive marketplace when they are combined with AT&T’s network and spectrum resources to produce the output-enhancing synergies discussed in this submission.  As a standalone company, however, T-Mobile USA would continue to face substantial commercial and spectrum-related challenges.  It confronts increased competition from industry mavericks such as MetroPCS, Leap, and others; its percentage of U.S. subscribers has been falling for nearly two years; and it has no clear path to LTE.
  • T-Mobile USA’s absence from the marketplace will not have a significant competitive impact, particularly vis-à-vis AT&T.  AT&T is more focused on Verizon and Sprint than on TMobile USA, and AT&T too is seeing increased competitive threats from rapidly growing mavericks like MetroPCS and Leap and other providers.  These other competitors can quickly replace the diminished market role T-Mobile USA plays today—and indeed have already begun to do so.
  • …this increase in network density will mean that the combined company’s GSM and UMTS networks will have greater capacity than the sum of the two companies’ separate networks
  • As noted, T-Mobile USA’s AWS spectrum is currently dedicated to relatively less efficient HSPA+ technology.  Over time, at a rate that will vary by market, the combined company will be able to (1) migrate T-Mobile USA subscribers off the
  • AWS spectrum to AT&T’s UMTS bands, which merger synergies will have made less congested, (2) upgrade them to LTE service, or (3) pursue some combination of these two. This process generally will take time because it will require the affected T-Mobile USA UMTS subscribers to obtain new handsets, given that their current handsets cannot provide UMTS service outside the AWS band and cannot provide LTE service on any band.  But the transaction eventually will enable AT&T to free up T-Mobile USA’s AWS spectrum for higher performing and more spectrally efficient LTE service.
  • Finally, as described above, T-Mobile USA has no clear path to providing LTE service with its current spectrum holdings because it is already serving millions of customers on its AWS spectrum using less spectrally efficient HSPA+ technologies.  This transaction will provide a clear path for migrating T-Mobile USA customers to more efficient LTE services, thereby enabling the combined company to further expand output.
  • And because AT&T will adopt the best practices of each company, AT&T expects that its customers will benefit from T-Mobile USA’s industry-leading customer care practices.
  • As T-Mobile USA’s UMTS subscribers migrate to the AT&T network, they too will benefit from better in-building penetration and broader coverage—indeed, more than double the geographic coverage for UMTS they have today.
  • Finally, the transaction will enhance the diversity of rate plans available to T-Mobile USA customers.  Consumers who are happy with their T-Mobile USA rate plans will be able to keep them, so they will enjoy the benefits of improved service quality and thus a lower quality adjusted price.  Moreover, T-Mobile USA customers who wish to consider other options will have access to AT&T’s broad selection of rate plans, such as basic/senior plans available to customers 65 years and older, individual entry-level plans starting as low as 200 minutes per month, and plans with expanded weekend hours, and rollover minutes. addition, they will benefit from free mobile-to-mobile calling to a substantially expanded customer base.
  • To be clear, consumers will not have to make any changes to their T-Mobile USA services or devices upon the close of this transaction.  Their handsets will continue to work, and they can remain on their current rate plans.  The transaction merely gives them the highly valuable option to take advantage of more advanced service technologies, a broader range of devices, and additional rate plans.
  • T-Mobile USA has faltered because, among its other challenges, it occupies an uncomfortable position between higher-end providers and value competitors.  On the one hand, it has been undersold by MetroPCS, Leap, and others in the provision of budget-oriented services. And on the other hand, it “lacks a clear path to deployment of LTE that is necessary for it to compete robustly in the U.S. longer term,” particularly for high-end mobile broadband services. , “T-Mobile’s competitive position is probably best summarized in J.P. Morgan’s recent comment that T-Mobile is ‘struggling for relevance.’”  For all of these reasons, it is not a significant competitive constraint on AT&T.
  • As discussed, DT has turned increasing attention to its European operations at the expense of its American subsidiary and, in January 2011, announced that T-Mobile USA can no longer rely on its parent for investment support and must instead “fund its future itself.”
  • This transaction also will not harm competition for business customers because AT&T and T-Mobile USA are not frequent or close competitors in that space.
  • T-Mobile USA has a more limited offering, since it sells more basic wireless services and has no wireline operations.  In short, T-Mobile USA is not a significant player in this customer segment, and where it does appear, there are other, stronger competitors involved as well.
  • For all of these reasons, while consumers will benefit tremendously from the integration of these two companies’ networks, the elimination of T-Mobile USA as a standalone provider will not substantially reduce competition in any relevant market.

PDF Public Interest Filing Courtesy of Thisismynext.com. You can read the full filing here.

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  • http://twitter.com/LTEstyles LTEstyles

    Let’s be realistic guys, I for one don’t want this merger to go through, but here we are trying to fight this merger when it is CLEAR t-mobile doesn’t want us, if this deal doesnt go through they will probably sell to the next person in line…DT doesn’t want T-MOBILE USA, i bet they might even try to sell us to Walmart or something.

    • Googleplex

      It’s not that T-Mobile doesn’t want us – it’s that DT has seen a chance to further its own interests. DT is selling T-Mobile, and one of the benefits of the sale, aside from the 40 billion dollars, is an 8% share of AT&T and a place on the AT&T Board. That’s a pretty big thing, as it would make DT the largest shareholder in AT&T.

    • Jeffreygreen1315

      @LTEstyles….PLEASE sell us to Walmart and NOT AT&T!!!!!!!!!!!!!!

  • TM97

    DT doesn’t want T-Mobile USA anymore. T-Mobile USA had a chance to make things really happen back about 5 or 6 years ago. Instead, poor management by former AT&T rejects doomed this company.

    Its almost as if AT&T fired their worst employee’s then gave them recommendations to come to T-Mobile, but their only real goal was to be moles and gremlins within the company.

    The average engineering employee has done more with this network, with less money and equipment, then many of their largest competitors. They had, and continue to have a customer centric approach to wireless, which made this company great. But failed marketing (what marketing?), business, and sales strategies only compiled to make a growing problem worse. While T-Mobile was launching EDGE in most markets nationally, the big two wireless carriers were readying for an impressive 3G/4G build out.

    The only reason AT&T has its problems are due to its union constraints, and the fact that their network is SLAMMED with data users. Verizon hasn’t run into this problem on their 4G network yet, because they don’t have the devices or the users on it. In a year they’ll have the same issue.

    Part of the United States problem when it comes to cellular is the fact that we have to many constraints spectrum wise. The federal government wants an metric **** ton of money to lease anything, and then you constantly have to jump through regulatory hoops.

    If you want a viable, third party cellular company in the United States, quit opposing the AT&T T-Mobile merger, and start writing your congressmen saying you want them to lower restrictions on tower height, locations, transmission power, and frequency use. Otherwise it will always boil down to one or two big competitors, while everyone else is fighting for the scraps from the big boy table. Combined, AT&T and Verizon have a super majority of the cellular customers in this country. If they sense a threat they just buy it.

    • Anonymous

      Excellent post TM97.

  • Anonymous

    Meanwhile… back at the fort where granny is fighting off the martians… Per the Kansas City Star, this great update:

    Sprint Nextel Corp. is taking the battle against AT&T Inc.’s proposed merger with T-Mobile USA to Washington. It’s signing up lobbyists to man its barricades and standing in alliance with consumer groups.

    Why is Sprint fighting so hard when conventional wisdom (aka “they”) sees regulators ultimately giving the deal an OK? Perhaps to sway the terms of the deal regulators might approve.

    “What they’re doing is way more about concessions than about any real hope of stopping the deal,” said Timm Bechter, a telecommunications analyst at Waddell & Reed. He falls in with other analysts who think the Federal Communications Commission and Justice Department will eventually give AT&T the nod to swallow T-Mobile.

    Overland Park-based Sprint, led by full-throated complaints from CEO Dan Hesse, argues that combining the second-largest and fourth-largest cellphone companies in the country would be bad for consumers. A spokesman said Sprint’s lobbying charge is not about negotiating the conditions of the merger. Rather, the company contends that the government shouldn’t approve the deal.

    Hesse and others insist a larger AT&T and Verizon would control up to 80 percent of the wireless market. That makes the shaky position of Sprint even wobblier. Hesse, now in step with some consumer groups, said it could destroy competition that leads to improved service and lower prices. But in papers filed with the FCC last week, AT&T parroted many of the goals that the Obama administration has voiced for the wireless industry.

    The carrier said combining wireless spectrum with T-Mobile would improve data-heavy service in congested urban areas — places such as New York and San Francisco where its networks have left smartphone users complaining about spotty connections. AT&T also argues that the merger would speed the deployment of wireless broadband service, an oft-repeated objective of the FCC under President Barack Obama.

    Bechter and others say those arguments are likely to prevail, especially when teamed with AT&T’s political muscle. But merger approval would probably come with concessions aimed at preventing a monopoly. AT&T and T-Mobile will almost certainly have to agree to divestiture — auctioning off subscribers and wireless spectrum to other carriers. (Remember when I said that both Companies have calculated to “losing” 7.5 million subscribers on acquisition approval. I predict that the 7.5 million subscribers will be the T-Mobile customers who would not stay sign on with AT&T anyway. And AT&T will use a divestiture to get rid of T-Mobile “cheapskates.”)

    Sprint and industry leader Verizon figure most prominently among those to bid for the assets — at prices AT&T will be forced to accept.

    So the ramped-up lobbying charge would serve Sprint in two ways even it fails to stop the merger.

    First, lobbyists could push regulators to demand a larger sell-off (divestiture). Second, it could give Sprint insight about, and perhaps influence over, what clusters of subscribers and spectrum land on the auction block.

    “This is really not a regulatory fight or debate between AT&T and Sprint. This is a fight between AT&T and everybody else,” said John Taylor, a Sprint spokesman in Washington. “But Sprint is going to be participating in that debate.”

    “If everyone thinks (the acquisition) is going forward, the lobbying is going to be about the terms, the provisions. … What are the guts of the deal going to look like?” said Dave Levinthal, a spokesman for the Center for Responsive Politics and a critic of the pay-to-play lobbying culture in Washington. “You’re looking for people with both the partisan connections and who know the specialty.”

    Who in this battle has a financial interest in the companies? Seven members of Congress own more than $100,000 in AT&T stock. Sen. John Kerry, a Massachusetts Democrat, owns more than $1.2 million. No one in Congress owns more than $65,000 of Sprint stock.

    Among those standing on Sprint’s side in opposing the merger is Free Press, a self-styled public interest lobbying group. It sees Sprint as outgunned in the fight, especially because Verizon has remained neutral.
    “The size of their (Sprint’s) megaphone will be so small in comparison to AT&T,” said Derek Turner, the research director at Free Press. “As time goes on, the talk will switch to the size of divestiture. There may be some room to move things there.”

    The FCC will lead the regulatory examination. But it will also work with Justice Department lawyers, who focus on whether such deals violate antitrust laws. Critics, Sprint’s Hesse chief among them, warn of the creation of a duopoly where the biggest carriers would lose motivation to shore up their networks.

    Regulators at the FCC deal with the more nebulous issue of whether the acquisition would serve the public interest. That allows it to look at issues ranging from pricing to the likelihood the change would spur innovation to whether more rural areas would get cell signals.

    It could mimic the deal approved in January that mated Comcast and NBC Universal. The FCC forced the merged company to offer much of its content for distribution on the channels of competitors.

    Like the negotiations over that merger, the AT&T/T-Mobile proposal is expected to take more than a year to finalize. It’s almost certain to come under scrutiny in the Republican-controlled House, where many lawmakers think regulators go too far in setting conditions for such deals. Two House committees are planning hearings on FCC reform, discussions that could look at the conditions of the AT&T merger.

    Will pouring millions into lobbying help Sprint?

    “Nothing in politics is certain,” said Lisa Gilbert of Public Citizen’s Congress Watch. “On the other hand, it’s fairly well documented that lobbyists who have revolving-door connections or are backed by campaign dollars have more power.”

    And the millions spent on lobbyists seem small in the context of a merger that might threaten Sprint’s survival or the billions of dollars in business that could spring from a government-ordered sell-off of assets.

    “Millions of dollars is still real money,” said Bechter, the industry analyst. “But it’s relative.”

    • TM97

      AT&T will likely have to give up some spectrum, divest some customers, and offer sweetheart roaming deals to minor carriers.

      My assumption is that they’ll give up a large amount of T-Mobiles AWS spectrum. They don’t need the 2100 and 1700 MHz band, they want the 1900 band that T-Mobile has for further growth now, and will be pushing 4G on the 700MHz band that they have significant holdings in.

      Lower frequency means greater in building penetration, and you can haver towers 10 miles apart, instead of 5.

      That will meet Obama’s goal of getting broadband to 97% of Americans. Can you say campaign goal?

      Sprint is fighting to stay relevant, when they are already irrelevant. Its like they are trying to bail out the ship when its already 10 feet below the surface.

      • Anonymous

        Ditto on the sweetheart deals to minor carriers. For example, Metro PCS wants two things out of this acquisition, the same or lower roaming price it currently pays the majors, because right now Metro PCS is at the mercy of whatever AT&T, for example, charges it for coverage. In other words, if roaming prices are increased, Metro PCS’s prices have to increase.

        Second, and this is what the minor carriers as a group want, Metro PCS wants access to better (or best) handsets. So AT&T would have to agree to stop with the exclusive deals it cuts with manufacturers, that they will not make and sell phones to Metro PCS with specs similar to AT&T’s superphones.

        Metro PCS and regional carriers have long complained that what has hurt business growth are these contracts that prohibit them from getting nice phones, even if they are willing to pay for them.

        To be sure, from the distance you can always tell who the “prepaid” subscribers are, just look to see if they are using clam shell phones, or phones made to look like a deluxe smartphone.

        Sidenote: It was only this year that Metro PCS finally got an Android smartphone from Samsung, the Indulge, that by current common specs is not a superphone, but by 2010 standards is quite a nice smartphone (3.5″ display, full QWERTY slider, 4G, 2.2 Android, etc. With the exception of it being 4G it’s similar to the MyTouch Slide). Moreover, both Metro PCS and Boost Mobile are now selling BlackBerry Curves with BlackBerry service. These are big changes from the old days of 2009-10 of only feature phones being available.

        http://www.metropcs.com/shop/phonelist.aspx

        http://plans.boostmobile.com/phones.php

        So as this article says, and as you eloquently add, the noise small carriers are making is NOT to stop the deal, rather it’s so each can partake in the feast.

        After all, this acquisition is a once-in-a-lifetime opportunity for everyone in wireless to pull up a chair and dine at the big boy’s table, where the menu says concessions will be the main course. This is far better than in the past, the carriers sitting under the table hoping some scraps are tossed their way, like my dogs do when it’s steak night.

  • Anonymous

    .vipshopper.us

  • Brian

    I don’t know why Orange Mobile in Europe doesn’t buy T-mobile! If Deutche doesn’t want it anymore, Orange can make it work. AT&T already said they want to use the AWS band for LTE. They DO NOT own enough of the 700mhz band in any city to make a LTE network on it (they only have a bit of the 700 in some cities). AT&T has a patchwork right now for 4G LTE. They do not have enough spectrum for a 4G build out. T-mobile AWS band covers every major city right NOW (they would have to shut down T-mobile’s 3G network to do it but they don’t care about T-mobile people) . AT&T doesn’t need to buy spectrum or build towers, it is already pre-done with Tmo AWS towers.

    T-mobile has options. They can buy Clearwire if they need LTE spectrum. If the buyout fails, ATT must give Tmo 3 billion dollars, service agreements across the USA and all the little AWS specturm that ATT already owns. The 3 billion would help tmo buy clearwire.

    It’s better for the consumer if the deal doesn’t go through. AT&T is too expensive and I don’t care about Iphone customers who need mega bandwidth.

    AT&T needs to just buy more of it’s own spectrum and build itself out. They have made a ton of money off the Iphone, they are not poor.

    • Anonymous

      Even at $39 billion DT is getting less than what it paid for T-Mobile way back. (In today’s dollars DT paid about $51 billion for TMOUS). Adding to that amount the profit TMOUS has realized running the U.S. operation does not help the bottom line.

      Moreover DT posted a loss last year. This $39 billion will make DT execs shine and save their jobs.

      DT wants out of the U.S. since it was a lousy investment and it needs the money. It does not see anything on the plus side of the column justifying staying here.