(Updated With FCC Statement, Full Text Of DOJ Statement) Department Of Justice Moving To Block AT&T/T-Mobile Takeover

Updated: Thisismynext received a statement from FCC Chairman Julius Genachowski and it’s not looking good for AT&T:

By filing suit today, the Department of Justice has concluded that AT&T’s acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws. Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile.  Competition fosters consumer benefits, including more choices, better service and lower prices.

We’re very short on details but Bloomberg and the Wall Street Journal are reporting that the Department of Justice is attempting to block the AT&T/T-Mobile merger. The DOJ has filed an anti-trust complaint.

The Justice Department complaint was filed today in federal court inWashington. The U.S. is seeking a declaration that Dallas-based AT&T’s takeover of T-Mobile, a unit of Deutsche Telekom AG (DTE), would violate U.S. antitrust law and a court order blocking any arrangement implementing the deal.

“AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market,” the U.S. said in its filing.

Developing…

Bloomberg

Justice Department Files Antitrust Lawsuit to Block AT&T’s Acquisition of T-Mobile

Transaction Would Reduce Competition in Mobile Wireless Telecommunications Services, Resulting in Higher Prices, Poorer Quality Services, Fewer Choices and Fewer Innovative Products for Millions of American Consumers

WASHINGTON – The Department of Justice today filed a civil antitrust lawsuit to block AT&T Inc.’s proposed acquisition of T-Mobile USA Inc.   The department said that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives.

The department’s lawsuit, filed in U.S. District Court for the District of Columbia, seeks to prevent AT&T from acquiring T-Mobile from Deutsche Telekom AG.

“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole.   “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers.   This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.   “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

Mobile wireless telecommunications services play a critical role in the way Americans live and work, with more than 300 million feature phones, smart phones, data cards, tablets and other mobile wireless devices in service today.   Four nationwide providers of these services – AT&T, T-Mobile, Sprint and Verizon – account for more than 90 percent of mobile wireless connections.   The proposed acquisition would combine two of those four, eliminating from the market T-Mobile, a firm that historically has been a value provider, offering particularly aggressive pricing.

According to the complaint, AT&T and T-Mobile compete head to head nationwide, including in 97 of the nation’s largest 100 cellular marketing areas.   They also compete nationwide to attract business and government customers.  AT&T’s acquisition of T-Mobile would eliminate a company that has been a disruptive force through low pricing and innovation by competing aggressively in the mobile wireless telecommunications services marketplace.

The complaint cites a T-Mobile document in which T-Mobile explains that it has been responsible for a number of significant “firsts” in the U.S. mobile wireless industry, including the first handset using the Android operating system, Blackberry wireless email, the Sidekick, national Wi-Fi “hotspot” access, and a variety of unlimited service plans.   T-Mobile was also the first company to roll out a nationwide high-speed data network based on advanced HSPA+ (High-Speed Packet Access) technology.  The complaint states that by January 2011, an AT&T employee was observing that “[T-Mobile] was first to have HSPA+ devices in their portfolio…we added them in reaction to potential loss of speed claims.”

The complaint details other ways that AT&T felt competitive pressure from T-Mobile.   The complaint quotes T-Mobile documents describing the company’s important role in the market:

  • T-Mobile sees itself as “the No. 1 value challenger of the established big guys in the market and as well positioned in a consolidated 4-player national market”; and
  • T-Mobile’s strategy is to “attack incumbents and find innovative ways to overcome scale disadvantages.   [T-Mobile] will be faster, more agile, and scrappy, with diligence on decisions and costs both big and small.   Our approach to market will not be conventional, and we will push to the boundaries where possible. . . . [T-Mobile] will champion the customer and break down industry barriers with innovations. . . .”

The complaint also states that regional providers face significant competitive limitations, largely stemming from their lack of national networks, and are therefore limited in their ability to compete with the four national carriers.   And, the department said that any potential entry from a new mobile wireless telecommunications services provider would be unable to offset the transaction’s anticompetitive effects because it would be difficult, time-consuming and expensive, requiring spectrum licenses and the construction of a network.

The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction.   The department concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers.   Moreover, the department said that AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor.

 

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  • ItsMichaelNotMike

    Some great comments in here, but many people are confused about what’s going on with the DOJ lawsuit (what it means).  I am working on another matter, but will weigh in on this later.

    For now, as much as many people hate Sprint, you all should be kissing Dan Hesse’s feet.  He pretty much has led the fight in opposing this deal (he even has a war room dedicated to this fight) and the court filing indicates the DOJ “adopted” Sprint’s arguments. (Always flattering when someone does that.)

    Knowing the DOJ had the biggest foot to squish AT&T’s acquisition bug, Hesse has been pushing the DOJ to file an antitrust suit.  Hesse was so sure his prodding the DOJ would pay off that when in July 2011 DOJ antitrust chief Christine Varney announced her August departure to Cravath Swaine (a white shoe law firm), Hesse went on record that he had confidence the antitrust division and Varney’s successor would block the deal. Looks like Hesse was right.  Hesse must be absolutely giddy right now.

    By the way, the government is NOT saying T-Mobile can’t do a deal, it’s saying that AT&T can’t be the buyer.

    This is devastating news for T-Mobile (DT) because DT really, really, really, really wanted that $39 billion.  No one else is going to offer that kind of money.  T-Mobile is realistically worth about $12 billion to $15 billion.

    The AT&T deal was going to save some people at DT from being fired.  I expect to see their heads rolling now. Don’t feel any sympathy for them.  They were basically willing to sheetcan T-Mobile employees and screw over T-Mobile customers simply to save their jobs and hand a windfall to DT shareholders.

  • http://pulse.yahoo.com/_FY5YIPKTMK6UF42HYGK4MRAF5Q Ben

    Not to worry, there is an evil MBA somewhere plotting a way to engineer a career boost and a big bonus from a merger or acquisition involving T-Mobile. Once they’re in play it’s just a matter of time.

  • http://pulse.yahoo.com/_FY5YIPKTMK6UF42HYGK4MRAF5Q Ben

    Not to worry, there is an evil MBA somewhere plotting a way to engineer a career boost and a big bonus from a merger or acquisition involving T-Mobile. Once they’re in play it’s just a matter of time.

  • Lcc1_

    wheres google when TMo needs a buyer? Theyve pretty much bought everything else…come on google.

  • Lcc1_

    wheres google when TMo needs a buyer? Theyve pretty much bought everything else…come on google.

  • Guest

    I think ensuring AT&T doesn’t get a hold of T-Mobile is a victory. I’m not sure we’re out of the park, yet, but it’s a step in the right direction. 

    TMobile customers are not out looking for big huge fees, which is what AT&T will provide, they are seeking the best deal. This is NOT the best deal. 

    DT wants to get rid of TMobile. They’ve said it and they WILL do it. The question isn’t what will happen to Tmobile, it’s what will happen to its customers… 

    • Anonymous

      We will all die !! Look other companies have an interest in TMO . Even Google inquired . 39 billion dollars shut out everyone . TMO is worth much less than 39 billion . It was a power move . If the merger goes through they will get to raise rates . Verizon will go right along . Sprint would die . They are just to in debt to even merge . 

    • Bladesjunk

      Businesses should never be run by consumers.  That was T-Mobiles first downfall.  Consumers want cheap and free but don’t care about what it takes for a business to be profitable and stay afloat.  In the end, the consumer screaming that they don’t want AT&T to buy T-Mobile are the individuals that have been the cause of the company’s poor profitability.

      People responsible for the company will continue to attempt and have the company bought.  DT is putting them in a position to do so.  It is bad business to keep sinking money into a company that does not turn a profit or even keep itself flat.

      If DOJ wins then it will be impossible for any other mergers/buyouts.  The company will slowly bankrupt itself and then the subscribers will be forced to move onto either the main wireless companies (Verizon/AT&T) or the ‘prepaid’ companies (Cricket and Metro).  

      I suspect that if the merger, acquisition, does not take place, then T-Mobile will take the MetroPCS style of service.  They will shut down all call centers, shut down stores, hire uneducated salespeople, have local HR/IT/Engineers, low-end devices for full MRSP, no bills, no frills.  It is the only way for them to even be able to keep the company in the game.

    • Bladesjunk

      Businesses should never be run by consumers.  That was T-Mobiles first downfall.  Consumers want cheap and free but don’t care about what it takes for a business to be profitable and stay afloat.  In the end, the consumer screaming that they don’t want AT&T to buy T-Mobile are the individuals that have been the cause of the company’s poor profitability.

      People responsible for the company will continue to attempt and have the company bought.  DT is putting them in a position to do so.  It is bad business to keep sinking money into a company that does not turn a profit or even keep itself flat.

      If DOJ wins then it will be impossible for any other mergers/buyouts.  The company will slowly bankrupt itself and then the subscribers will be forced to move onto either the main wireless companies (Verizon/AT&T) or the ‘prepaid’ companies (Cricket and Metro).  

      I suspect that if the merger, acquisition, does not take place, then T-Mobile will take the MetroPCS style of service.  They will shut down all call centers, shut down stores, hire uneducated salespeople, have local HR/IT/Engineers, low-end devices for full MRSP, no bills, no frills.  It is the only way for them to even be able to keep the company in the game.

  • Guest

    I think ensuring AT&T doesn’t get a hold of T-Mobile is a victory. I’m not sure we’re out of the park, yet, but it’s a step in the right direction. 

    TMobile customers are not out looking for big huge fees, which is what AT&T will provide, they are seeking the best deal. This is NOT the best deal. 

    DT wants to get rid of TMobile. They’ve said it and they WILL do it. The question isn’t what will happen to Tmobile, it’s what will happen to its customers… 

  • Guest

    I think ensuring AT&T doesn’t get a hold of T-Mobile is a victory. I’m not sure we’re out of the park, yet, but it’s a step in the right direction. 

    TMobile customers are not out looking for big huge fees, which is what AT&T will provide, they are seeking the best deal. This is NOT the best deal. 

    DT wants to get rid of TMobile. They’ve said it and they WILL do it. The question isn’t what will happen to Tmobile, it’s what will happen to its customers… 

  • Susank

    Tmobile can be bought by Orange Mobile (France) or Telefonica /Spain (both bigger than AT&T). Both run their companies better than the Germans (DT) too.

  • Therealmikebrown

    Let’s go Google. Time to get into wireless.

    • Guest

      No! Google is big enough. They are invasive enough. They are nothing short of corrupt. I would not like a carrier full of Android phones and little else, either. 

      • https://plus.google.com/102862831744598656090/about Wesley Griffiths

        “They are nothing short of corrupt.” I call BS on this statement. None of us know how much corruption, if any, is in any of these companies. Google competes with Apple, RIM and Microsoft in the phone/OS business. They compete with Microsoft, Yahoo, Ask and AOL in the search business. They compete with Microsoft, Apple, Roku and others in the TV software/entertainment business. They even compete with Apple, Microsoft, Amazon, Blockbuster, Netflix, Barns & Noble, MySpace, Facebook and many more in the book, movie rental, social networking and app businesses. What says Google is any more or less corrupt than any of the others? People choose what they like best in any market, and it would be the same if Google got into the phone carrier business. I don’t believe they would get into this business, though, because they want all the carriers to provide Android phones throughout the world. This would not be as likely to happen if Google owned their own carrier.

    • Guest

      No! Google is big enough. They are invasive enough. They are nothing short of corrupt. I would not like a carrier full of Android phones and little else, either. 

  • William Cron

    So, if AT&T is the Death Star, does that make Sprit the Rebel Alliance?

    • TouchedMeHere

      no it makes them the Hutts.

  • tmofan99

    Suck on that AT&T, and pay up! Time to build up the network and crank up that LTE. I’m pumped!

  • tmofan99

    Suck on that AT&T, and pay up! Time to build up the network and crank up that LTE. I’m pumped!

  • tmofan99

    Suck on that AT&T, and pay up! Time to build up the network and crank up that LTE. I’m pumped!

  • technerd

    Does this mean T-mobile iPhone soon? It better! I’m tired of EDGE speeds!

  • Anonymous

    This is excellent news to hear. It’s doubtful that AT&T can win this court battle. According to former FCC chair Reed Hundt, he says “The Department of Justice will prevail. The Justice
    Department in its entire history has never lost a telecom case of this
    sort.” To which I say, oh yeah! Also, as David recently updated, the current FCC chair has serious concerns about the deal as well.

    T-Mo will continue to operate and may have others attempt to buy it but until that happens, DT has no choice but to continue to let it run. They can’t just dissolve the company as it would be a huge loss for them. Either someone who is not AT&T will pick them up, or they will be the same company we have known (only hopefully with more aggressive marketing and they’ll stop changing plans every 2 months).

    Personally, this news has made my day. Now give us Nexus Prime, iPhone 5, and actual specs on the upcoming Hercules and we’ll be happier customers.

  • http://twitter.com/SParKlngCyaNide SparklingCyanide

    just got REAL!!  GOod job United States Government(for once)).  ha, not so Fast Att!  ; P

  • http://twitter.com/SParKlngCyaNide SparklingCyanide

    just got REAL!!  GOod job United States Government(for once)).  ha, not so Fast Att!  ; P

  • http://twitter.com/KARMA773 Karma

    this is good news, thanks DOJ for protecting the consumers not these greedy bastard AT&T company

  • http://twitter.com/KARMA773 Karma

    this is good news, thanks DOJ for protecting the consumers not these greedy bastard AT&T company

  • http://twitter.com/KARMA773 Karma

    i’d rather see tmo vanish from US market than being owned by another US carrier, be it AT&T or any company. why? i will save on ETC, but i still prefer TMO to stay

  • http://twitter.com/KARMA773 Karma

    i’d rather see tmo vanish from US market than being owned by another US carrier, be it AT&T or any company. why? i will save on ETC, but i still prefer TMO to stay

  • Steve

     Interesting News Article about T-mobile’s Woes
    NEW YORK (AP) — The Justice Department’s move to block AT&T Inc. from buying T-Mobile USA is motivated by the desire to keep a low-priced competitor in the game. But that’s a game T-Mobile is losing.Despite low prices and a peppy pitchwoman in a polka-dot dress, T-Mobile customers have been fleeing to other carriers in the last year and a half.T-Mobile’s 33.6 million customers may be relieved that the federal government is trying to block the merger, so they can keep their wireless service plans. But in the long run, T-Mobile is in an unsustainable position. Analysts say the company’s past decisions have painted it into a corner.The No. 4 wireless carrier is being squeezed by competitors from two directions. At the high end of the market, it can’t compete with Verizon Wireless and AT&T Inc., the market leader and no. 2, respectively. At the low end, T-Mobile is struggling against competitors like Sprint Nextel Corp., which sells government-subsidized “lifeline” service, and MetroPCS Holdings Corp., which targets urban, working class consumers with cheap “unlimited” plans.Essentially, T-Mobile is seen as a cheap brand by those who can afford better, and as an expensive one by those who pinch every penny.”We’re stuck in the middle from a brand point of view,” T-Mobile CEO Philipp Humm said in January.The most valuable customers, the ones who buy smartphones and sign up for two-year contracts with lucrative data plans, are leaving T-Mobile the fastest.It’s not because T-Mobile’s customers are particularly dissatisfied with the service — they like their provider better than AT&T customers theirs, according to the American Customer Satisfaction Index.Instead, the lure of the iPhone and wider network coverage is what draws high-paying customers to AT&T and Verizon.So, even though T-Mobile is profitable, its revenue is shrinking fast — in the latest quarter, it was down to the level of 2007.Customer flight could speed up even more this fall, if Sprint gets to start selling the iPhone, as The Wall Street Journal reported recently. That would make T-Mobile the only one of the four national wireless carriers that doesn’t sell Apple Inc.’s coveted phone.In about two years, T-Mobile will face another problem: limited wireless spectrum, or space on the airwaves. While other carriers have been bulking up their spectrum holdings in the last five years, T-Mobile stayed mostly on the sidelines. That means growing smartphone data use could fill up T-Mobile’s airwaves in a few years, according to the company’s own estimates.Even before AT&T’s $39 billion deal to buy T-Mobile was announced in March, T-Mobile’s corporate parent, Deutsche Telekom AG of Germany, said it’s not interested in investing more in its U.S. subsidiary. It gave CEO Humm a mission to stop customer flight and start growing revenue, but he’ll have to do it with the U.S. subsidiary’s own resources.Recon Analytics analyst Roger Entner traces T-Mobile’s current troubles in part to Deutsche Telekom’s unwillingness to invest in T-Mobile’s spectrum and network in the last few years. It waited until 2009 to start building out a wireless broadband network, several years behind Verizon Wireless, AT&T and Sprint Nextel Corp.Entner said Sprint, the industry’s No. 3, is a good example of a carrier that has overcome a lot of adversity. It has slowed subscriber flight in the last few years through improvements in customer service.”The US market is competitive and companies can come back from near death when they do things right. The problem is that T-Mobile USA’s parent Deutsche Telekom is not committed to the US market the same way its competitors are,” Entner said.When the AT&T deal was announced in March, it came as a surprise. Industry rumors, instead, hinted at a linkup between T-Mobile and Sprint. If AT&T fails its appeal, that buzz could reemerge. But T-Mobile and Sprint use different network technologies, which would make any merger difficult.Sanford Bernstein analyst Craig Moffett also thinks the Justice Department’s reasoning in the AT&T case would preclude a Sprint-T-Mobile merger.There would be a silver lining for T-Mobile if the deal falls through. AT&T would have to pay T-Mobile $3 billion in cash and transfer to it some unused spectrum. In addition, T-Mobile would get a renegotiated roaming agreement with AT&T. None of those are likely to change Deutsche Telekom’s reluctance to invest in T-Mobile.

  • Steve

     Interesting News Article about T-mobile’s Woes
    NEW YORK (AP) — The Justice Department’s move to block AT&T Inc. from buying T-Mobile USA is motivated by the desire to keep a low-priced competitor in the game. But that’s a game T-Mobile is losing.Despite low prices and a peppy pitchwoman in a polka-dot dress, T-Mobile customers have been fleeing to other carriers in the last year and a half.T-Mobile’s 33.6 million customers may be relieved that the federal government is trying to block the merger, so they can keep their wireless service plans. But in the long run, T-Mobile is in an unsustainable position. Analysts say the company’s past decisions have painted it into a corner.The No. 4 wireless carrier is being squeezed by competitors from two directions. At the high end of the market, it can’t compete with Verizon Wireless and AT&T Inc., the market leader and no. 2, respectively. At the low end, T-Mobile is struggling against competitors like Sprint Nextel Corp., which sells government-subsidized “lifeline” service, and MetroPCS Holdings Corp., which targets urban, working class consumers with cheap “unlimited” plans.Essentially, T-Mobile is seen as a cheap brand by those who can afford better, and as an expensive one by those who pinch every penny.”We’re stuck in the middle from a brand point of view,” T-Mobile CEO Philipp Humm said in January.The most valuable customers, the ones who buy smartphones and sign up for two-year contracts with lucrative data plans, are leaving T-Mobile the fastest.It’s not because T-Mobile’s customers are particularly dissatisfied with the service — they like their provider better than AT&T customers theirs, according to the American Customer Satisfaction Index.Instead, the lure of the iPhone and wider network coverage is what draws high-paying customers to AT&T and Verizon.So, even though T-Mobile is profitable, its revenue is shrinking fast — in the latest quarter, it was down to the level of 2007.Customer flight could speed up even more this fall, if Sprint gets to start selling the iPhone, as The Wall Street Journal reported recently. That would make T-Mobile the only one of the four national wireless carriers that doesn’t sell Apple Inc.’s coveted phone.In about two years, T-Mobile will face another problem: limited wireless spectrum, or space on the airwaves. While other carriers have been bulking up their spectrum holdings in the last five years, T-Mobile stayed mostly on the sidelines. That means growing smartphone data use could fill up T-Mobile’s airwaves in a few years, according to the company’s own estimates.Even before AT&T’s $39 billion deal to buy T-Mobile was announced in March, T-Mobile’s corporate parent, Deutsche Telekom AG of Germany, said it’s not interested in investing more in its U.S. subsidiary. It gave CEO Humm a mission to stop customer flight and start growing revenue, but he’ll have to do it with the U.S. subsidiary’s own resources.Recon Analytics analyst Roger Entner traces T-Mobile’s current troubles in part to Deutsche Telekom’s unwillingness to invest in T-Mobile’s spectrum and network in the last few years. It waited until 2009 to start building out a wireless broadband network, several years behind Verizon Wireless, AT&T and Sprint Nextel Corp.Entner said Sprint, the industry’s No. 3, is a good example of a carrier that has overcome a lot of adversity. It has slowed subscriber flight in the last few years through improvements in customer service.”The US market is competitive and companies can come back from near death when they do things right. The problem is that T-Mobile USA’s parent Deutsche Telekom is not committed to the US market the same way its competitors are,” Entner said.When the AT&T deal was announced in March, it came as a surprise. Industry rumors, instead, hinted at a linkup between T-Mobile and Sprint. If AT&T fails its appeal, that buzz could reemerge. But T-Mobile and Sprint use different network technologies, which would make any merger difficult.Sanford Bernstein analyst Craig Moffett also thinks the Justice Department’s reasoning in the AT&T case would preclude a Sprint-T-Mobile merger.There would be a silver lining for T-Mobile if the deal falls through. AT&T would have to pay T-Mobile $3 billion in cash and transfer to it some unused spectrum. In addition, T-Mobile would get a renegotiated roaming agreement with AT&T. None of those are likely to change Deutsche Telekom’s reluctance to invest in T-Mobile.

    • Richardthegrape

      I thought this was a post from @ItsMichaelNotMike:disqus for a second ha-ha. He always posts super long ones like this…

      • http://profiles.yahoo.com/u/35HLVJSI34LMH5M274SCGWDZBY mike

        lol!!!

    • Richardthegrape

      I thought this was a post from @ItsMichaelNotMike:disqus for a second ha-ha. He always posts super long ones like this…

    • Richardthegrape

      I thought this was a post from @ItsMichaelNotMike:disqus for a second ha-ha. He always posts super long ones like this…

    • Richardthegrape

      I thought this was a post from @ItsMichaelNotMike:disqus for a second ha-ha. He always posts super long ones like this…

    • https://plus.google.com/102862831744598656090/about Wesley Griffiths

      A lot of people have left just because they do not want to be an AT&T customer. If the sale is stopped, T-Mobile could see their numbers go up again. Also, AT&T will have to pay a few billion to DT if the deal is stopped. DT would also get a couple billion in spectrum and a billion in roaming costs. That should help them boost T-Mo’s business a bit.

    • https://plus.google.com/102862831744598656090/about Wesley Griffiths

      A lot of people have left just because they do not want to be an AT&T customer. If the sale is stopped, T-Mobile could see their numbers go up again. Also, AT&T will have to pay a few billion to DT if the deal is stopped. DT would also get a couple billion in spectrum and a billion in roaming costs. That should help them boost T-Mo’s business a bit.

      • http://profiles.yahoo.com/u/35HLVJSI34LMH5M274SCGWDZBY mike

        3 Billion cash + 3 Billion in spectrum. It’s like a big party!

  • Steve

     Interesting News Article about T-mobile’s Woes
    NEW YORK (AP) — The Justice Department’s move to block AT&T Inc. from buying T-Mobile USA is motivated by the desire to keep a low-priced competitor in the game. But that’s a game T-Mobile is losing.Despite low prices and a peppy pitchwoman in a polka-dot dress, T-Mobile customers have been fleeing to other carriers in the last year and a half.T-Mobile’s 33.6 million customers may be relieved that the federal government is trying to block the merger, so they can keep their wireless service plans. But in the long run, T-Mobile is in an unsustainable position. Analysts say the company’s past decisions have painted it into a corner.The No. 4 wireless carrier is being squeezed by competitors from two directions. At the high end of the market, it can’t compete with Verizon Wireless and AT&T Inc., the market leader and no. 2, respectively. At the low end, T-Mobile is struggling against competitors like Sprint Nextel Corp., which sells government-subsidized “lifeline” service, and MetroPCS Holdings Corp., which targets urban, working class consumers with cheap “unlimited” plans.Essentially, T-Mobile is seen as a cheap brand by those who can afford better, and as an expensive one by those who pinch every penny.”We’re stuck in the middle from a brand point of view,” T-Mobile CEO Philipp Humm said in January.The most valuable customers, the ones who buy smartphones and sign up for two-year contracts with lucrative data plans, are leaving T-Mobile the fastest.It’s not because T-Mobile’s customers are particularly dissatisfied with the service — they like their provider better than AT&T customers theirs, according to the American Customer Satisfaction Index.Instead, the lure of the iPhone and wider network coverage is what draws high-paying customers to AT&T and Verizon.So, even though T-Mobile is profitable, its revenue is shrinking fast — in the latest quarter, it was down to the level of 2007.Customer flight could speed up even more this fall, if Sprint gets to start selling the iPhone, as The Wall Street Journal reported recently. That would make T-Mobile the only one of the four national wireless carriers that doesn’t sell Apple Inc.’s coveted phone.In about two years, T-Mobile will face another problem: limited wireless spectrum, or space on the airwaves. While other carriers have been bulking up their spectrum holdings in the last five years, T-Mobile stayed mostly on the sidelines. That means growing smartphone data use could fill up T-Mobile’s airwaves in a few years, according to the company’s own estimates.Even before AT&T’s $39 billion deal to buy T-Mobile was announced in March, T-Mobile’s corporate parent, Deutsche Telekom AG of Germany, said it’s not interested in investing more in its U.S. subsidiary. It gave CEO Humm a mission to stop customer flight and start growing revenue, but he’ll have to do it with the U.S. subsidiary’s own resources.Recon Analytics analyst Roger Entner traces T-Mobile’s current troubles in part to Deutsche Telekom’s unwillingness to invest in T-Mobile’s spectrum and network in the last few years. It waited until 2009 to start building out a wireless broadband network, several years behind Verizon Wireless, AT&T and Sprint Nextel Corp.Entner said Sprint, the industry’s No. 3, is a good example of a carrier that has overcome a lot of adversity. It has slowed subscriber flight in the last few years through improvements in customer service.”The US market is competitive and companies can come back from near death when they do things right. The problem is that T-Mobile USA’s parent Deutsche Telekom is not committed to the US market the same way its competitors are,” Entner said.When the AT&T deal was announced in March, it came as a surprise. Industry rumors, instead, hinted at a linkup between T-Mobile and Sprint. If AT&T fails its appeal, that buzz could reemerge. But T-Mobile and Sprint use different network technologies, which would make any merger difficult.Sanford Bernstein analyst Craig Moffett also thinks the Justice Department’s reasoning in the AT&T case would preclude a Sprint-T-Mobile merger.There would be a silver lining for T-Mobile if the deal falls through. AT&T would have to pay T-Mobile $3 billion in cash and transfer to it some unused spectrum. In addition, T-Mobile would get a renegotiated roaming agreement with AT&T. None of those are likely to change Deutsche Telekom’s reluctance to invest in T-Mobile.

  • Steve

     Interesting News Article about T-mobile’s Woes
    NEW YORK (AP) — The Justice Department’s move to block AT&T Inc. from buying T-Mobile USA is motivated by the desire to keep a low-priced competitor in the game. But that’s a game T-Mobile is losing.Despite low prices and a peppy pitchwoman in a polka-dot dress, T-Mobile customers have been fleeing to other carriers in the last year and a half.T-Mobile’s 33.6 million customers may be relieved that the federal government is trying to block the merger, so they can keep their wireless service plans. But in the long run, T-Mobile is in an unsustainable position. Analysts say the company’s past decisions have painted it into a corner.The No. 4 wireless carrier is being squeezed by competitors from two directions. At the high end of the market, it can’t compete with Verizon Wireless and AT&T Inc., the market leader and no. 2, respectively. At the low end, T-Mobile is struggling against competitors like Sprint Nextel Corp., which sells government-subsidized “lifeline” service, and MetroPCS Holdings Corp., which targets urban, working class consumers with cheap “unlimited” plans.Essentially, T-Mobile is seen as a cheap brand by those who can afford better, and as an expensive one by those who pinch every penny.”We’re stuck in the middle from a brand point of view,” T-Mobile CEO Philipp Humm said in January.The most valuable customers, the ones who buy smartphones and sign up for two-year contracts with lucrative data plans, are leaving T-Mobile the fastest.It’s not because T-Mobile’s customers are particularly dissatisfied with the service — they like their provider better than AT&T customers theirs, according to the American Customer Satisfaction Index.Instead, the lure of the iPhone and wider network coverage is what draws high-paying customers to AT&T and Verizon.So, even though T-Mobile is profitable, its revenue is shrinking fast — in the latest quarter, it was down to the level of 2007.Customer flight could speed up even more this fall, if Sprint gets to start selling the iPhone, as The Wall Street Journal reported recently. That would make T-Mobile the only one of the four national wireless carriers that doesn’t sell Apple Inc.’s coveted phone.In about two years, T-Mobile will face another problem: limited wireless spectrum, or space on the airwaves. While other carriers have been bulking up their spectrum holdings in the last five years, T-Mobile stayed mostly on the sidelines. That means growing smartphone data use could fill up T-Mobile’s airwaves in a few years, according to the company’s own estimates.Even before AT&T’s $39 billion deal to buy T-Mobile was announced in March, T-Mobile’s corporate parent, Deutsche Telekom AG of Germany, said it’s not interested in investing more in its U.S. subsidiary. It gave CEO Humm a mission to stop customer flight and start growing revenue, but he’ll have to do it with the U.S. subsidiary’s own resources.Recon Analytics analyst Roger Entner traces T-Mobile’s current troubles in part to Deutsche Telekom’s unwillingness to invest in T-Mobile’s spectrum and network in the last few years. It waited until 2009 to start building out a wireless broadband network, several years behind Verizon Wireless, AT&T and Sprint Nextel Corp.Entner said Sprint, the industry’s No. 3, is a good example of a carrier that has overcome a lot of adversity. It has slowed subscriber flight in the last few years through improvements in customer service.”The US market is competitive and companies can come back from near death when they do things right. The problem is that T-Mobile USA’s parent Deutsche Telekom is not committed to the US market the same way its competitors are,” Entner said.When the AT&T deal was announced in March, it came as a surprise. Industry rumors, instead, hinted at a linkup between T-Mobile and Sprint. If AT&T fails its appeal, that buzz could reemerge. But T-Mobile and Sprint use different network technologies, which would make any merger difficult.Sanford Bernstein analyst Craig Moffett also thinks the Justice Department’s reasoning in the AT&T case would preclude a Sprint-T-Mobile merger.There would be a silver lining for T-Mobile if the deal falls through. AT&T would have to pay T-Mobile $3 billion in cash and transfer to it some unused spectrum. In addition, T-Mobile would get a renegotiated roaming agreement with AT&T. None of those are likely to change Deutsche Telekom’s reluctance to invest in T-Mobile.

  • http://twitter.com/RudyFlyer4 CJ

    Just remember they let the merger of United-Continental go through and i think that did more damage to consumers than ATT and T Mobile. In my opinion it will go through this is just a political game right now.

    • http://profiles.yahoo.com/u/35HLVJSI34LMH5M274SCGWDZBY mike

      The DOJ filing to put an Axe to the merger gives it to the Courts, and out of the Halls of Congress. 

  • http://profiles.yahoo.com/u/35HLVJSI34LMH5M274SCGWDZBY mike

    Someone should say sorry to Carly right about now. Just making a point!

  • http://profiles.yahoo.com/u/35HLVJSI34LMH5M274SCGWDZBY mike

    Someone should say sorry to Carly right about now. Just making a point!

  • BigMixxx

    and the report ends with…

    “What is somewhat unusual about what’s happening with the AT&T/T-Mobile deal is the timing of the Justice Department’s lawsuit. Typically, the Justice Department waits as long as possible to file such claims, according to a lawyer who has worked for the agency but didn’t want to be named. The merger was only announced in March. For the Justice Department to come to a decision to file suit in August, essentially suggesting that the agency sees no way that concessions can be made to make this deal palatable, is unusual, he said.”

    Remember, there is no SEC in this.  only the FCC and the DOJ hurdles.  DOJ has filed a lawsuit blocking it.  the FCC has never ruled against the DOJ….that’s the precedence that ATT as the deal with.  

  • josue cifuentes

    google should buy t-mobile after this is over

  • ConspiracyTheory

    Let me tell you the real story!  Tmobile has gotten real shady and EVIL!  The firing sprees have gotten out of control!  They are on the rampage firing tenured reps and supervisors for the smallest things that would normally result in a verbal warning, some ppl have been fired for things that arent even an issue!  we all know the real reasons here is to either avoid paying severence to tenured employees or to deflate the operational costs by eliminating people!  This is not where the evil stops though, it gets worse!   T-Mobile fights all unemployment benefits!  Leaving people in a bad economy HOMELESS!  yes HOMELESS!     Do not be surprised when you start reading about thousands of lawsuits against t-mobile for their unconscionable acts of wrongful termination!  The numbers will speak VOLUMES!

    • Jcj1

      Do you have proof? Yes there have been people let go, but without facts it is just opinion. People have been upset about the buyout and have been leaving T-Mobile, hopefully now with this news they will come back. Your name says it all, you are trying to stir up trouble. 

  • Dave Macias

    Any other carrier could be better than AT&T, you not only have Vodafone, Orange, O2, Movistar but also carriers most people here in America never heard of like Telenor, Telia Sonera and TATA Docomo even the big Japanese ones like SoftBank, Docomo and KDDI could be better, it is sad to know that because of a phone (iPhone) and low end devices(although the new TMO lineup is very good) my favorite carrier is going down…if they want competition then DT finds another player besides AT&T like i said i would not mind using the carriers i mentioned before, we still would have 4 carriers and competition will be better for the best of consumers.

  • http://pulse.yahoo.com/_AWWIKW6MNPUHOC4OVSHWUDWAHM Fabio

    AT&T doesn’t need T-Mobile to deploy 4G LTE nor do they need T-Mobile’s spectrum to grow. Simple as that, the merger needs to be blocked. AT&T can use its 39 BILLION dollars to deploy 4G LTE. The United States government, knows this and they will NOT put the United States of America’s economy in more jeopardy, than it already is just because AT&T doesn’t want to compete fairly. So AT&T and T-Mobile merger, say GOOD BYE! If T-Mobile wants to sell, its free to do so, just not to ANY of the current national wireless carriers in the United States. That means Verizon, AT&T nor Sprint Nextel can be potential candidates for T-Mobile. So DT, owner of T-Mobile, my advice for you is to find yourself another buyer that’s not in the United States!

    • http://twitter.com/Ac3of2pade2 Ac3of2pade2

      But T-Mobile Needs At&t for its customers to have 4g

      • Lelik827

        idiot

  • JustSomeGuyThatWorksForTMOBILE

    Ok here is the only thing I gained from that

    Sen. John Cornyn (R-Tex.) said he was “disappointed in the Justice Department’s decision,” citing Tuesday’s announcement from AT&T that it intended to return 5,000 outsourced call center jobs to the United States if the deal went through.

    Another Texas Republican, Rep. Pete Sessions, called DOJ’s decision “the latest example of the Obama administration’s continued assault on the American economy.”

    First of all, ATT is a Texas based company. With that being said I am pretty sure Sen. Cornyn knows what he is talking about when he stated that. Which (moving call centers) is something Obama has been saying he is going to do for years. Second of all these are TWO people from the RIGHT side. This doesnt mean the entire right party follows two people let alone ONE person. Texas has the best economy as an indevidual state. So if this guy says we CAN benefit from this take over I believe it. Plus the Senatory was ONLY quoted on being disapointed. Obama in fact was for this take over he just never said it on the record. But if you want proof then google it, im not going to spoon feed you. I think the FCC needs to regulate the a## out of ATT so they cant drive up prices, dont ruin jobs for 20k+ people, and get our damn call centers back in the USA….. Thats ONLY if ATT is going to have their way, we should regulate.

    This forum is for T-Mobile News, lets keep it that way and keep politics out!!!!
    Well US politics that is :-P

  • http://pulse.yahoo.com/_UAHHQVJFXBFYG7UL7LDCAPXJB4 Jason K

    Funny how everything said here is opposite of what we see in those ATT commercials.

  • http://pulse.yahoo.com/_UAHHQVJFXBFYG7UL7LDCAPXJB4 Jason K

    “T-Mobile has been an important source of competition among the national carriers”   …   The a big slice of bologna. TM has been heading down the drain for 2/2.5+ years now or whenever the first iPhone came out, that was the killer.

  • http://twitter.com/lolaludesign Anita Elder

    I despise AT&T and have dumped them in the past. I have no desire to ever be a part of them again! I’m currently a T-Mobile customer. I love the service (I’m happy with my Android phone) and will be really ticked if the merger goes through. If it does, I’m saying hello to Sprint!