
AT&T withdraws T-Mobile takeover application from FCC - barredo
http://www.theverge.com/2011/11/24/2584536/at-t-withdraws-t-mobile-takeover-application-from-fcc-records
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mdasen
This is a bit of a curious move. Why would AT&T voluntarily withdraw their
application and possibly trigger the brake-up fee rather than waiting for the
government's decision? The only explanation I can come up with is that they're
going to re-file and withdrawing the application and re-filing will delay any
decision (perhaps to a point where T-Mobile looks like it is declining and not
providing competition or something).

Frankly, the $39B buy of T-Mobile was a deal seemingly too-good-to-be-true for
T-Mobile. T-Mobile has struggled to put up customer additions in a market
increasingly dominated by AT&T and Verizon. While T-Mobile has remained
profitable, it's possible that they're starting down the path Sprint hit
several years ago that left them unprofitable. T-Mobile was considering a
merger with Sprint that probably would have left DT as a minority shareholder
in an unprofitable, 3rd-place wireless carrier and then AT&T comes along and
offers $39B. At the time of the offer, Sprint had a market-cap of about $13B,
debt of about $14.5B and cash-on-hand of about $4B, valuing the business at
about $23.5B. That makes the $39B offered for T-Mobile a lot more than a good
purchase price for Sprint and Sprint is a larger wireless carrier.

With that said, it's genuinely possible that AT&T is stringing T-Mobile along.
$39B is probably over T-Mobile's value (based on 2011 earnings, it would be
about 44x earnings), but it might be worth it for AT&T to have nearly 140MHz
in spectrum, plenty of new cell sites, and plenty of new customers. AT&T has a
history of integrating purchased networks well (compared to, say, Sprint who
still hasn't dealt with the two networks from its Nextel purchase). By
contrast, getting a minority share in a new Sprint would probably be worth a
lot less, might see the new carrier running four separate networks (CDMA/EV-
DO, GSM/UMTS/HSPA, iDEN, and LTE), and might still see poor customer numbers
and profits. It would also be an odd position to be in. Would the new Sprint
sell CDMA as its flagship product or HSPA+? Would they try and maintain both
networks for the next decade as they try to fit LTE in somewhere? AT&T's offer
is that promise from a business partner that you're going to get a windfall if
you just hang in there. "Yeah, we know we pulled the app from the FCC, but if
you just hang in there and work with us, you'll get that windfall. C'mon, just
a little longer."

While I don't like the prospect of having only three national wireless
companies, I'm not sure T-Mobile staying is a lynchpin for competition.
T-Mobile's customer numbers have gotten less rosy and the continued lack of an
iPhone is only going to hurt them more. From my perspective, we need a cap on
spectrum below 1GHz. Low-frequency spectrum travels significantly further in
real-world conditions than high-frequency spectrum. For example, to cover
1,000sq mi can be done with one cell site with 700MHz spectrum. By contrast,
at 1900MHz it would take 4 sites, and at 2.4GHz it would take 10. While cell
networks need to split cells in urban areas as their customer base grows, low-
frequency spectrum offers the broad coverage that customers demand as well as
offering the ability to build out a network with decent coverage before one
has many customers (somewhat solving the chicken and the egg problem of
building a network).

Without low-frequency spectrum, new carriers face the daunting task of
building considerably more cell sites when they don't even have customers yet.
Likewise, limiting holdings below 1GHz would provide a guarantee of
competition. If a carrier could only own 25MHz below 1GHz, we'd be guaranteed
to have at least 4 carriers - and those carriers could be more genuinely
competitive. Imagine if the 700MHz auction couldn't be participated in by
Verizon or AT&T. T-Mobile might have picked up spectrum there, same for
MetroPCS or Leap Wireless (or new entrants). We could have seen increased
competition driven by ownership of spectrum that made rolling out a wireless
network with decent coverage much easier.

~~~
henrikschroder
> the continued lack of an iPhone is only going to hurt them more.

I noted that Apple is offering the unlocked 4S almost immediately this time,
unlike the 4 where they waited half a year or a year before offering it.
Hopefully this could be the beginning of the end of carrier-locked phones in
the US.

Where I am, you could buy a locked iPhone with a carrier plan through the
Apple Store for the 4 model, but for the 4S this simply disappeared, they now
only sell unlocked phones. I'm guessing because the carrier subsidies are so
small that it's not worth "polluting" the brand with it.

~~~
eli
Few Americans are going to buy a $600+ phone up front and then pay an inflated
monthly service charge that is based on you having to repay a phone subsidy.

~~~
stanleydrew
T-Mobile doesn't charge the subsidized plan price if you don't buy a
subsidized phone from them. Or at least they didn't as recently as a year ago.
I pay $60/month instead of $80 because I bought my Nexus One from Google.

~~~
billpaetzke
No one's going to use an unlocked iPhone with T-Mobile because it doesn't get
3G (due to non-standard frequency).

~~~
aaronbrethorst
Or, over a million people will.

 _"Today, there are over a million T-Mobile customers using unlocked iPhones
on our network," [T-Mobile USA Chief Marketing Office Cole] Brodman continued.
"We are interested in offering all of our customers a no-compromise iPhone
experience on our network."_

[http://www.informationweek.com/news/mobility/smart_phones/23...](http://www.informationweek.com/news/mobility/smart_phones/231602261)

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jcc80
This is so awesome!!! I love it! My apologies to the community for little
substance here, but having a choice between just AT&T & Verizon would be
terrible for us consumers long-term. My sister's BF just got a T-Mobile phone
and I was just explaining tonight how I hoped this would not go through.

~~~
zitterbewegung
Did you forget about Sprint? If AT&T and Verizon merged wouldn't you have
Sprint to choose from?

~~~
fossuser
Sprint doesn't give you a less expensive no contract deal if you bring your
own phone that you bought at full price.

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sourc3
I am very happy to read this. I have been a T-Mobile customer (from the early
days of VoiceStream) and they have never given me any problems.

In fact, they let me replace an eBay bought phone with a new Tmobile one just
because I had the handset protection plan (from years ago).

This is a company that provides comparably good service to both Sprint and Att
and charges 3/4 of the price.

For $50 a month I am getting the unlimited 3G/Talk/Text with them, which is
unheard of for ATT. Happy with my Windows Phone 7 and Tmobile :)

~~~
Nrsolis
Honestly, the service I got from T-Mobile was beyond awesome when I was using
a Blackberry. The stores had knowledgable people, the rates were very
reasonable, and I never had a problem getting support from their 800-number
when there was a problem.

I'm glad to see T-Mobile at least _appear_ to stay independent for now. The
USA is a very big country and letting one carrier dominate the GSM marketplace
is just a terrible idea.

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daimyoyo
I wonder how T-Mobile will fare now that the sale seems all but off? The
breakup fee and spectrum allotment should be a great opportunity for them to
build their network, and aquire customers. Who knows? Maybe they'll use the
spectrum to standardize their MMS protocall(which I believe to be a major
reason they don't have the iPhone yet).

~~~
Symmetry
Yeah, I switched to T-Mobile recently because it seems like they're the least
evil of the big four by a fair margin. They even let you get around the
subsidized phone lock-in thing by charging people without a contract less on
their monthly bill.

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fpgeek
This is a big deal for US mobile customers that travel internationally. While
there has been some movement on the CDMA/GSM "world phone" front, having two
native GSM carriers still makes a big difference.

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megamark16
Oh thank goodness. I'm a happy (and life long) T-Mobile customer, and I really
didn't want to become an AT&T customer. T-Mobile has the best customer service
of just about any company out there, and I feel that they really help to level
the playing field a little here in the US, even if they are only a small
segment of the market.

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va_coder
Would this have happened to ATT under a different administration?

~~~
danssig
Of course. You're not under the impression that Obama is more for the people
than Bush was, are you? [1]

[1] [http://www.huffingtonpost.com/2011/11/07/bank-earnings-
obama...](http://www.huffingtonpost.com/2011/11/07/bank-earnings-
obama_n_1079482.html)

~~~
icebraining
"For the people" is frankly a bullshit metric. Different presidents can and
will act differently even if they're both on the same "for the people" level.
Even with a completely cynical view, they'll at least have a different set of
lobbyists who they're loyal to.

~~~
danssig
But doesn't that make the initial "observation" nonsensical? What could be
meant by "would this have gotten by in another administration" other than,
"wow, we're so blessed to have these guys" yet it's just cherry picking (same
as I did, but for the opposite point-of-view).

~~~
va_coder
>>"wow, we're so blessed to have these guys"

Don't put words in my mouth. I asked a simple question.

~~~
danssig
What could your question possibly mean? My claim is that it's meaningless.
Maybe this could or could not have happened with another administration. But
bad things that happened with this administration could or could not have
happened with another.

