DOJ files Antitrust Suit against AT&T

[crownjules]

http://money.cnn.com/2011/08/31/technology/att_tmobile_antitrust/index.htm

NEW YORK (CNNMoney) -- The U.S. Department of Justice filed an antitrust lawsuit against AT&T on Wednesday seeking to block its $39 billion merger with T-Mobile.

The merger would create the largest wireless company in the United States, combining AT&T's 98 million customers with T-Mobile's 34 million users, for a total of 130 million subscribers. AT&T is currently the second-largest wireless company by number of subscribers, and T-Mobile is fourth.

The DOJ said the merger would lead to a situation in which just two companies -- the AT&T-T-Mobile combination and Verizon Wireless -- would dominate the mobile market. The new AT&T and Verizon would account for more than two-thirds of wireless subscribers and 78% of the wireless industry's revenues.

"We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services," James Cole, deputy attorney general, said in a press conference Wednesday.

The Federal Communications Commission, which oversees the wireless industry, is in the midst of its own review of the proposed merger.
Following the DOJ's announcement, FCC Chairman Julius Genachowski said that the agency also believes the merger raises "serious concerns about the impact ... on competition."

Shares of AT&T (T, Fortune 500) tumbled more than 4%.

Wayne Watts, AT&T's general counsel, said in a statement that the company was "surprised and disappointed by today's action." He went on to say that the company remained "confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court."
AT&T has claimed that the merger is necessary in order to significantly expand its faster 4G wireless network to compete with Verizon (VZ, Fortune 500). Without the acquisition, AT&T says it would lack the necessary wireless spectrum and wherewithal to cover 97% of the U.S. population with 4G.
But the Justice Department said it didn't buy AT&T's argument. Following what the regulator called "an exhaustive investigation," the DOJ said it concluded that AT&T did not need to buy T-Mobile to remain competitive, and that the company could deploy next-generation technology by simply investing in its own network.

"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," the DOJ said in a statement.
Back-to-school smartphone shopping tips

Sprint (S, Fortune 500) and many of the smaller carriers have argued that the merger will harm competition and raise prices for consumers, because it would eliminate T-Mobile, the last low-cost carrier with a national footprint.
"By filing suit to block AT&T's proposed takeover of T-Mobile, the DOJ has put consumers' interests first," Vonya McCann, Sprint's senior vice president of government affairs, said in a written statement.

The DOJ said it concurred with the smaller carriers' opinions, noting that the agency filed the lawsuit to protect price competition. The regulator labeled T-Mobile as an important source of competition in the wireless market.
"Any way you look at this merger, it is anticompetitive," said Sharis Pozen, acting head of the DOJ's antitrust division. "It raised serious concerns, and we believe it violates the law."

The lawsuit does not necessarily mean the deal won't get done.
In April, the DOJ filed an antitrust lawsuit against Google (GOOG, Fortune 500), following its $700 million takeover bid for ITA, the world's largest airline search software company.

The DOJ and the search giant then quickly settled the claim, with the Justice Department approving the deal, provided that Google accept certain concessions and restrictions.

Good to see the DOJ actually has the balls to step up and stop these huge monopolies from forming. Unlike Comcast, AT&T fortunately doesn't have an inside woman to help let it slide through. It was just 30 years ago that AT&T was split up precisely because it was deemed a monopoly. In case you're curious, here's a nice little graphic depicting how we're a mere 3 company mergers away from Ma Bell being reconstituted.

What about AT&T's stated reason for the merger. They cite that in order to cover 97% of the US in LTE technology, pursuant with FCC and Administration desires to bring broadbrand to rural America, they would have to purchase T-Mobile. But in a document leak, it's seen that AT&T's own analysis is that 97% LTE coverage could be built for a mere 10% of the cost of the T-Mobile purchase. So why would AT&T not want to spend $3.8B to expand from it's current 80% coverage to 97% on its own but be willing to drop $39B on a merger that's explicitly to accomplish the same thing?

And to throw further salt in the wound, there's AT&T's bribe. Guys if you let us kill off a competitor, we promise to bring back 5000 jobs we shipped overseas. Honest to god.

 

[JSt0rm]

Good

 

[BoomerD]

This is long overdue. AT&T was broken up to eliminate their monopoly on telephone service and long-distance calling.

As the OP has mentioned, they've been regaining much of their old powers...and are bigger than they were before the break up...and trying to become bigger still.

time to break them up again.

 

[Kadarin]

I'm in utter shock that the government is taking action against their corporate masters. Another shocker:

http://www.msnbc.msn.com/id/44366983/ns/business-us_business/#.TmCBHZjZV60

 

[trenchfoot]

*sarcasm*

Monopolies are the natural evolutionary end game result of Big Business' attempts at maximizing its profit potentiial and gov't shouldn't interfere with this process.


This is exactly why we need to deregulate, deregulate and deregulate some more.


We should trust in and believe that Big Business interests will always police itself in tne public's best interests just as they have always promised they would.

Big Business is and will always be preferrable over Big Government as our business interests care more for our general welfare than our government ever will.

Trust our Republican politicians when they say they will always side with the people rather than the business interests who own and control them.

 

[Dulanic]

Ma Bell wants it's monopoly back. I love how AT&T mentions 5,000 call center jobs. Why don't they mention all the jobs they will cut in the merger? The higher paying jobs like the techs who build the infrastructure and even the managers etc. I hope this does get blocked, it will do nothing but hurt the country, the consumer and more. But, it will improve the profits for the shareholders of AT&T and the exec pay I am sure.

 

[xj0hnx]

Sprint (S, Fortune 500) and many of the smaller carriers have argued that the merger will harm competition and raise prices for consumers

It's insane how much cell service cost here, when I left Germany and came here I was surprised that people here put up with it. If you had told someone in Germany that they had to pay for incoming calls, or text they'd laugh at you.

 

[crownjules]

Ma Bell wants it's monopoly back. I love how AT&T mentions 5,000 call center jobs. Why don't they mention all the jobs they will cut in the merger? The higher paying jobs like the techs who build the infrastructure and even the managers etc. I hope this does get blocked, it will do nothing but hurt the country, the consumer and more. But, it will improve the profits for the shareholders of AT&T and the exec pay I am sure.

Of course it would. AT&T stock has dropped a few points since the DOJ announcement. You can bet that if the T-Mobile acquisition goes through, AT&T's stock will soar much higher.

AT&T is fighting to make the merger happen. At this point, exact concessions they're willing to make are not known to the public at large. Speculation is that they'll agree to keep T-Mobile's low cost plans as well as agree to sell off 25% of T-Mobile's assets. But the DOJ suit will make it much harder to pass over just having to convince the FCC. If this merger fails, AT&T will have to pay out $6 billion to Deutchse Telekom.

 

[bruceb]

We will see how this plays out. It will mean more jobs if the merger does not happen and less if it does, as some functions will overlap. T-Mobile has a good network, but coverage in some areas is spotty or non existant. AT&T has towers just about everywhere and if you have a dead zone, they check it and add a tower if needed (takes about 6 months)

 

[her209]

It's insane how much cell service cost here, when I left Germany and came here I was surprised that people here put up with it. If you had told someone in Germany that they had to pay for incoming calls, or text they'd laugh at you.

People paying north of 70 dollars a month is crazy for a phone that can surf the net at DSL speeds.

 

[her209]

Monopolies are the natural evolutionary end game result of Big Business' attempts at maximizing its profit potentiial and gov't shouldn't interfere with this process.

Pretty much this. The corps just need to figure out to pay people enough to cover living expenses and they're all set.

 

[Lanyap]

Good news. I lost my job along with a number of my IT co-workers over a year ago as a direct result of AT&T buying out Bellsouth. AT&T brought in IBM to do the work and they only let them pick up 50% of the people in my organization. IBM has since moved a good bit of the work to Brazil.

 

[dfuze]

I never thought I would see the gov take this stance and am glad they found the balls to do it.

 

[bestoption]

On these forums : I am looking for people who have been abused by ATT Customer Service and ATT's office of president and who are interested in initiating a class action lawsuite against ATT.

I specifically have had following problem with ATT and i have spent over 500 hours with ATT trying to resolve those issues in the last '4' year. ATT has a monopoly in my area for providing land line connections and hence they have gone way beyond the point of abuse to harass me:

1. Not honoring legimitate rebates and turning down legitimate rebate requests without giving logical answers. Pretty much the answer is that of a dictator: 'The rebate is invalid because i say so. My word is all that counts - all the paperwork you have is crap'.

2. Issueing statements that the time of a customer is does not have any value for ATT. If you have spent 500 hours with ATT on resolving their process and technical issues - you gave free QA to ATT and should continue to do so 'coz you chose to join ATT.

3. Not standing by the Cell phones they cell. I purchase a Palm Centro that never worked. ATT pretty much denied standing by it even during the warranty period. They eventually provided a refurbished replacement after spending over 200 hours on phone - when the phone failed to work.

4. Switching to combined billing - it is upto the customer to reach out to different departments each month to ensure they don't cross over and issue exorbitant bills. I have had bills with no discounts that come with combined billing and Customer service associates shuttling me over one department and the other for over 6 months to get it fixed. It can break any time again. It took a complaint against FTC and BBB(Better Business Beaureau) to get them to start looking into it and eventually fix it. Again, the cost to a customer in terms of time spent is immaterial to ATT. Abuse is a mild term to reflect this.

5. As recent as this week - i am being charged exorbitantly for Data usage on my iPhone. For some reason my iPhone continues to use 3G even in a WI-FI zone(Is anyone else seeing this problem)?? I have a iPhone 3GS. ATT has no clue about it - they rolled out tiered plan however there is no way to stop rolling over from one tier to the next if the device or ATT network begins to malfunction. Again, if you spent countless hours with ATT helping them figure out their is a problem, the answer is - we don't equate your time with any costs. Associates harass customers over the phone and so does the office of President at ATT.

6. 8 years ago, they kept billing me for a phone line that i had disconnecte months ago. The bils were exorbitant - over $6000. They fixed it after a year of battle.

I can understand if there is a problem once and if i have problems with other vendors. ATT is just abusive - again ABUSE is a mild term to reflect how they treat customers. Everyone i talk to had a nasty experience with ATT - but seems like no one is willing to step up.

All of this certainly calls for a class action lawsuite and of course make efforts to curb these unlawful practices by ATT.

If there are people who want to join in and have had similar experiences, please reply back to this thread.

I will post this on additional forums to spread the word and report it to FTC, Better Business Bureau and State Attorney Generals.

 

[bfdd]

To big to fail!!! Dont break them up give them more monies!

 

[drebo]

All this talk from the left about how bad monopolies are, yet no talk of how the government MANDATES telecom monopolies. It's all empty and hollow until you're ready to talk about rewriting the Telco Act of 1996.

Nothing will change until that act is rewritten.

 

[bfdd]

All this talk from the left about how bad monopolies are, yet no talk of how the government MANDATES telecom monopolies. It's all empty and hollow until you're ready to talk about rewriting the Telco Act of 1996.

Nothing will change until that act is rewritten.

because those who you're talking about actually love the idea of a monopoly, hence the reason they're constantly pushing for a government monopoly of everything.

 

[rudder]

A monopoly really?

http://www.gottabemobile.com/2011/08/24/dish-network-wants-to-create-4g-network/

http://www.pcworld.com/article/238497/a_cable_company_may_soon_supply_your_wireless_service.html

http://www.mobilemarketer.com/cms/news/television/2021.html

Is t-mobile able to upgrade their network to compete without At&t?

http://news.cnet.com/8301-30686_3-20100203-266/t-mobile-sans-at-t-faces-big-4g-gap/

 

[drebo]

A monopoly really?

http://www.gottabemobile.com/2011/08/24/dish-network-wants-to-create-4g-network/

http://www.pcworld.com/article/238497/a_cable_company_may_soon_supply_your_wireless_service.html

http://www.mobilemarketer.com/cms/news/television/2021.html

Is t-mobile able to upgrade their network to compete without At&t?

http://news.cnet.com/8301-30686_3-20100203-266/t-mobile-sans-at-t-faces-big-4g-gap/

Can you lay your own cable (whether that be coax, fiber, or twisted pair) to a customer premesis in 99% of municipalities in the country? No. They were divied up and given to the RBOCs and various other ILECs and to the cable companies.

Wireless is different, but a wireless provider still has only one option to trunk to a particular tower: the ILEC in the area.

ILECs and cable companies are government-mandated geographic monopolies. It's all orchestrated by the Telco Act of 1996, and it absolutely destroys competition and innovation. The FCC sold all that old analog TV spectrum to Verizon...no one else can use it. That's a monopoly.

Yes, there are CLECs and DLECs available that offer wireline services, but their only options for end-user connectivity are to lease AT&T's (or whatever ILEC's) cables.

There are some municipalities that have spurned this model, but the telcos are suing them. It's not a good situation.

The DOJ is extremely hypocritical in this instance. They're attacking AT&T for one type of monopoly while granting them another.

Sure, AT&T may no longer have a nation-wide monopoly on wireline and long distance services anymore, but consumers are hardly any better for it. They still only have one real option.

 

[Londo_Jowo]

On these forums : I am looking for people who have been abused by ATT Customer Service and ATT's office of president and who are interested in initiating a class action lawsuite against ATT.

I specifically have had following problem with ATT and i have spent over 500 hours with ATT trying to resolve those issues in the last '4' year. ATT has a monopoly in my area for providing land line connections and hence they have gone way beyond the point of abuse to harass me:

1. Not honoring legimitate rebates and turning down legitimate rebate requests without giving logical answers. Pretty much the answer is that of a dictator: 'The rebate is invalid because i say so. My word is all that counts - all the paperwork you have is crap'.

2. Issueing statements that the time of a customer is does not have any value for ATT. If you have spent 500 hours with ATT on resolving their process and technical issues - you gave free QA to ATT and should continue to do so 'coz you chose to join ATT.

3. Not standing by the Cell phones they cell. I purchase a Palm Centro that never worked. ATT pretty much denied standing by it even during the warranty period. They eventually provided a refurbished replacement after spending over 200 hours on phone - when the phone failed to work.

4. Switching to combined billing - it is upto the customer to reach out to different departments each month to ensure they don't cross over and issue exorbitant bills. I have had bills with no discounts that come with combined billing and Customer service associates shuttling me over one department and the other for over 6 months to get it fixed. It can break any time again. It took a complaint against FTC and BBB(Better Business Beaureau) to get them to start looking into it and eventually fix it. Again, the cost to a customer in terms of time spent is immaterial to ATT. Abuse is a mild term to reflect this.

5. As recent as this week - i am being charged exorbitantly for Data usage on my iPhone. For some reason my iPhone continues to use 3G even in a WI-FI zone(Is anyone else seeing this problem)?? I have a iPhone 3GS. ATT has no clue about it - they rolled out tiered plan however there is no way to stop rolling over from one tier to the next if the device or ATT network begins to malfunction. Again, if you spent countless hours with ATT helping them figure out their is a problem, the answer is - we don't equate your time with any costs. Associates harass customers over the phone and so does the office of President at ATT.

6. 8 years ago, they kept billing me for a phone line that i had disconnecte months ago. The bils were exorbitant - over $6000. They fixed it after a year of battle.

I can understand if there is a problem once and if i have problems with other vendors. ATT is just abusive - again ABUSE is a mild term to reflect how they treat customers. Everyone i talk to had a nasty experience with ATT - but seems like no one is willing to step up.

All of this certainly calls for a class action lawsuite and of course make efforts to curb these unlawful practices by ATT.

If there are people who want to join in and have had similar experiences, please reply back to this thread.

I will post this on additional forums to spread the word and report it to FTC, Better Business Bureau and State Attorney Generals.

I've been/currently an AT&T/Cingular/Uverse/Home Phone/Long Distance customer for well over 15 years, I've never had an issue dealing with them. Granted I only use unlocked cell phones (bloat free) so I've been able to deal directly with the manufacturer rather than having to deal with AT&T.

 

[bruceb]

Wireless carriers in most areas, now have the option of using the cable tv service fiber optics to run the T1 / T3 line out to the cell site tower. They do not always have to rely on the LEC for this. I know in the NJ / VA / MD / WA / NY area that at least 1 company (T-Mobile) was in the middle of doing this, going from Verizon to others to get the service to the towers. Mainly for lower cost and better reliability.

 

[Modelworks]

The breakup of AT&T was the worst thing to ever happen to telecom. It wasn't broken up because government wanted it. AT&T was broken up because AT&T wanted it done. Before the breakup they were heavily price regulated and couldn't profit like other companies. After the breakup their profits went up 300% in the first 5 years. You an partially blame Al Gore, he invented the internet right ? The internet is what AT&T and other companies used to get their free reign on the market. They went to congress and talked about all the great things they could do , 45Mbps connections for all, 200 digital tv channels, video phones , and more, ......"but we can't do it with government regulating our prices, we need that money to make the improvements, give it to us and we promise you will see amazing things !"

 

[Modelworks]

Wireless carriers in most areas, now have the option of using the cable tv service fiber optics to run the T1 / T3 line out to the cell site tower. They do not always have to rely on the LEC for this. I know in the NJ / VA / MD / WA / NY area that at least 1 company (T-Mobile) was in the middle of doing this, going from Verizon to others to get the service to the towers. Mainly for lower cost and better reliability.

Here they are all using point to point links on the towers because the terrain is mostly flat.That way they don't have to rely on anyone.

 

[rudder]

Seems AT&T's competitors are not with the antitrust suit either...

http://www.marketwatch.com/story/verizon-cautions-government-on-blocking-att-deal-2011-09-21

Demand is growing. And as mentioned... t-mobile had to be bought out or they would die a slow death. No capital to exploit the spectrum they owned.

More needless government meddling. We have a problem (spectrum allocation) but we need to make sure companies stagnate because we can't effectively deal with the problem.

 

[Jaepheth]

In the age of information, it is my opinion that telecommunications has become as essential a service as water or power. It's time to nationalize that industry.
:sneaky: