Originally published: September 13, 2011
Last updated: September 13, 2011 - 4:13pm
AT&T was undoubtedly aware that there were real antitrust risks when it decided to gobble up its smaller rival earlier this year. Certainly T-Mobile recognized those risks; it demanded a package of cash, spectrum and a roaming agreement worth an estimated $6 billion to $7 billion if the deal didn't go through.
AT&T miscalculated the level of opposition it would face in pushing the deal through. After the merger was announced in March, numerous telecommunications firms came out in opposition. The opponents were in all parts of the wireless ecosystem, ranging from equipment and infrastructure providers to smaller wireless providers to roaming partners to potential new entrants. Many of these firms do business with AT&T today, and their willingness to brave AT&T's displeasure by taking a public stand is noteworthy.
For months, AT&T had been claiming that it needed the merger to bring high-speed wireless broadband to 97% of America, especially rural America. This is what it told Congress. But AT&T apparently had done some internal analysis suggesting it could accomplish the same objective — even without the T-Mobile merger — at a cost of $3.8 billion. That number apparently should have been redacted. As a result of this misstep, AT&T created for itself a major credibility nightmare. One may well ask why it needed to spend $39 billion to buy a competitor when it could accomplish the same goal for one-tenth of the price. AT&T's response was that the letter "contained no new information." Maybe it was not new information for the FCC, but it was new to Congress and the rest of the world.
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