November 2011

Samsung, the world’s biggest smartphone maker, won a battle in its global patent war with Apple as an Australian appeals court overturned a ban on the sale of its tablet rivaling the iPad.

Samsung can begin sales of its Galaxy Tab 10.1 in the country starting Dec. 2, a federal appeals judge ruled. A three-member appeal panel unanimously said that a lower-court judge earlier made a mistake in granting Apple’s request for a ban. Apple must file an emergency appeal against this verdict in the Canberra-based High Court, the nation’s apex legal body, to extend the ban. The Australian dispute is part of a battle between the companies on at least four continents that began in April, when Apple sued Samsung in the U.S. and accused it of “slavishly” copying the designs of iPhones and iPads.

The Federal Communications Commission is expected to accept the withdrawal of AT&T and T-Mobile’s merger application, clearing the way for the companies to concentrate on their separate antitrust battle with the Justice Department. The companies hope to win their federal lawsuit against Justice and then reapply for their merger with the FCC. The agency is also expected to announce the release a report on its findings from its merger review — a move the companies have protested because the findings could influence the Justice Department’s separate lawsuit against the merger in the U.S. District Court of the District of Columbia.

The wireless giants argue that to release the report would go against FCC protocol. Dick Wiley, AT&T’s outside attorney, called FCC Commissioner Mignon Clyburn, saying that the merger application has already been withdrawn and that any documents related to the agency’s review of the deal should remain sealed. “Releasing staff workproduct concerning a matter no longer before the Commission would be unprecedented,” Wiley said in an ex-parte filing with the FCC. “In this case, the workproduct is highly deliberative in nature as it is a draft for consideration by the Commissioners that, if finalized and approved, would merely provide the basis for issues to be considered by an Administrative Law Judge. This workproduct would in no way constitute official findings of the Commission.”

Update:

The FCC staff report says AT&T failed to make the case that the merger would create up to 96,000 new jobs in the U.S. and allow the carrier to roll out 4G service to an additional 17 percent of the U.S. population. Instead of increasing jobs, the merger would likely lead to major layoffs as the combined company cut duplicative positions, FCC officials said Tuesday.

AT&T and T-Mobile did not "attempt to give specifics or quantify their claims with respect to the number of indirect jobs that will be crated by the proposed transaction, making it impossible to assess whether any indirect employment gains, even if transaction specific and realized, will outweigh the direct employment losses," the staff report said.

The FCC cannot consider indirect jobs that "might" be created as a benefit "in the absence of concrete evidence," the report said.

Read the Order http://transition.fcc.gov/transaction/DA-11-1955.pdf

Read the staff report http://transition.fcc.gov/transaction/ATT-TMO-redacted-PDF-final.pdf

AT&T, under pressure from regulators over its bid for T-Mobile USA, may be willing to shed up to half of the target’s customers to close the deal and gain control of assets including wireless spectrum, analysts said.

AT&T, the second-largest U.S. wireless operator, is weighing the sale of customers and spectrum to address Justice Department concerns that the acquisition of the fourth- largest operator will undercut competition. The company may propose total divestitures of as much as 40 percent of T-Mobile assets. AT&T could sell a higher percentage of T-Mobile’s customers and smaller share of other assets, said Roger Entner, founder of market research firm Recon Analytics LLC. Most important for AT&T is getting T-Mobile spectrum, or licenses to airwaves that provide more capacity for wireless traffic, he said. “It’s still a good deal even if they have to give up half the customers,” said Entner. “AT&T desperately needs spectrum in larger cities and would give it up elsewhere.” AT&T wants to work out an agreement with the Justice Department, which sued on Aug. 31 to block the deal. If the two sides can’t reach a compromise, they’re scheduled to go to trial in February.

So what happens in the aftermath of AT&T/T-Mobile? Every operator would have a different take depending on what side of the AT&T-Mo battle lines they stood and their relative position in the mobile market.

Here’s Fitchard’s take on who would win and who would lose:

• AT&T: It may seem obvious that AT&T loses if its blockbuster acquisition fails, but AT&T isn’t as bad off as it claims. AT&T wouldn’t be able to piece together the massive 20 MHz-by-20 MHz LTE juggernaut it hoped to gain with T-Mobile’s Advanced Wireless Service (AWS) spectrum, but it’s still fairly well off spectrum-wise. The most lasting damage from the merger fallout to AT&T may be in public perception.
• T-Mobile: T-Mobile could come out of this smelling slightly sweeter than when it started. A failed acquisition means a big $3 billion payout for DT as well as the handover of $3 billion worth of spectrum to T-Mobile. That spectrum probably won’t be enough to launch a nationwide LTE network (if it were, AT&T wouldn’t need to buy T-Mobile’s spectrum,) but assuming AT&T does fork over some of its own AWS holdings, T-Mobile could build upon it to become a much stronger mobile broadband player.
• Verizon: If the AT&T-Mo merger just disappeared, Verizon would be happy: no new regulations on the wireless industry, no definitive decision to deny the mega-merger, no harm, no foul.
• Sprint: Sprint, of course, would celebrate the failure of AT&T-Mo, but ironically it might have actually benefited if the merger went through.
• MetroPCS and Leap Wireless: They would miss out on their biggest opportunity to expand for some time. Any AT&T deal with the FCC or DOJ would have required massive divestitures of markets and spectrum, all of which Metro and Leap could have picked up to either expand their footprints or add capacity to their CDMA and LTE networks.