That’s the day a federal judge has set for AT&T and the Department of Justice to appear in court “ready to discuss the prospects of a settlement,” Bloomberg’s Sara Forden reports.
From an editorial in the Wall Street Journal responding to this week’s announcement that the Department of Justice is suing to block the merger of AT&T and T-Mobile:
The real threat to wireless competition is the lack of available spectrum for companies to use to meet public demand. The crunch has become acute as consumers snap up new smartphones, which enable them to watch videos, download data and more. The last auction was held in 2008 and there aren’t any new ones on the calendar. If companies can’t get the spectrum they need, they’ll restrict usage through higher pricing—exactly what the Justice Department says it doesn’t want.
The political interpretation of Justice’s actions was borne out yesterday when acting antitrust chief Sharis Pozen said that “our door is open” to AT&T if the company wants to resolve the government’s “concerns.” In other words, do our bidding on some regulatory or political business, and you can still get your merger. Meantime, Ms. Pozen and Justice are putting a legal damper on investment and innovation in one of America’s few dynamic industries, and that will do economic damage far beyond AT&T.
The Wall Street Journal‘s complaints about the DoJ’s actions are echoed by Geoffrey Manne of Forbes, who wrote shortly after the lawsuit was announced:
[E]ven on a national level, the blithe dismissal of a whole range of competitors is untenable. MetroPCS, Cell South and many other companies have broad regional coverage (MetroPCS even has next-gen LTE service in something like 17 cities) and roaming agreements with each other and with the larger carriers that give them national coverage. Why they should be excluded from consideration is baffling. Moreover, Dish has just announced plans to build a national 4G network (take that, DOJ claim that entry is just impossible here!). And perhaps most important the real competition here is not for mobile telephone service. The merger is about broadband. Mobile is one way of getting broadband. So is cable and DSL and WiMax, etc. That market includes such insignificant competitors as Time Warner, Comcast and Cox. Calling this a 4 to 3 merger strains credulity, particularly under the new merger guidelines.
Our response to this week’s announcement is here.
Alliance disappointed with Department of Justice move to block merger; lawsuit detrimental to economy and U.S. growth
WASHINGTON, D.C. – August 31, 2011 – The Internet Innovation Alliance (IIA), a broad-based coalition supporting broadband access and adoption for all Americans, today issued the following statement in response to reports that:
1. The Department of Justice filed a lawsuit to block the AT&T and T-Mobile merger; and
2. AT&T would create 5,000 new jobs at U.S.-based call centers – jobs that are currently outsourced:
“The Department of Justice decision today is contrary to this Administration’s commitments to grow the economy, create jobs and expand broadband deployment,” said IIA Senior Advisor Broderick Johnson. “Next week, President Obama is expected to unveil a wide ranging pro-jobs plan. Approval of this merger is consistent with that critical message.”
“The IIA is supportive of the merger because it will be helpful to our economy and U.S. job creation,” said IIA Honorary Chairman Rick Boucher. “Bringing jobs back to America and investing in broadband technology which will foster innovation are a win-win for the U.S. economy.”
AT&T, an IIA member, also committed that the merger will not result in job losses for U.S.-based wireless call center employees of T-Mobile or AT&T, when the merger closes. Analysis of the merger has shown the following:
• According to a study by the independent organization Economic Policy Institute (EPI), investment related to the merger will create an estimated 55,000 to 96,000 new jobs.
• The Communication Workers of America (CWA) has stated that a post-merger AT&T will be better able to retain and increase jobs, in the long term, because it will be in a more advantageous position to expand and extend its business than either AT&T or T-Mobile could as separate entities.
“Bringing call center jobs to American workers is commendable, but it’s the tip of the iceberg,” said IIA Co-Chairman Bruce Mehlman. “The real job-generating benefits of the merger will be seen as higher-speed mobile broadband gets deployed to millions more Americans, giving them far greater opportunities to reach new customers, serve new markets and benefit from new applications and services that are transforming the global economy.”
As recent research shows, investment in broadband technology — also a pledge with the merger — will greatly contribute to job creation in the United States:
• Wireless carriers could invest between $25 billion and $53 billion in building out their 4G network through 2016, which could lead to the creation of 371,000 to 771,000 jobs and gross domestic product growth of $73 billion to $151 billion, according to a study from Deloitte.
• According to a McKinsey study, the Internet creates 2.6 new jobs for every one job lost.
With the Department of Justice and Federal Communications Commission separately looking over the planned merger of AT&T and T-Mobile, The Hill‘s Gautham Nagesh checked in with AT&T’s Jim Cicconi:
“We’re not really running into major concerns or disquiet about the deal on any scale that we feel would threaten approval,” said AT&T senior executive vice president Jim Cicconi, pointing out the deal has now been endorsed by 27 state governors, more than 100 mayors and over 150 Chambers of Commerce nationwide. “We’ve got good momentum on this and it’s growing.”
Cicconi also made clear that one of the merger’s key selling points — near achievement of President Obama’s goal of reaching 98 percent of Americans with broadband by deploying next-generation LTE coverage to the vast majority (97%) of Americans — hinges on merger approval:
“With this transaction we can and will (build out to 97 percent of the population),” Cicconi said. “It costs a lot to do that, $8 billion, but it’s money we’re willing to invest if this merger is approved. We’re not going to do that otherwise. Period. It’s very simple, it’s binary. If approved we can and will do it, if not we cannot and won’t.”
With Christine Varney, Assistant Attorney General for the Justice Department’s Antitrust Division, scheduled to move on later this month, Sara Jerome of the National Journal reports the DOJ has announced current chief of staff Sharis Pozen will step in to the role.
The DOJ is currently reviewing the merger of AT&T and T-Mobile.
Via Sara Jerome of the National Journal, House Judiciary Chairman Lamar Smith [R-Texas] “urged federal regulators on Monday to see the benefits in AT&T’s proposed merger with T-Mobile USA.”
For the past few months, the FCC had been following a self-imposed 180-day “shot clock” to weigh in on the proposed merger of AT&T and T-Mobile. But as Josh Smith of the National Journal reports, new information from AT&T has changed things:
The Federal Communications Commission stopped an informal “shot clock” for its review of AT&T’s merger with T-Mobile on Wednesday to allow for new information to be submitted to the agency.
The agency needs more time to collect information about new models that AT&T is using to bolster its arguments, Rick Kaplan, chief of the FCC’s Wireless Telecommunications Bureau, said in a letter to AT&T lawyers at Arnold & Porter.
When the merger was announced in March, AT&T stated it expected the approval process to take at least a year.