What Happens to AT&T and T-Mobile Now? Congressman Boucher Weighs In

    January 20, 2012
    Abby Johnson
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Last month, AT&T withdrew its bid to purchase T-Mobile USA from Duetsche Telekom after a lot of criticism, especially from the Department of Justice and the FCC. The merger did receive a lot of support, but the criticism proved to be louder.

Were you for or against the AT&T/T-Mobile merger? We’d love to know.

Former Congressman and Internet Innovation Alliance Honorary Chairman Rick Boucher supported the merger, as he explained in this previous interview with WebProNews, because he believed it would help spur innovation, the economy, and jobs. We recently spoke with him again to talk about the implications of the deal not going through.

“I was not surprised by that decision given what had happened prior to the time that the application was withdrawn,” said the Congressman.

He went on to explain that the merger would have brought an “improvement that we desperately need.” If you remember, one of the goals of the merger was to bring high-speed broadband connections to 97 percent of the U.S. in 6 years, which would have nearly fulfilled President Obama’s broadband plan. Since the deal fell threw, Congressman Boucher told us that, in order for the President’s goal to still be met, the government would have to step in with an investment.

“In this era of concern about deficit spending, finding those investments is going to be very difficult,” he said.

As for AT&T, Congressman Boucher told us that he thinks the company will still try to meet the goals it set with the merger in mind, but that it would take a lot longer than 6 years to fulfill them. Through T-Mobile, AT&T would have saved significantly in its effort to enable 4G, but now, it needs to come up with the monies on its own.

“My guess is AT&T, at this point, is going to focus on strengthening its network in its core areas building out its 4th generation technology on an incremental basis of market-by-market, as it is an opportunity for that investment to realize the highest rate of return,” the Congressman explains. “Instead of it happening within 6 years on a nationwide basis, undoubtedly without the merger having occurred, that may now take a somewhat longer period of time.”

Some reports have indicated that AT&T has been talking with several owners of 700 MHz licenses and is in the process of acquiring them as part of its backup plan in case the T-Mobile deal fell threw. This may very well be true since the company is in need of more spectrum.

The Congressman is also optimistic about T-Mobile saying it is in a “very strong position to be a viable competitor.” However, he did say that it would have challenges with deploying 4G.

“The challenge that T-Mobile faces is acquiring the capital that is necessary to deploy 4th generation technology across its network,” he pointed out.

While AT&T did have to pay T-Mobile $4 billion ($3 billion in cash and $1 billion in spectrum rights), the Congressman said that T-Mobile would still need considerably more financing. What’s more is that T-Mobile’s parent company, Deutsche Telekom, had said, prior to the merger, that it wanted to exit the U.S. market and was not going to invest in it further. If this is still the case, T-Mobile could have a tough road ahead.

Since the future of T-Mobile is still in question, there have been some speculations about whether or not AT&T will make another attempt at buying the company. Congressman Boucher told us that, at this point, it seemed that the companies were headed in two different directions.

Sprint has also been mentioned as a potential buyer of T-Mobile, but the Congressman thinks such a merger would face the same scrutiny that the AT&T/T-Mobile did.

“I think it’s gonna be very difficult for any of the major carriers to purchase T-Mobile, given the position of the Department of Justice and the FCC,” he said.

Speaking of major carriers, he said it would be “impossible” for Verizon to make such a purchase. If a carrier were to purchase it, the Congressman thinks it would have to be smaller than T-Mobile.

Another possibility would be to sell T-Mobile in parts, which is not what Congressman Boucher considers to be a good decision.

“This is a world where business dominates,” he said. “I think Deutsche Telekom will make its decision very carefully based upon the relative value of the business offers that are made.”

In terms of the mobile industry as a whole, Congressman Boucher told us that the merger not going through was negative for mobile, consumers, and the economy.

“The long term impact is that we don’t get the deployment of 4th generation technology to 97 percent of the American public within the next half decade,” he said. “I think that’s the major negative impact.”

“Wireless technology was the answer,” he added. “We were going to bring broadband to the broadband have-nots – I’m not sure what the answer is now.”

What do you think the next steps will be not only for AT&T and T-Mobile, but also the mobile industry? Please share your thoughts.

  • Clifford Bush

    I tanke that t-mobile needs the iPhone they need it to help them to stay in the running with At&t and other. For At&t they need to take that money and get bater towers if that what going to make them bater.

  • John

    I was definitely, and still am, for the Blue-Magenta merger.

    I have AT&T and since most of the people I know have AT&T and T-Mobile, I would have been able to ditch my unlimited calling plan with AT&T. I have the grandfathered unlimited data so I would’ve been happy with just moving onto a 4G LTE smartphone in the future as I keep paying the same price, although I’m happy with my 3G service in Los Angeles right now. Now that the merger isn’t happening, I’m afraid my service will actually get worse. I feel like the iPhone 5 or something will ruin my network again.

    I’m trapped because if I jump ship and switch to T-Mobile, my service will just remain lacklustre. I know because I’ve had T-Mobile and had to rely on my own WiFi at home so as to make a damn call. Now, I’m just stuck at AT&T since the other GSM network is just plain crap. If AT&T 4G LTE fails miserably, which I predict will, where would I go? Verizon’s CDMA/LTE service, which is already known to suck balls, and get charged hella? How about Sprint, which also sucks balls, which has the failed WiMax network and which doesn’t have a 4G LTE plan at all? Sounds like T-Mobile’s current predicament!

    Well, Congressmen, it seems like AT&T still monopolises the wireless industry. Thanks a lot. I personally would’ve been better off with the merger. I feel bad about T-Mobile too as they will clearly fail to survive this one. They’ll probably try to get an iPhone working on their 1700MHz UMTS network, which will ultimately shut their network down, even with their data throttling plan. AT&T will probably get the merger in the future anyway!

    • Jon

      As a loyal T-Mobile customer, I am very happy the AT&T Death Star did not consume T-Mobile. I have had my taste of the big three already and was unimpressed with their poor customer service, high prices, and (for Sprint and Verizon) poor call quality (must be the antiquated CDMA technology). By removing the leader in low prices and customer service, AT&T was simply looking to lower the bar for themselves which, as the FCC realized, would only raise prices and result in more outsourced call centers.

      AT&T’s claims of creating “up to” 98,000 American jobs were pure propaganda (hence the “up to” caveat). Also, AT&T HAD plenty of unused spectrum already with which to expand their LTE coverage. Of course, some of that belongs to T-Mobile now.

      I find it comical that an AT&T customer wants so much to get a part of T-Mobile, while at the same time stating how unhappy they were with them (and with AT&T). I am fine the way T-Mobile has been operating. While I admit that they do not have the greatest coverage, they have it where I need it, and their innovative wifi calling solution goes a long way in making up for the rest.

      Don’t even get me started about Apple’s overhyped me-tooPhone. It’s still 3G, has no MicroSD slot, no replacable battery, no 4G hotspot, no video calling over the network, no widgets, no Swype keyboard, no hard keyboard, no choices, and it continues to be on the heels of Android in terms of every other “innovation” it claims to bring to market. Voice recognition? Big deal. The very first Android phone had voice recognition. I use mine regularly to tell my phone to find and navigate to new locations on-the-fly while I’m driving. Oh, wait. I guess the iPhone wouldn’t need to do that, since it doesn’t do turn-by-turn navigation like Google Navigator does. My G2 is still more capable than the iPhone 4S in terms of functionality, and I wouldn’t trade it for two iPhone 4S’s (except maybe to sell those two and buy another G2).

      When I first moved to my current home, I had no coverage inside my house and had to rely on wifi calling. I called T-Mobile to complain about my coverage and a few months later I had five bars in my basement. How many other companies have that kind of commitment to their customers?