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Leaked AT&T Letter Demolishes Case For T-Mobile Merger
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Old 08/12/2011, 06:07 PM   #1 (permalink)
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Hi all,

FYI.

Take care,

Jay


Leaked AT&T Letter Demolishes Case For T-Mobile Merger
Lawyer Accidentally Decimates AT&T's #1 Talking Point
by Karl Bode

Leaked AT&T Letter Demolishes Case For T-Mobile Merger - Lawyer Accidentally Decimates AT&T's #1 Talking Point | DSLReports.com, ISP Information

Yesterday a partially-redacted document briefly appeared on the FCC website --accidentally posted by a law firm working for AT&T on the $39 billion T-Mobile deal (somewhere there's a paralegal looking for work today). While AT&T engaged in damage control telling reporters that the document contained no new information -- our review of the doc shows that's simply not true. Data in the letter undermines AT&T's primary justification for the massive deal, while highlighting how AT&T is willing to pay a huge premium simply to reduce competition and keep T-Mobile out of Sprint's hands.

We've previously discussed how AT&T's claims of job gains and network investment gained by the deal aren't true, with overall network investment actually being reduced with the elimination of T-Mobile. While AT&T and the CWA are busy telling regulators the deal will increase network investment by $8 billion, out of the other side of their mouth AT&T has been telling investors the deal will reduce investment by $10 billion over 6 years. Based on historical averages T-Mobile would have invested $18 billion during that time frame, which means an overall reduction in investment.

Yet to get the deal approved, AT&T's key talking point to regulators and the press has been the claim that they need T-Mobile to increase LTE network coverage from 80% to 97% of the population. Except it has grown increasingly clear that AT&T doesn't need T-Mobile to accomplish much of anything, and likely would have arrived at 97% simply to keep pace with Verizon. AT&T, who has fewer customers and more spectrum than Verizon (or any other company for that matter), has all the resources and spectrum they need for uniform LTE coverage without this deal.



For the first time the letter pegs the cost of bringing AT&T's LTE coverage from 80% to 97% at $3.8 billion -- quite a cost difference from the $39 billion price tag on the T-Mobile deal. The letter highlights how the push for 97% coverage came from AT&T marketing, who was well aware that leaving LTE investment at 80% would leave them at a competitive disadvantage to Verizon. Marketing likely didn't want a repeat of the Luke Wilson map fiasco of a few years back, when Verizon made AT&T look foolish for poor 3G coverage.

The letter also notes that AT&T's supposed decision to "not" build out LTE to 97% was cemented during the first week of January, yet public documents (pdf) indicate that at the same time AT&T was already considering buying T-Mobile, having proposed the deal to Deutsche Telekom on January 15. In the letter, AT&T tries to make it seem like the decision to hold off on that 17% LTE expansion was based on costs. Yet the fact the company was willing to shell out $39 billion one week later, combined with AT&T's track record with these kinds of tactics, suggests AT&T executives knew that 80-97% expansion promise would be a useful carrot on a stick for politicians.

While the $39 billion price certainly delivers AT&T some equipment, employees, and spectrum, most of T-Mobile's network replicates AT&T's existing resources in major markets, and T-Mobile's network is significantly less robust in rural markets where AT&T would want to expand. While the deal provides AT&T with a shortcut to sluggish tower builds in a few select markets, by and large AT&T will be faced with terminating many redundant positions and decommissioning a lot of duplicative equipment. They'll also have to close a large number of retail operations and independent retailers.

Again, the reality appears to be that AT&T is giving Deutsche Telekom $39 billion primarily to reduce market competition. That price tag eliminates T-Mobile entirely -- and makes Sprint (and by proxy new LTE partner LightSquared and current partner Clearwire) more susceptible to failure in the face of 80% AT&T/Verizon market domination. How much do you think wireless broadband market dominance is worth to AT&T over the next decade? After all, AT&T will be first to tell you there's a wireless data "tsunami" coming, with AT&T and Verizon on the shore eagerly billing users up to $10 per gigabyte.

Regardless of the motivation behind rejecting 97% LTE deployment, the letter proves AT&T's claim they need T-Mobile to improve LTE coverage from 80-97% simply isn't true. That's a huge problem for AT&T, since nearly every politician and non-profit that has voiced support for the merger did so based largely on this buildout promise. It's also a problem when it comes to the DOJ review, since proof that AT&T could complete their LTE build for far less than the cost of this deal means the deal doesn't meet the DOJ's standard for merger-specific benefits.
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Old 08/12/2011, 06:20 PM   #2 (permalink)
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Funny it takes a leaked document to prove what EVERYONE has been saying/thinking about the deal since it was announced...
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Old 08/12/2011, 06:29 PM   #3 (permalink)
 
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I love that it was AT&T that proved what no one else could. They totally screwed themselves with this one! LOL I'd love to be a fly on the wall at Verizon's top offices when this one broke.
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Old 08/12/2011, 06:51 PM   #4 (permalink)
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haha finally! I was sooo scared we loose competition! No wonder att recently added unlimited minutes to any mobile to their plans!
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Old 08/12/2011, 06:55 PM   #5 (permalink)
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It's going to get approved. I wonder how many politicians will get bribed to put this through. What seems like common sense really isn't with our elected officials.
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Old 08/12/2011, 07:00 PM   #6 (permalink)
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I was excited that this couldve meant webOS on TMobile but oh well.
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Old 08/12/2011, 09:40 PM   #7 (permalink)
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Yeah, I'm sure AT&T has been bribing a lot of politicians for this merger.
I really hope it doesn't go through. It would be much better if Sprint acquired them.
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Old 08/13/2011, 12:54 AM   #8 (permalink)
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Originally Posted by Smartfah View Post
Yeah, I'm sure AT&T has been bribing a lot of politicians for this merger.
I really hope it doesn't go through. It would be much better if Sprint acquired them.
Hi,

1. I agree with you about the merger, it will lead to higher phone and data plan rates as well as higher rates for Phones. Canada had a very similar situation and has other similarities to the American market, (in Canada phone prices are subsidized unlike Europe, where you buy the phone outright), with 2 or 3 large cell providers and 2 smaller ones. A larger firm was allowed to gobble up a small one....rates went up across the board for everyone at all companies.

There is another disturbing tread to this:

At least one of the Providers in Canada, Rogers is trying to link smartphones to a 3 year contract....They are trying to CRAM 3 years contracts down the throats of the public

I'm still using my trust Centro until the Pre3 arrives.....my contract (2 year) ended the middle of last Oct. In just the 2 years of the contract Palm, dumped PalmOS for WebOS, dropped the Treo and Centro lines and went with the Pre/PP & Pixi lines. Palm then was sold to HP.

That was in just 2 years....with smartphones evolving so quickly, why would anyone want a 3 year contract? With a three year contract the smartphone model in question might as well be a toaster!

2. Now to your 2nd point....to that I disagree 100%! Sprint almost went belly up trying to digest the disaster of buying Nextel...which didn't use the same tech as Sprint...they couldn't shake Nextel's extremely loyal fans free from Nextel's tech, even when they added Push to Talk to certain models, (they should have added push to talk to a wider slice of Sprint's phones and waited far to long to do so).

Sprint was then left saddled with maintaining two different techs some on the same towers some on diffident towers....any cost savings from the merger were lost on all of this extra maintenance and the Nextel users final "coup de grace", was to leave Sprint...Sprint wasn't that far off from going belly up...it left them a far smaller firm who is recently stabilized.

Now T-Mobile uses different tech than Sprint and Sprint couldn't afford to go down that road again.

However, I'm sure that Sprint's lawyers now know of the letter in question and will make sure that EVERYONE knows about it!


Take care,

Jay
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Old 08/13/2011, 02:22 AM   #9 (permalink)
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Niiiice. Now if only someone in Washington can take this and run with it... this merger has bs and wrong written all over it.
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Old 08/13/2011, 02:50 AM   #10 (permalink)
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Originally Posted by ilovedessert View Post
...However, I'm sure that Sprint's lawyers now know of the letter in question and will make sure that EVERYONE knows about it!

Take care,

Jay
You provided some nice insight; however this quote above is probably my favorite part.
I can't wait for Sprint to use this letter and make headlines.
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Old 08/13/2011, 11:36 AM   #11 (permalink)
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Hi,

1. I agree with you about the merger, it will lead to higher phone and data plan rates as well as higher rates for Phones. Canada had a very similar situation and has other similarities to the American market, (in Canada phone prices are subsidized unlike Europe, where you buy the phone outright), with 2 or 3 large cell providers and 2 smaller ones. A larger firm was allowed to gobble up a small one....rates went up across the board for everyone at all companies.

There is another disturbing tread to this:

At least one of the Providers in Canada, Rogers is trying to link smartphones to a 3 year contract....They are trying to CRAM 3 years contracts down the throats of the public

I'm still using my trust Centro until the Pre3 arrives.....my contract (2 year) ended the middle of last Oct. In just the 2 years of the contract Palm, dumped PalmOS for WebOS, dropped the Treo and Centro lines and went with the Pre/PP & Pixi lines. Palm then was sold to HP.

That was in just 2 years....with smartphones evolving so quickly, why would anyone want a 3 year contract? With a three year contract the smartphone model in question might as well be a toaster!

2. Now to your 2nd point....to that I disagree 100%! Sprint almost went belly up trying to digest the disaster of buying Nextel...which didn't use the same tech as Sprint...they couldn't shake Nextel's extremely loyal fans free from Nextel's tech, even when they added Push to Talk to certain models, (they should have added push to talk to a wider slice of Sprint's phones and waited far to long to do so).

Sprint was then left saddled with maintaining two different techs some on the same towers some on diffident towers....any cost savings from the merger were lost on all of this extra maintenance and the Nextel users final "coup de grace", was to leave Sprint...Sprint wasn't that far off from going belly up...it left them a far smaller firm who is recently stabilized.

Now T-Mobile uses different tech than Sprint and Sprint couldn't afford to go down that road again.

However, I'm sure that Sprint's lawyers now know of the letter in question and will make sure that EVERYONE knows about it!


Take care,

Jay
Thanks as always for the articles. Completely agree with need for competition. Not sure I'd call Sprint stable, haven't they lost money in something like 17 of 18 quarters? Sooner or later their investors are going to demand a stop to the bleeding. I hope both Tmo and Sprint survive as independent companies.
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Old 08/13/2011, 03:12 PM   #12 (permalink)
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I almost feel sorry for the lawyer that accidentally leaked this document.

Almost.
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Old 08/13/2011, 04:11 PM   #13 (permalink)
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I almost feel sorry for the lawyer that accidentally leaked this document.

Almost.
Hi all,

LOL...LMAO...all I keep thinking is M-A-L-P-R-A-C-T-I-C-E!

Take care,

Jay
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Old 08/16/2011, 06:47 AM   #14 (permalink)
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Here are links to the actual letters :

https://prodnet.www.neca.org/publica.../81011att3.pdf (the original, with all the good stuff - I urge eveyone to rpint this letter out and send it to ther congressman and senator)

https://prodnet.www.neca.org/publica...df/8911att.pdf (the revised, cleaned up letter)

And, the spin has begun, starting with Engadget:

Leaked FCC document details AT&T's 4G LTE rollout plans, talks up T-Mobile merger -- Engadget

Here is their "take on the reading of this document", and even their readers are all over them for it:

"On Friday, a law firm accidentally posted a letter to the FCC website, detailing AT&T's confidential 4G LTE rollout plans and explaining how they would be bolstered by a merger with T-Mobile. Arnold & Porter LLP, which is helping design the deal on AT&T's behalf, quickly removed its partially redacted document, but the folks over at Gizmodo have gotten their hands on it once again and recently posted it for our viewing pleasure. According to the document, AT&T plans to extend its US coverage to 70 million consumers by the end of this year, before ramping that figure up to 170 million by the end of 2012 and a full 250 million by the end of the following year. The carrier plans to achieve this by upgrading a full 44,000 of its nodes to LTE over the course of the next three years and, once its merger goes through, hopes to cover 97 percent of all Americans within the six years following approval. The letter goes on to explain how the economics behind the TIA-approved deal would help facilitate these aspirations, while confirming that the merger is indeed as expensive as earlier reported -- a whopping $3.8 billion, to be exact. To read the document in full, hit up the links, below."

Really Engadget???? You chose to report on which version of the "leaked doucment???

I guess we shouldn't be too surprised.. Engadget isnt a news site, they are a tek blog site, and they do exhibit bias on a regular basis in their blogs.

Now, about this deal going through... AT&T never would have risked that $3.8 billion penalty if they didn't know (in their own minds) that they had enough clout at the federal level to push this through.

Years and years of funding politicians, and lots of lobbyists already working almost 7 months on this are likely what they are basing this on.

Ever since corporations were allowed to make political contributions, the individual citizen ( who still is the only legal entity with the right to vote out thier congressional and senatorial representatives) has lost almost all of his/her importance in the law making, and enforcement process.

The only way this can change is if every voting citizen voices up loud and clear.

Everyone KNOWs what this deal is really about, however, the wealthy want it to go through so that they can make more money, the politicians will let it go through because the loudest voice in their ears is the corporations, while the citizens of the US, on the whole, remain oblivious to what this is really about, and, as a result, will demonstrate apathy and ignorance until it is too late - most are kept so distracted from matters like this as they are just trying to keep their jobs and put food on their tables, while raising their children.

Interesting that this happened on Friday, and no big event in the news has hit the main media, isn't it?

That, folks, is the "writing on the wall", sadly enough.
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Old 08/31/2011, 01:12 PM   #15 (permalink)
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Verizon wants the deal so they can control the market with AT&T and bring prices up. The one that has been fighting this merger id Dan Hessee CEO of Sprint. AT&T main purpiose is to eliminate competition, so they can go ahead and increase prices. Verizon will go along that road and since both have different technologies Verizon can play ball. GSM VS. CDMA with prices up without any competition.
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Old 08/31/2011, 03:03 PM   #16 (permalink)
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Hi all,

I agree with you...however they had a round table type discussion on CNBC just after the DOJ renouncement. They mentioned at one point Sprint was interested buying T-M and AT&T rode in to thwart the plans....which was news to me...b/c S merging with Nextel was a total disaster!

take care,

jay
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Old 09/11/2011, 12:05 AM   #17 (permalink)
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I still don't understand why the government is even considering allowing AT&T to buy T-Mo. That would bring national wireless carriers down to only 3. Not to mention T-Mo is known for offering lower prices and that helps keep the other carriers prices from going crazy high. This deal would cause more problems then it would solve.
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Old 09/11/2011, 06:23 AM   #18 (permalink)
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I still don't understand why the government is even considering allowing AT&T to buy T-Mo. That would bring national wireless carriers down to only 3. Not to mention T-Mo is known for offering lower prices and that helps keep the other carriers prices from going crazy high. This deal would cause more problems then it would solve.
Read my post above.

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