Where Does This Leave the Merger?

By Wayne Rash  |  Posted 2011-08-31 Print this article Print


Of course, the obvious question is where this leaves the merger?

Right now, that's not clear. During its press conference, DOJ attorneys said that they were open to offers from AT&T as to how they might make the merger something they could swallow. However, it's also worth noting that groups opposing the merger have all said that no compromise will make the merger acceptable. Likewise, Sprint has said that the merger must be stopped, not modified.

And of course, there's the inconvenient matter of antitrust law that pretty clearly states that a merger of four major competitors into three is illegal. AT&T hasn't said what it plans to do that will make it O.K. with the Justice Department to circumvent the law.

And then there's that pesky Federal Communications Commission.

For the merger to work, the FCC must also decide that it's in the public interest, and won't reduce competition, hurt consumers or be contrary to the public interest. In an unusual statement, FCC Chairman Julius Genachowski said that competition is an essential part of the FCC's public interest analysis, and that the Commission is worried about the same problems as the DOJ.

What's more likely is that the opposition of the Justice Department, and apparently the FCC, will either kill the deal or stretch it out so long with litigation that it becomes moot because some other company-maybe Google?-will offer to buy T-Mobile for more money.

So while the DOJ action hasn't killed the merger, it's certainly placed it in extremis. Right now, the merger is facing formidable odds. With U.S. Senate hearings in the offing, and more lawsuits a sure thing, AT&T's stockholders should insist that the company call it quits. But AT&T, believing in its own invincibility, won't do this-at least until it finds that the District Court treats it the same as it did in 1982.


Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazineÔÇÖs Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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