ATandT Has Few Options in Trying to Beat DOJ Suit

By Wayne Rash  |  Posted 2011-09-01 Print this article Print


So where does this leave us, really? For an unbiased look at life after the suit, I talked with Carl Howe, research director of the Yankee Group. The Yankee Group performed an exhaustive analysis of the effects, determining that the merger would meet the definition of being anti-competitive and would result in higher prices. The Yankee Group presented its findings to the DOJ and the Federal Communications Commission in June.

"The merger as proposed I think is pretty much dead," Howe said. "This is not the sort of lawsuit where they can tweak a few things. This was based on the competitiveness of the market." Howe noted that AT&T has a lot of incentive to keep trying to find a way to make the merger happen, if only because there's a $3 billion breakup fee, another $3 billion in patent and legal fees, and $7 billion in spectrum and other reimbursements to T-Mobile. The breakup fee and the items for T-Mobile must be paid if the merger isn't consummated by September 2012.

"I'm hard-pressed to see a way they could do it in a year," Howe said. He also noted that if the law is preventing a company from doing something, the other route is to change the law. AT&T has already spent millions in donations to senators and representatives on both sides of the aisle, and may spend billions if it has to in order to get the legislation it wants, according to Howe.

But even if AT&T has billions of dollars to spend on lobbying, it's hard to see how they could change the Clayton Antitrust Act in time. This fall, both houses of Congress will be wrangling over the budget and would hardly have time for a major rewrite of the antitrust laws. In addition, the Senate Subcommittee that would have to consider a change has already spoken out publically against the merger.

In fact, Sen. Herbert Kohl, D-Wis., yesterday went on record praising the DOJ's actions, so it's clear that there's no chance a change to the law would get through his committee at least before a new Senate is sworn in after the 2012 election.

Even if an effort by AT&T were to be mounted with the next Congress, there's little reason to expect success. The candidates will be focused mainly on the election. While they all want money, getting huge contributions from AT&T is certain to become an issue for opposition research, as well as fodder for the news media. As a result, getting a change to the antitrust laws through a dysfunctional Congress in a year seems unlikely.

As Howe suggested, "I'd advise AT&T to look somewhere else. They're not going to get the No. 4 carrier." 

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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