ATandT, T-Mobile Deal Dominates Day 1 at CTIA 2011

 
 
By Nicholas Kolakowski  |  Posted 2011-03-22
 
 
 

ATandT, T-Mobile Deal Dominates Day 1 at CTIA 2011


ORLANDO, Fla.-AT&T's proposed $39 billion acquisition of rival T-Mobile was the dominant issue during the opening keynotes at CTIA 2011, despite the best efforts of some speakers to keep the conversation focused on mobility's burgeoning growth, driven by consumer and business interest in both smartphones and tablets.

AT&T officials stunned the tech world when they announced the deal March 20, just 48 hours before the wireless industry's largest show of the year. Two days later, much of the early attendee buzz focused on the AT&T-T-Mobile news, a deal that, if approved, will drastically affect the plans of many companies gathered here to show off their latest devices. It seemed to be the topic of conversation in the Orlando airport, hotel bars and even an attendee-loaded bus headed for the Orange County Convention Center.

The CEOs and other leaders headlining the opening keynote March 22 took pains to avoid the proverbial elephant in the room. For the first hour, talk centered on mobility's growth and its supposedly beneficial effect on the U.S. economy as a whole.

"The proposed transaction that was just announced," Julius Genachowski, chairman of the Federal Communications Commission, told the audience, "I'm not going to comment on that."

The audience laughed. The FCC is one of the regulatory bodies that will have to review the proposed AT&T deal.

"Unleashing more spectrum must be a national priority," Genachowski said, suggesting that wireless helps power innovation. "If we don't innovate in the private sector and government, we risk letting big opportunities pass us by."

In the meantime, he added, the spectrum-squeeze issue facing the United States is critical.

American consumers "know what it means to have a dropped call or a slow connection or cranky WiFi," he said. But "while American ingenuity and our appetite for wireless is infinite, spectrum is not." The FCC's agenda, in that light, includes not only creating a transparent marketplace, but also removing obstacles to 4G deployment.

Genachowski's speech echoed one a few minutes earlier by Sprint CEO Dan Hesse.

"Mobile devices have become a lifeline," Hesse told the audience, referring to the use of smartphones by survivors of the recent Japanese earthquake and tsunami. He also cited the use of phones by protesters in the Middle East and North Africa as an example of how mobility is drastically affecting current events.

Like the FCC chairman, Hesse also called out the need for more spectrum for wireless devices, referring to it as the air "that gives our industry life and growth." The United States, he said, "must lead the way in wireless-broadband capacity."

Everything from cars to health-care applications, he predicted, would eventually benefit from tighter integration with wireless technology.

A Mad Money Round-Table


 

The second part of the keynote saw Jim Kramer, host of CNBC's "Mad Money," appear onstage to host a round-table with the mobile industry's biggest CEOs: Hesse, Verizon Wireless' Daniel Mead, and AT&T Mobility and Consumer Markets President and CEO Ralph de la Vega.

In keeping with his aggressive personality, Kramer charged head-on at the elephant. "You certainly ruined everybody's Sunday," he told de la Vega, referring to the day AT&T announced its T-Mobile acquisition.

The AT&T leader suggested the "need for additional spectrum" helped drive the deal with T-Mobile. "Few things in life grow 8,000 percent over four years," he said, before adding that the potential acquisition "helps alleviate the crunch by allowing the networks to be combined and more efficiently utilize that spectrum."

Kramer then turned to Hesse, asking him what he thought of AT&T's announcement.

"My opinion doesn't matter. I think the FCC and the DOJ ..." Hesse replied, referring in the latter case to the Department of Justice.

The room burst into laughter.

Then it was Mead's turn. "We're certainly very interested in what's going on," he said. "If you look at the history of our company, we built a foundation of great spectrum through a great many acquisitions."

Kramer asked whether Verizon had considered acquiring T-Mobile.

"We did think through that," Mead said. "We didn't think there was a need. We're extremely confident of where we're at."

On March 20, AT&T unveiled plans to acquire T-Mobile for $39 billion in cash and stock. That would make AT&T by far the largest carrier in the United States, but analysts feel the carrier will face substantial hurdles in getting the acquisition approved by government regulators.

"So far as regulatory oversight of AT&T/T-Mobile goes, I expect the FCC will be particularly careful," Charles King, principal analyst of Pund-IT, wrote in a March 21 e-mail to eWEEK. "Not only does the deal effectively consolidate a huge part of the U.S. wireless market in the hands of a vendor, but AT&T's wireless plan offerings and costs differ significantly from T-Mobile's."

Politics could also play a substantial role. "The FCC under President Obama has been considerably more vigilant than it was during previous administrations," King added. "AT&T may be gambling that the antiregulatory mood which pervades the GOP and the contentious run up to the 2012 elections will create enough turbulence to let the deal proceed."

Ahead of CTIA, AT&T's rivals were already beginning to protest the deal's size and scope.

"A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third-largest wireless competitor," read a March 20 statement from Sprint, as reprinted on AllThingsD. "If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically integrated companies that control almost 80 percent of the U.S. wireless post-paid market."

Based on the friendly aggression demonstrated by those mobility CEOs onstage-a certain laugher-filled hostility-the next several quarters' worth of competition could be especially fierce.

 


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