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When you see the outpouring of comments regardingthe antitrust lawsuit filed in the U.S. District Court for the District of Columbia on Aug. 31 to block the proposed merger of AT&T and T-Mobile, it brings to mind the line from Shakespeare’s Macbeth: “Sound and fury, signifying nothing.” But in reality, the sentiments-pro and con-signify a great deal, even if they may not influence the lawsuit at all.
The first people I heard from were the opponents of the Department of Justice action, expressing their surprise that it happened. First out of the gate after the principals gave their predictable responses was the Competitive Enterprise Institute, a conservative think tank here in Washington. The institute somehow decided that the merger of AT&T and T-Mobile was pro-competitive, even though it would effectively eliminate competition for GSM phone users. The institute’s headline explains its thinking: “DOJ Antitrust Lawsuit Subverts Free Enterprise, Job Creation.”
Shortly after that, I heard from two representatives of the Hispanic community. One, the Hispanic Chamber of Commerce, claims that the DOJ antitrust lawsuit hurts Hispanic businesses in the United States. The USHCC notes that AT&T has promised to spend $8 billion in technology investment and bring 5,000 jobs back to the U.S. The organization does not say how this is better for Hispanic businesses than lower prices and more competition.
The other Hispanic group, the National Hispanic Media Coalition, claims the merger between AT&T and T-Mobile would hurt Hispanic people. “We applaud DOJ for taking this important step to prevent consumers from being steamrolled over in AT&T’s brazen attempt to pad its pockets and eliminate competition,” said Alex Nogales, the group’s president and CEO. The NHMC is an advocacy group backing employment and equal programming opportunities for Latinos and other people of color.
NHMC Vice President of Policy and Legal Affairs Jessica Gonzales told eWEEK exclusively: “It’s wonderful to see that the DOJ is enforcing antitrust laws and putting consumers first. For years we have seen Goliath dominate David. And yesterday the little guy won. We are anxiously awaiting a final decision that similarly puts the will of the people before giant corporations, and upholds competition, lower prices and jobs for Americans.”
On the job front, theCommunications Workers of America said in a story published in International Business Times that blocking the merger would cost up to 96,000 U.S. jobs, but didn’t say how it arrived at that number. Perhaps revealing its true motives, the CWA also slammed T-Mobile for being non-union.
Most telling, however, is the response from rural America, the large portion of the country that AT&T promises to help by bringing high-speed communications to 97 percent of the U.S. Despite that promise, the Rural Telecommunications Group, which represents rural wireless carriers, sees the antitrust lawsuit as a good thing. In a prepared statement, the RTG’s General Counsel Carri Bennet said, “DOJ’s pre-Labor Day decision (less than 4 months after AT&T filed to acquire T-Mobile) shows that there is no question that this merger would have been bad for rural America, rural consumers, and rural carriers.”
ATandT Has Few Options in Trying to Beat DOJ Suit
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 thinkis 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.”