DOJ Attempts to Scuttle AT&T's $39B T-Mobile Buy

OpportunityCost said:

You need a legal reason to break up a company?
Unless they engage in collusion, price fixing etc, illegal activity; government cant just stick its nose into a company.

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Of course they can. Government can do anything it wants. Point is they wont because the companies have government in their pockets. The US congress makes legislation and regulations on behalf of industries not on behalf of the consumer and competition... and in most cases it is the conservatives that are pushing for big business...

If they suck, they will get competition.

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That is the point.. they wont if the market is skewed towards the big players..which the telecommunications market is. The cost of entry into the telecommunications market in the US is huge, which is why the big mobile telecommunications companies in the world would rather buy one of the big companies (Verizon is owned by Vodafone) than set up their own networks. This cost of entry is due to regulations and rules often put in place to protect the status quo instead of promoting competition. Some where in this thread someone stated that there was 180 mobile phone operators in the US.. considering the size of the US, that is very low... that is like 3ish per state. I have at least 10 providers here in Spain, that not only are regional but many cover the whole country.

Government shouldnt force market actions, the market will do that by itself.

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While this is a good and pretty thing in a text book and theories and are based on the idea that there are many small competitors in a market and no big mega corporation. Now reality is a whole different ball of twine.. since most markets have one or two big companies and a bunch of small ones and that creates very little competition, especially if the big companies defacto work together on pricing and keeping new competition out of the markets. Like it or not, if the market is left on its own, there is trend towards becoming a monopoly and any method (including buying politicians to set the rules for you) will be used to gain this power base...

Im not against competition, I dont think its the government's place to dictate company and market actions.

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Sorry to burst you bubble, but the "government" has been doing that for many decades when it comes to the US telecommunications market (and other markets). Regional monopolies, regulation that prevents competition and so on and so on. There is a reason most American's have so little choice when it comes to getting internet and it is industry friendly regulations and rules put in place by your politicians on behalf of the industry. If your politicians were the patriots and "men/women of the people" they claim they are, then they would force whole industries into more competition... telecommunications, news media, air lines, steel, medical and big pharma and so on.

Regulation that promotes competition is good regulation.

Hugh_Akston said:

If say GM and Ford merged, I'd see your point. But the problem lies in that there is plenty of competition in the cellular market. There are literally over 180 cellular providers in the US - source, so the angle the DOJ is taking in that it would create a monopoly simply doesn't fly in the face of the facts.

AT&T is overpriced and they pretty much do suck. I know someone who works in one of their call centers, so I have knowledge of how they run. I'm currently a T-Mobile customer and I could care less either way to be honest.

As for the 5,000 new jobs promise, I'm a little skeptical as well. There will be layoffs with a merger and how long would these 5,000 jobs remain in place? It is a shot at Obama and his administration and it will be used as campaign fodder for whoever his opponent ends up being. From my perspective, it looks more like the administration is siding with Verizon here more than anything. While both AT&T and Verizon have union employees, the Verizon employees have been on strike. I'm skeptical of the DOJ's angle here in addition to the promise to bring back 5,000 new jobs by AT&T.

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Forget Jobs.
This isn't about Jobs. That's a teaser.
It's Not about Bandwidth. There's plenty.
It's about YOU T-Mobile customers who pay easily the lowest rates and have economical plans.

AT&T is offering $39 Billion for a company that doesn't make money (!!), because eventually they will Make YOU pay much more.
The deal makes No sense otherwise.
Most in the biz community, many customers, and DOJ, know this is the Real reason.
That's why they're blocking it.

With Sprint on the ropes (but still not really discounting), and T-mob bought we Would be looking at a Two company Cartel; Verizon and AT&T.
The rates are already Not competitive and don't have the low cost T-mobile plans.

mbig said:

AT&T is offering $39 Billion for a company that doesn't make money (!!),

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That might not be exactly true... since US tax law encourages non-US and multi-national US companies to make no money on paper in the US and get taxed on the profit in other countries, usually countries with very little tax rate.... just saying.

Of course they can. Government can do anything it wants.

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You see that statement as a solution, I see it as a problem and that is where we differ. Government should be restricted by laws just as much as a citizen or company.
Government shouldnt simply do whatever it wants.

I think that even most people who are skeptical of government accept that one its legitimate functions is policing monopolies.

Hugh_Akston said:

If say GM and Ford merged, I'd see your point. But the problem lies in that there is plenty of competition in the cellular market. There are literally over 180 cellular providers in the US - source, so the angle the DOJ is taking in that it would create a monopoly simply doesn't fly in the face of the facts.

AT&T is overpriced and they pretty much do suck. I know someone who works in one of their call centers, so I have knowledge of how they run. I'm currently a T-Mobile customer and I could care less either way to be honest.

As for the 5,000 new jobs promise, I'm a little skeptical as well. There will be layoffs with a merger and how long would these 5,000 jobs remain in place? It is a shot at Obama and his administration and it will be used as campaign fodder for whoever his opponent ends up being. From my perspective, it looks more like the administration is siding with Verizon here more than anything. While both AT&T and Verizon have union employees, the Verizon employees have been on strike. I'm skeptical of the DOJ's angle here in addition to the promise to bring back 5,000 new jobs by AT&T.

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I'm going to defend my employer and say, ATT does not suck.

Hugh_Akston said:

DOJ Attempts To Scuttle AT&T's $39B T-Mobile Buy | FoxBusiness.com

Hmmm, [1] 5,000 new jobs returning to the US which is struggling to stay out of a double-dip recession and the DOJ blocks it? Good for you Obama! How's that hope and change working out for everyone? :roll:

This is just dumb. The DOJ seems to be picking and choosing who they will side with. [2] Further proof that government needs to stay out of business.

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1. Assuming that the DOJ has legitimate concerns about the merger (and there has been no legitimate reason offered to think otherwise), you're arguing that the DOJ should succumb to bribery (the 5,000 jobs). What if T-Mobile offered to create 6,000 U.S. jobs? Would you then side with them?

2. You're also arguing against anti-trust actions in general; coupled with point #1, we get government for sale to the highest bidder with no restrictions on how large those bidders may become? No thanks.

soccerboy22 said:

Yeah I just read this on CNN. I do not understand the DOJ's logic on this one. I guess they must fear a monopoly on telecommunications?

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I thought the logic rather clear; here are the pertinent excerpts from the OP's link:

“We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services,” James Cole, the deputy U.S. Attorney General, said at a press c onference Wednesday morning. In making its case, the DOJ pointed to the crucial role T-Mobile has played in the mobile market as a low-cost alternative to many Americans. The complaint says AT&T and T-Mobile compete with each other in 97 of the 100 largest U.S. cellular marketing areas.

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” Sharis Pozen, acting assistant attorney general in charge of the DOJ's antitrust division, said in a statement. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.” [source: http://www.foxbusiness.com/industries/2011/08/31/report-doj-opposes-atts-t-mobile-usa-buy/]Fox Business]

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Hugh_Akston said:

DOJ Attempts To Scuttle AT&T's $39B T-Mobile Buy | FoxBusiness.com

Hmmm, 5,000 new jobs returning to the US which is struggling to stay out of a double-dip recession and the DOJ blocks it? Good for you Obama! How's that hope and change working out for everyone? :roll:

This is just dumb. The DOJ seems to be picking and choosing who they will side with. Further proof that government needs to stay out of business.

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You are effectively suggesting that the DOJ succumb to bribery (the 5,000 jobs), while providing no argument that the DOJ is acting improperly (other than refusing the bribe).

Hugh_Akston said:

The government has proven over and over and over (in fact nearly every time they try) again that government can't create competition through regulation and legislation. Most conservatives do believe in competition. If the liberals do, then why do they oppose de-regulating the health care industry to allow insurance companies to sell across state lines, thus bringing down the price of health care, among other things?

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Insurance companies can already sell across state lines, more or less. Blue Cross/Blue Shield, for example, services the health insurance needs (directly or indirectly) of over 100 million people in all 50 states (The 14-state WellPoint is the largest Blue Cross Blue Shield member, and is a publicly traded company) (source).

Of course, the rub is that individual states have individual (and differing) regulations on what health insurers cover in their state, so outfits like BCBS generally maintain a corporate presence in each state and tailor their policies accordingly.

Are you suggesting that the federal government step in, override the states, and lay down nationwide uniform health insurance policy guidelines? A national health insurance exchange, of sorts? It would likely streamline things, but I think the 10th Amendment crowd might throw a few rocks at you....

Hugh_Akston said:

The government has proven over and over and over (in fact nearly every time they try) again that government can't create competition through regulation and legislation. Most conservatives do believe in competition. If the liberals do, then why do they oppose de-regulating the health care industry to allow insurance companies to sell across state lines, thus bringing down the price of health care, among other things?

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I'm not an expert, but can't they already do that? I think Karl brought up a few decent points.

StillBallin75 said:

I'm not an expert, but can't they already do that? I think Karl brought up a few decent points.

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The main problem is that it will be a race to the bottom

soccerboy22 said:

Yeah I just read this on CNN. I do not understand the DOJ's logic on this one. I guess they must fear a monopoly on telecommunications?

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Or a duopoly, more likely. US antitrust law is amorphous/ambiguous and is applied inconsistently (although, admittedly it's probably impossible to apply it consistently in practice). Just reminds me of the whole Baby Bell craziness that went on before I was born.

If the District Court in DC thinks the DOJ has a case, then the gov't will win. If not, then they'll rule in favor of AT&T. But even afterwards, AT&T will have the FCC to contend with.

Hugh_Akston said:

If say GM and Ford merged, I'd see your point. But the problem lies in that there is plenty of competition in the cellular market. There are literally over 180 cellular providers in the US - source, so the angle the DOJ is taking in that it would create a monopoly simply doesn't fly in the face of the facts.

AT&T is overpriced and they pretty much do suck. I know someone who works in one of their call centers, so I have knowledge of how they run. I'm currently a T-Mobile customer and I could care less either way to be honest.

As for the 5,000 new jobs promise, I'm a little skeptical as well. There will be layoffs with a merger and how long would these 5,000 jobs remain in place? It is a shot at Obama and his administration and it will be used as campaign fodder for whoever his opponent ends up being. From my perspective, it looks more like the administration is siding with Verizon here more than anything. While both AT&T and Verizon have union employees, the Verizon employees have been on strike. I'm skeptical of the DOJ's angle here in addition to the promise to bring back 5,000 new jobs by AT&T.

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The competition that is being emphasized here is not between ALL cellular providers, but between the few large giants that cater to the NATIONAL market. T-Mobile is AT&T's direct competitor in all but THREE cellular marketing areas nation-wide.

http://ftalphaville.ft.com/blog/2011/08/31/665926/where-now-for-att-and-t-mobile/

OpportunityCost said:

You need a legal reason to break up a company?
Unless they engage in collusion, price fixing etc, illegal activity; government cant just stick its nose into a company.

If they suck, they will get competition. Government shouldnt force market actions, the market will do that by itself.
Im not against competition, I dont think its the government's place to dictate company and market actions.

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It really depends on the market in question, not all markets are created equal.

As to your point about whether or not the government should be involved in a firm's actions, there's still a solid basis in US antitrust law for a suit such as this. Anti-competitive behavior, including the formation of oligopolies, monopolies, duopolies, or otherwise, are still grounds for a lawsuit according to antitrust laws in this country.

http://en.wikipedia.org/wiki/US_antitrust_law

Anti-trust laws prohibit agreements in restraint of trade, monopolization and attempted monopolization, anticompetitive mergers and tie-in schemes, and, in some circumstances, price discrimination in the sale of commodities.

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Bell System divestiture - Wikipedia, the free encyclopedia