German based Deutsche Telekom AG wants to sell T-Mobile USA. AT&T wanted to merge with T-Mobile to improve its cellphone network. However, the Federal Communications Commission (FCC) and the Department of Justice were against the merger.
AT&T and Deutsche Telekom withdrew their merger application from the FCC after the FCC released a staff report concluding that the merger was not in the public's interest because it would be likely to lead to higher prices, fewer jobs, less innovation, and overconcentration of market share and wireless spectrum among remaining competitors. But, Jim Cicconi, AT&T Senior Executive Vice President of External & Legislative Affairs, posted a rebuttal to the FCC on AT&T's public policy blog.
The companies turned their focus on the antitrust lawsuit filed by the Department of Justice. The Justice Department reported, "On Aug. 31, 2011, the Justice Department filed a lawsuit in U.S. District Court for the District of Columbia, to block the transaction, which would have combined two of the only four wireless carriers with nationwide networks. State attorneys general from California, Illinois, Massachusetts, New York, Ohio, Pennsylvania, Puerto Rico and Washington joined the United States as co-plaintiffs. The department coordinated its review of the proposed transaction with the Federal Communications Commission."
On Monday, December 19, 2011, the Justice Department issued the following statements.
Deputy Attorney General Cole said, "This result is a victory for the millions of Americans who use mobile wireless telecommunications services. A significant competitor remains in the marketplace and consumers will benefit from a quick resolution of this matter without the unnecessary expense of taxpayer money and government resources."
Acting Assistant Attorney General Pozen said, "Consumers won today. Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties' abandonment, we achieved that result."
The Wall Street Journal reported that "The deal's failure is a setback for AT&T's top executives, who exuded confidence about the takeover beginning with its announcement on March 20. For Mr. Stephenson, AT&T's CEO, the bid for T-Mobile was the biggest gamble in a tenure devoid of the sort of blockbuster deals that were a hallmark of his predecessor, Ed Whitacre. Mr. Whitacre created today's AT&T over more than a decade of deal-making that pieced together fragments of Ma Bell and rolled up several wireless companies."
Now, T-Mobile will look for another buyer, and AT&T does not have access to a wireless-spectrum network. It will take years for AT&T to build it.
Consumers could benefit if wireless services were more accessible. The merger would have made AT&T bigger, but is big always bad? When is big good?
Jobs might have been lost, but moving data quickly and affordably could result in new jobs. How could economies of scale and other technological and procedural efficiencies have led to new products and services?