On Monday, AT&T announced that it would end its $39 billion attempt to acquire T-Mobile from Deutsche Telekom, after facing stiff opposition throughout 2011 from the Department of Justice, the Federal Communications Commission, and antitrust groups. The deal's collapse comes with a hefty, multibillion-dollar breakup fee that AT&T must pay to Deutsche Telekom, and will have far-reaching consequences for the entire mobile-phone industry. Here, a brief rundown of winners and losers:
If the deal had gone through, it "might have been fatal to Sprint," says Devin Coldewey at TechCrunch. Sprint is the nation's No. 3 carrier, behind AT&T and Verizon. No. 2 AT&T's gobbling of No. 4 T-Mobile would have created yet another industry powerhouse to hammer Sprint. "Competing against one hundred-million-subscriber carrier is hard enough; competing against two would have made things intolerable." Sprint would have been relegated "to the dungeon occupied by local and specialty carriers."
More major mobile players means more competition, and the failed acquisition should mean "lower rates [for consumers] as the industry competes for their dollars," says Cecilia Kang at The Washington Post. T-Mobile in particular is expected to continue to be a "lower-cost competitor."
Cellphone tower owners
This is a win for tower companies like SBA and America Tower, says Shira Ovide at The Wall Street Journal. T-Mobile is likely to use its breakup settlement to build out its LTE network, bringing in more money for tower owners. And since AT&T is no longer getting T-Mobile's existing towers, AT&T will likely be forced to build up its own network, further benefitting the tower business.
Justice — and the Department of Justice
"In this age of cynicism, it is important for the American people to see that Washington does not always go to the highest bidder," Harold Feld, the director of a digital-rights group that opposed the deal, tells Computerworld. "The Department of Justice and the Federal Communications Commission stood up to tremendous lobbying pressure as AT&T spent tens of millions of dollars trying to push this merger through."
Without this deal, AT&T has "few attractive strategic options as it seeks to challenge market leader Verizon Wireless," says Scott Moritz at The Washington Post. The company needed T-Mobile's airwaves. Now, AT&T's options are limited — and pricey if it's going to keep up with customer demand. It can try to buy more spectrum from another company, wait for the government to make more frequencies available, or try to squeeze more out of the spectrum it already has. But given that AT&T is "already criticized for dropped calls," this could really curb AT&T's customer growth.
The $3 billion consolation prize for T-Mobile's owner may not be enough, says Marguerite Reardon at CNET. "There is no question the carrier is still in trouble." It's having a hard time competing with Verizon and AT&T, and at the same time, T-Mobile is getting edged out by small competitors like Leap Wireless and MetroPCS. To survive, Hal Singer with Navigant Economics tells CNET, T-Mobile needs "a backer that is committed to investing in its future."
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Why Mitt Romney is perfectly poised for a comeback in 2016
- Why is the West so afraid of Islam?
- 10 things you need to know today: July 31, 2014
- Why GOP reformers are bound to fail
- The Nazi smart bomb that inspired China's most dangerous weapon
- The best places to find love — and lust — according to science
- The mystery behind China's aggressive push into space
- What would a U.S.-Russia war look like?
- Here's the schedule very successful people follow every day
- Don't vote for Andrew Cuomo
Subscribe to the Week