Telecommunications Policy

The Department of Justice vs. AT&T

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There's an app for that.

One of the reasons that mobile data and phone networks, especially those that serve popular smartphones like the iPhone, are so swamped is that, regardless of demand for additional service, it can be extremely expensive and time-consuming to build the new cell sites necessary to add network capacity. And various requirements set up by local governments make the process even more difficult than it otherwise would be.

As Jerry Brito, a technology policy expert at The Mercatus Center, explained earlier this year, "if a carrier wants to put up a new tower, or add antennas to existing towers, it has to get permission from the local zoning board. This can be an extremely onerous process as different localities will have different reasons to hold up the process." Here's Bret Swanson saying much the same thing in Forbes:

It's not easy to build cell sites. You've got to find good locations, get local government approvals, acquire (or lease) the sites, plan the network, build the tower and network base station, connect it to your long-haul network with fiber-optic lines, and of course pay for it. In the last 20 years, the number of U.S. cell sites has grown from 5,000 to more than 250,000, but we still don't have enough.

One relatively straightforward way to acquire new cell sites, then, is to purchase another telecom company's network infrastructure. AT&T, which has seen massive growth in data traffic in recent years, thanks in large part to being the first carrier to offer Apple's iPhone, proposed earlier this year to merge with T-Mobile, another mobile provider. The deal would expand the total number of AT&T's cell sites by about 30 percent.

It would also give AT&T access to the scarce wireless spectrum that T-Mobile currently owns—spectrum that's currently difficult to acquire thanks to federal rules that end up creating artificial scarcity. That additional spectrum would likely substantially hasten AT&T's ability to roll out faster data networks. Obviously there's no gaurantee that the deal would mean better service for customers, but the upside, if it works, seems reasonably clear: More robust service, and a faster network.

Naturally, Obama's Department of Justice has filed an antitrust lawsuit intended to block AT&T's acquisition on the grounds that if the two companies merged, consumers would suffer. 

The news was unexpected—AT&T officials claim they were given no notice—but it's not exactly surprising given the current administration's aggressive stance toward Internet providers, and wireless carriers in particular. Under President Obama, the Federal Communications Commission not only spent considerable time and effort passing net neutrality regulations, it's also begun paving the way for increased regulation of the wireless sector.

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  1. Let’s play “who gave the most money to the Democrats last year”. Verizon or AT&T?

    1. The Battle of the Baby-Bells?

      The winner will be the party that successfully bribes the government!

      1. I don’t know the answer to the question. But I can’t shake the feeling that Verizon or one of AT&T’s competitors gave Obama more money and this is a replay of the Gibson raid.

        1. Why don’t you Sprint over to google and check on this?

          1. I see what you did there.

        2. Verizon or one of AT&T’s competitors
          AT&T only has two competitors (other than the one they’re trying to merge with), and it’s not at all clear how they benefit from preventing this merger. Verizon and Sprint would probably be better off with T-Mobile and its relatively cheap paygo plans out of the picture.

        3. … Obviously there’s no gaurantee that the deal would mean better service for customers, but the upside, if it works, seems reasonably clear: More robust service, and a faster network.

          This article is retarded…if company A and Company B merge, and the resulting combination ends up with the same number of towers and the same amount of spectrum and the same number of customers, how would you infer more robust service and a faster network? They would have more robust pricing power and, if trees do grow to the sky, there might possibly be economies of scale to be milked, but the core supposition defies logic. I expect better from Reason.

          1. If AT&T had 1 tower every 20 sq mi, by adding TMobiles towers they might have 1 tower every 15 sq mi. Hence better service due to fewer nodes with poor service. And with mOre bandwidth there are more possible paths to route signals. Hence faster service.

            Can you hear me now?

    2. Dunno about its competitors, but I’m pretty sure AT&T gives more to TEAM RED.

  2. If it’s not broke, break it.

    1. Lets see how many billions of dollars in shareholder value one group of DOJ hacks can destroy.

      1. Lets see how many billions of dollars in shareholder value one group of DOJ hacks can destroy short.

  3. AT&T sucks. But they can run all telecommunications service, for all I give a shit.

    Fuck the FTC. Antitrust regulation is always gay 100% of the time.

    1. That hurt.

    2. It’s true, Senator John Sherman was FABUUUULOUUUSSSS!

  4. Kill the economy–it’s still moving.

    1. I continue to be amazed, though I shouldn’t be, at how insanely and monomaniacally this administration and its appointees are at regulating everything. Nothing, it seems, can go on without their interference and “guidance”.

      We literally cannot get rid of this horrific administration fast enough. I don’t actually think there could be anything worse than Obama getting a second term. Even tools like Romney or Perry would be better, because shit, dude, you can’t be worse. And because if he has a second term, he 1) won’t be worried about reelection (though I wouldn’t put it past them to try and repeal the two-term amendment, a la Bloomberg), and 2) would see it as additional mandate.

      My god that would be a nightmare.

      1. It really would be. I can’t stand Perry or Romney either one. But I can’t think of a single thing they would do that would be worse than this administration. If nothing else, a Perry or Romney administration would get Obama’s cabinet out of power.

        Sibileus, LaHood, Holder, Napolitano, Pistole, has there ever been a worse cabinet ever? This is worse than Nixon’s cabinet and half of them went to jail.

        1. While I share fears that worse is possible, as we learned with Bush, the fact is that we aren’t voting in a vacuum like we did with Obama (that’s the collective we–I voted LP). The likely GOP nominees are relatively known quantities. They could suck, but I don’t see any one of the ones who might get nominated sucking on an Obama scale.

          One qualification is that the GOP president coming in 2012 will likely have a GOP-controlled Congress as well. If it’s a diverse group, including lots of reformers, it might be okay, but single-party rule rarely turns out very well. Then again, the Democrats really have been one of the worst parties in our history since 2006. Maybe they need a little timeout.

          1. That’s kind of an interesting angle. It could almost be a bit more parliamentary; if more Tea Partiers get elected, we could have three almost equal factions.

            1. My point being that even a GOP majority congress wouldn’t necessarily indicate single party rule.

              1. Maybe. 1994 is a caution, but the situation today is much more dire and may result in a little better behavior from the newbies. Not that I really expect things to work out that way.

                1. The ~70 new Tea Party representatives have done a moderately good job of not walking in lockstep with the rest of the GOP so far.

                  1. Don’t forget about me!

      2. August 2003:

        “We literally cannot get rid of this horrific administration fast enough. I don’t actually think there could be anything worse than Bush getting a second term. Even tools like Kerry or Edwards would be better, because shit, dude, you can’t be worse. And because if he has a second term, he 1) won’t be worried about reelection (though I wouldn’t put it past them to try and repeal the two-term amendment, a la Bloomberg), and 2) would see it as additional mandate.”

        1. I’m not so sure about that because that was just months after us entering Iraq and a lot of the country wasn’t opposed to either of the wars yet.

      3. Isn’t this what people said about Bush? That literally anything would be better because nothing could be worse?

        Obama went and proved them wrong. Whoever is next in the White House will do their damndest to prove you wrong too.

        1. No, no. People voted for Obama because he obviously couldn’t be worse than McCain (Bush3).

          1. And technically that might still be correct. We could be at war with Iran instead of Libya, which would be a lot worse.

      4. Oh shit, it’s gotten so bad that even you are hoping for a Team Red victory in 2012.

        1. Not really. Hugh and Jim are right; I was just caught up in my astonishment that this administration astonished me again with its unbelievable push to regulate everything even more, which I found quite astonishing.

          Want I want is no victory in 2012. For anyone. Well, except for me, because if every candidate lost, then I win.

      5. Gotta go with Hugh on this one. Saying, “I don’t care who gets elected, it can’t be worse than this!” is just deja vu all over again. Saying someone can’t possibly be worse is like suffering a series of annoying setbacks, and then announcing, “What ELSE could go wrong today!?” Of course, then something terrible will immediately happen.

        I can think of lots of things that could be worse than Obama. A new president who immediately launches WMD against all the cities of the earth would be worse. Someone who rounds up the first-born children of everyone and murders them would be worse. You see where I’m going with this.

        The upshot is, I believe Mitt Romney is a child-molesting mass-murderer who will destroy the world. It’s my opinion, so he can’t sue me for libel.

        1. It’s my opinion, so he can’t sue me for libel.

          Is that all we needed to say to keep Reason from getting sued by that one fuck-knuckle?

          1. You mean the one of whom some said fucked sheep?

            1. I hear that some said he may or may not have engaged in some unspecified activities with or without sheep.

              1. Who hasn’t?

        2. Romney is Greg Stillson? Makes sense. But the question is, are you Christopher Walken?

          THE ICE IS GONNA BREAK

          1. Pffft, if I was Christopher Walken, I’d have better things to do than hang out around here with you losers.

            I’d be banging my cowbell. Cowbell is my codeword for hot whores. I need more cowbell.

    2. “Kill the economy–it’s still moving.”

      It’s comming right for us!

  5. Necessary if anti-trust is to mean anything at all. Otherwise, the Law of Competitive Exclusion will operate, and we’ll be back to Ma Bell. And given the technological innovations of Bell Labs (the transistor, the laser…) that might not be a bad thing.

    1. “And given the technological innovations of Bell Labs (the transistor, the laser…) that might not be a bad thing.”

      Shut your goddamned mouth.

    2. Ma bell could have fielded cheap cellphones ten years before they were fielded. DOJ prevented them from going into the cell phone market under the anti trust settlement.

    3. I believe the “mono” in “monopoly” means 1.

      Verizon is direct competitor.

      1. Ah but isn’t that why the word “anti-trust” is bandied around instead of monopoly. If we let on that AT&T has direct competition with Verizon and Sprint and MetroPCS, then suing them for monopoly might look a tad retarded.

        1. MetroPCS is not a competitor of AT&T. They’re Tier-2 with limited coverage and no 4G.

      2. Verizon’s (and Sprint’s) network doesn’t work with GSM phones. We’re going to be stuck with AT&T and nuttin else.

        And of course, cartels aren’t much better than monopolies.

  6. I never would have thought it was possible for anything to make me side with AT&T on any issue, but lo and behold here’s the Obama administration, ceaseless in it’s ability to stupify.

    I propose that the theme for the 2012 election officially be “ANY PORT IN A STORM”.

    1. Next thing you know he’ll do something to Comcast that will make even them look sympathetic.

      It’s almost magical.

      1. Well, they allowed Comcast-NBC Universal. Clearly Comcast paid for Obama’s re-election campaign, and AT&T did not.

        And honestly, I would totally support Obama just blatantly illegally ordering the dissolution of Comcast entirely. Yes it’s illegal and wrong and an abuse of power and blah blah blah but it’d be totally worth it regardless.

      2. Well, they allowed Comcast-NBC Universal. Clearly Comcast paid for Obama’s re-election campaign, and AT&T did not.

        And honestly, I would totally support Obama just blatantly illegally ordering the dissolution of Comcast entirely. Yes it’s illegal and wrong and an abuse of power and blah blah blah but it’d be totally worth it regardless.

        1. Agreed re: Comcast.

          They are the devil incarnate.

    2. “ANY PORT IN A STORM”.

      FTW

      1. You should read Howard Zinn’s A People’s History of the United States. That book will fucking knock you on your ass!

        1. MATT DAMON!!!!!

  7. Again, I wish to applaud the NYT for assembling the most formidable contingent of ill-informed Luddites the world has ever seen within the confines of a single comment board.

    Rs
    Georgia, USA
    August 31st, 2011
    3:30 pm
    I truly believe this merger will result in higher prices. It reflects the basic American business model: growth by buying out your competition. I have a feeling the Obama objection is more show than guts, and it will go through. Am I just dreaming, but hasn’t the trend been for the competition sell out. The trend is no staying power, take the pay outs. It is amazing. If we go back several decades, the telephone was basic, something useful, a simple tool. Look at what we have today, the phone with lots of electronic tools, and we pay big time for just a basic phone. Is this really progress?

    1. The stupid, it hurts!

    2. Especially several decades ago when Ma Bell was a government-created monopoly.

    3. It just shows how few people have any knowledge of business. Mergers and Acquisitions are incredibly expensive and 70 percent of the time they don’t create value for the shareholders. If the government wasn’t in the way of creating new cell towers, then AT&T would avoid the expense and risk of this M&A

  8. The reason why we are here at all is an accidentally released internal AT&T document that pretty much showed

    1) they didn’t need T-Mobile’s bandwidth for 4G LTE rollout
    2) combined infrastructure investment would be lower under merger than before
    3) the main reason for the buyout was to reduce competition.

    If you are an AT&T customer, you know very well how godawful (and declining, if that is possible) their service is. In major, densely-populated cities such as New York and San Francisco, AT&T is barely usable for voice, let alone data. In the more heavily populated areas of Los Angeles, it is increasingly unusable. If there’s an argument that the AT&T needs anything, it’s the cell tower space, but given their mendaciousness on other material parts of their filing, I would be very skeptical.

    1. What I can’t figure out why anybody is an At&T customer, it must be the brainwashed Apple people. There service is completely shit. I have US Cellular, never have had a call drop or anything even spending my college years in the middle of nowhere. My friend with AT&T was lucky to have cell service 50 percent of the time.

    2. Its private fucking property. So I don’t give a shit what you think.

      1. Artificially scarce private property, you mean, as outlined in the original post.

      2. What I think is not really the point so much as the motivations behind the DoJ’s filing suit to stop this merger. And as Tulpa points out below, this is artificially scarce private property — well, as much as spectrum ever is.

  9. It’s the totalitarian urge we’re seeing here, the need to control things across the board. Whether you’re talking about socialists or machine politicians, you’re talking about people who have to run things, and who can’t stand to let people be.

    First put measures in place to limit what business can do, and then when they figure out ways around your limitations, accuse them of sundry crimes.

    Control Freak Disorder is a horrible disease, and it’s time we developed a treatment for it.

  10. Taking my libertarian hat off for a moment and putting my T-Mobile Customer hat on — this deal would seriously limit consumer choice, since it would leave AT&T the only carrier compatible with GSM phones. And of course AT&T has (foolishly) already stated their intention to decimate T-Mobile’s paygo services in the hopes of forcing us onto their ridiculously expensive contract plans.

    Yes, libertarian ideology says the govt shouldn’t get in the way, but don’t dismiss the concerns about limiting competition out of hand. Personally I would prefer we make it easier to build towers before we endorse this kind of merger.

    1. I am heartened by the rumors coming out of Cupertino that the iPhone 5/4S will be a dual-mode device, i.e. it will run either CDMA or GSM.

      1. That would be sweet. Too bad I hate Apple too.

    2. T-Mobile has the best prices of the big 4. I miss being a customer… but when I moved to small town VA the service was just awful. Now I’m Verizon paying almost 50% more.

      I also kind of hope the deal falls through, even if I don’t necessarily think that the government is justified in stopping it.

  11. ALSO, AT&T gets a fuck ton of money from the government.

    I say if we give them money they we can regulate ’em.

  12. I find it hard to apply any libertarian principles to this mess. ATT was a monopoly who begged the government to regulate them so they could be protected from lawsuits. Then they got split up. PacBell had decent service for a while, until SWBell bought them, then SWBell bought ATT and renamed themselves as ATT, same old trash corporation with crap service and crap attitudes and crap products, depending on the government to trash the market so their competitors need as hidebound a bureaucracy as ATT to deal with the ever-changing government whims.

    Then there’s the government, full of political hacks who couldn’t care less about what they destroy or immobilize, as long as they increase their power.

    And finally I have a T-Mobile phone, chosen precisely because it is GSM and not ATT. ATT has fucked up every landline and cell phone I have ever had with them, and I will not remain their customer if they buy T-Mobile. T-Mobile may not be a real good company, but anyone is better than ATT, and I have heard enough stupidity about Verizon to not want them for a carrier.

    Sprint?

    It all sucks, but it sucks because the government won’t just let it be. If they’d step away from the arena, ATT would sink for their crap service and products and attitudes.

    So it’s the regulators regulating those who lived, died, and were reborn by the regulators, Two corrupt bureaucracies fighting for their own glory, and I really find it hard to root for either one or against either one. I root for that which does not exist and against both, and my phone service will suffer regardless of what happens.

    1. At what point does it become unlibertarian to not support the forming of an oligopoly? There is no net gain of bandwidth or cell towers by this transaction, only a hosing of TMOB customers whose service is now going to go in the crapper to make a few ATT iSteve church goers happier. This may be one of the rare moments when Obama admin gets it right – this merger is anticompetitive.

      1. I guess it really depends on whether those favoring the merger are bluffing about T-Mobile’s unhealthiness. If they are, then the merger reduces competition. If they aren’t, then T-Mobile will be out of the competition anyway.

  13. Peter, there’s a problem with saying this all could’ve been avoided by loosening regulations on buying cell towers and building up infrastructure. It’s not true. One of the most interesting twists in this whole regulatory process occurred earlier this month when AT&T forgot to redact information from a filing with the FCC. The accidentally leaked document showed an agreement between AT&T and HSPA+ to expand its spectrum and infrastructure at the bargain basement price of $3.8 billion (not bad when you consider buying T-Mobile will cost you $39 billion). The embarrassing leak showed that, contrary to AT&T’s insistence, this acquisition wasn’t about expanding spectrum, it was about jumping on the opportunity to do away with a competitor. Obviously, to many, there’s nothing wrong with such a move. This is business. But to say AT&T’s principal rationale for the merger was spectrum is to regurgitate AT&T spin and ignore the now-public information about its alternative opportunities to expand spectrum:

    “Documents unintentionally posted on the Federal Communications Commission’s website revealed it would cost AT&T $3.8 billion to expand its 4G coverage to 97 percent of the country ? far less than the $39 billion cost of acquiring T-Mobile.”

    http://thehill.com/blogs/hilli…..ile-merger

    http://www.wirelessweek.com/ne…..price-tag/

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