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Had enough of the Obama Administration

Today AT&T withdrew it’s bid to purchase T-Mobile deciding instead to take a $4 billion charge off. I expect T-Mobile to
eventually fade away into the Bavarian sunset unless it finds a way to build out a true 4G network and remain competitive
with AT&T and Verizon. While opponents to the transaction begin their holiday season on a high note, next year may not be that grand for T-Mobile’s new subscribers.

I expect rates to go up as a result of the Obama Administration’s preference for populism as opposed to good old fashioned
economics. Obviously the Justice Department does not read the U.S. Department of Labor’s jobs report. Some 315,000 people left the labor force in November. Unemployment for Blacks and Hispanics exceed the national average. These are the same consumers that subscribe to T-Mobile’s services. As the economy continues to flat line, more consumers seeking to offset long term unemployment by reducing household bills will gravitate to T-Mobile’s offerings.

The problem is that given T-Mobile’s smaller network, it will have to increase prices or curtail its services in order to meet the increasing demand. Just as prices are going up and quality of services are falling, a credit constrained parent, Duetsche Telekom, may decide to pull out of the U.S. market. Don’t know if the Justice Department knows this, but things aren’t so hot in Europe right now.

Should the Europeans decide to shore up their central banks with more capital, we may see rates climbing in Europe which will make getting financing even tougher for Deutsche Telekom.

For all its talk about global competitiveness, the Obama Admonistration appears to have dropped the ball on understanding
the meaning and impact of a global economy.

AT&T to acquire T-Mobile

Posted March 20th, 2011 in AT&T, FCC, Government Regulation, mobile telephone, wireless communications and tagged , , , by Alton Drew

AT&T, Inc., announced today that it will acquire T-Mobile for $39 billion. Twenty-five billion dollars will be in cash while the remaining $14 billion dollars will be in stock. Deutsche Telekom, the German-based owner of T-Mobile will receive an 8% interest in the company.

Needless to say the fear mongers are out in full force thrashing the deal with claims of customer harm and corporations on steroids; you know, the usual canned language.

What they won’t tell you is that the deal has one very important synergy: the accumulation of additional spectrum minus the cost of waiting to bid on it. By acquiring T-Mobile, AT&T will be able to reach 95% of American consumers with its 4th generation, long term evolution platform.

This means that Americans will be able to access high-speed broadband services, make calls, send text messages, and upload and download video with the advanced wireless devices that are hitting the market and straining the limited amount of spectrum that is currently available.

Rather than wait on regulators to implement the social policy behind the FCC’s national broadband plan, AT&T is using a free market practice that will get broadband into the hands of more Americans.

Hopefully the very regulators who unfortunately are at the forefront of slowing down the delivery of wireless broadband services to more households will step out of the way of this transaction.