18
Oct
death-star-att

This morning, AT&T VP Brad Burns released a statement regarding the upcoming Softbank purchase of Sprint, and it carefully treads the line between "passive aggressive displeasure" and "seriously FCC, if this goes through, we're buying like a million carriers":

Softbank's acquisition of Sprint and the control it gains over Clearwire will give one of Japan's largest wireless companies control of significantly more U.S. wireless spectrum than any other company. We expect that fact and others will be fully explored in the regulatory review process. This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize.

As Chris Ziegler over at The Verge notes, AT&T chose the tone of this particular statement with great care - taking issue with the acquisition, while simultaneously suggesting that if the deal does pass, AT&T won't argue with the decision. The latter is understandable, as AT&T obviously doesn't want the FCC to start looking at carrier acquisitions as de facto highly suspicious.

But, we all know why AT&T sounds a little miffed, too. Late in 2011, the company was eventually forced by the FCC to cancel its $39 billion buyout of T-Mobile USA, in what would have been the largest consolidation of wireless subscribers in US history. It would have also made AT&T the US's largest carrier by subscribers, and by quite a margin.

Now, a Japanese company is buying 70% of a major American wireless provider, and acquiring a controlling stake in a company with massive 4G-ready spectrum holdings (Clearwire). Burns claims that with control of Clear in hand (as of this morning), Sprint (and really, Softbank) is now the largest holder of wireless spectrum in the US. We're not 100% sure if that's true, but it sounds reasonable, and we do know Clear owns a big hunk of the 2500MHz band, which is ripe for LTE usage. This spectrum also has no real neighbors - Clear controls it "end to end" - and that means a data network on these bands could potentially handle a much larger load than those on lower frequencies (eg, 700, 900). This could be especially important for deployment in urban areas.

Anyway, before I bore you too much with spectrum stuff, let's get back on point with AT&T here. Would it be fair for the FCC and DoJ to allow a Softbank purchase of Sprint, while also having denied (in essence) AT&T's acquisition of T-Mobile? I think the key difference here is that Softbank doesn't have an existing wireless business in the US. If anything, this will shore up Sprint's wireless position, and hopefully provide AT&T and Verizon some much-needed competition. When it came to the AT&T purchase of T-Mobile, such a merger could only have served to hurt competition, and the FCC obviously recognized such a risk. I wouldn't say we're comparing apples and oranges here, but there are definitely some valid points distinguishing the two deals.

via The Verge

David Ruddock
David's phone is an HTC One. He is an avid writer, and enjoys playing devil's advocate in editorials, imparting a legal perspective on tech news, and reviewing the latest phones and gadgets. He also doesn't usually write such boring sentences.

  • http://www.facebook.com/profile.php?id=6810007 Doug Ranger

    Sprints Assets and network improvements are being enhanced, AT&T was trying to absorb a competitor ala "the Borg". This is not an Apples to Apples Merger Comparison.

    • Asphyx

      Not to mention the fact that this does not put all the CDMA into one company the way the AT&T T-Mobile merger would have with GSM.
      BIG BIG difference.

  • http://codytoombs.wordpress.com/ Cody Toombs

    Most of the same issues brought up in the Verizon/T-Mobile spectrum trade are applicable here. I don't think this creates a situation where Sprint is hoarding spectrum to the detriment of others (as Verizon is known to be doing), but it might create a landscape where the two CDMA carriers work against AT&T and T-Mobile to prevent them from getting full coverage in areas where they are still short.

    Considering Sprint's distant 3rd place position, I am generally happy to see this injecting a little more potential into the company. The only scary thing is that this could be setting the stage for Sprint to become another Verizon if they get the opportunity to start stockpiling resources and acquiring small carriers.

    • http://www.facebook.com/profile.php?id=6810007 Doug Ranger

      Very well said

    • Greyhame

      Being a VZW subscriber, I also think this could potentially be good for us, as it would increase the competition. It'll be interesting to see if the FCC allows this.

    • http://www.androidpolice.com/ David Ruddock

      AT&T just had a fair bit of spectrum opened up on the WCS band for LTE use. I think they're in a pretty good position right now. And when new spectrum auctions happen, you can bet they'll be first in line to grab up some.

      CDMA itself is a dying technology, Sprint and Verizon can only push that wide geographic coverage for so long - and Sprint's CDMA footprint isn't exactly a threat to AT&T.

      T-Mobile is probably the most at risk, even with the MetroPCS acquisition, I don't see them doing well for the foreseeable future.

      • http://codytoombs.wordpress.com/ Cody Toombs

        Good info on the spectrum openings, I hadn't heard most of that.

        It's impossible to disagree about the pending death of CDMA, the shift to LTE pretty much ensures that CDMA will become an increasingly expensive burden on their towers. I honestly can't believe it's lasted as long as it has. Sometime in 2009 (maybe 2008, I can't find articles about this anymore, weird that), Verizon publicly announced they were going to "open their network" and switch from CDMA to GSM in the "near future". I hoped it would be the beginning of the end for CDMA back then.

        I agree on T-Mobile, and they were really the ones I was thinking of with my comment. I've had doubts about them for a long time anyway, it's been obvious that they had a 'For Sale' sign hanging for about the last 5 years. With everything going on, I have a nagging feeling that 5 years from now we'll have demoted "The Big 4" down to 3 and Sprint might actually be riding a close 3rd to AT&T and Verizon.

      • Freak4Dell

        T-Mobile will do great as a value carrier, just like they have been so far. T-Mobile understands that they belong in the value market, and they're taking excellent steps to advance in that position.

  • Greyhame

    From Mr. Ziegler's article:

    "Deutsche Telekom's ownership of T-Mobile is an interesting parallel to the SoftBank deal: it relies on loopholes in Section 310 of the Communications Act of 1934 — which generally prohibits foreign entities from owning US spectrum — to establish a domestic holding company capable of holding the licenses in DT's stead."

    If this is what the CommAct of 1934 generally prohibits, I don't see this being any different. Is it because Clearwire has no direct subscribers? (Or do they?) I must be missing something.... Help?

    • http://www.androidpolice.com/ David Ruddock

      I'm not even sure what you're asking.

      • Greyhame

        Sorry, fair.

        If the Comm Act of 1934 generally prohibits a foreign entity from owning U.S. spectrum, I was just wondering how this was going to get through the FCC. Isn't that exactly what this is?

        • http://www.androidpolice.com/ David Ruddock

          Nope, Sprint will be a holding company. Sprint controls the spectrum, and will control Clear. Softbank is merely the majority stakeholder that runs Sprint.

          Just like DT owns most of T-Mobile USA and gets away with it, and just like Vodafone owning a major stake in Verizon.

          • http://www.facebook.com/Shinakuma George Millhouse

            Vodafone owns half of Verizon Wireless not Verizon...big difference

          • http://www.androidpolice.com/ David Ruddock

            Yep, that's true. Figured we were talking carriers here - thought that was kind of implied.

        • rockstar323

          I read an article about this a month or 2 ago. I'm pretty sure the FCC decided they were going to officially not enforce it because it stifled foreign investment and therefor growth.

        • http://codytoombs.wordpress.com/ Cody Toombs

          Just for reference, the same thing happens in reverse frequently. In Mexico, it's not legal for a non-Mexican citizen to own property, but non-citizens can create a company which can own property. There are quite a few cities in Mexico where entire neighborhoods are owned by Americans in this way.

  • Dima Aryeh

    While it could be good for competition, what happens to US companies? If other countries own stakes in Sprint, T-Mo, AND Verizon....

    • Asphyx

      Well look at what outside ownership did for Verizon? Not saying it's not a problem that US companies don't seem to be able to expand our infrastructure but that expansion is better for US consumers than what we have at present.
      These wireless companies pretty much have us over a barrel right now. It's almost as bad as the cable carriers. You can only buy from those companies available in your area. And for most that means Verizon or AT&Twith Verizon covering way more than AT&T does.
      Thats why they can get rid of unlimited data because who are you going to switch to? Sprint who offers it but only in a few areas and outside those zones your data is as limited as NONE?
      If I was the FCC and looking at the public interest I would allow this deal to go through on the promise that they intend to massively expand the coverage area to meet at least AT&T's footprint to give us consumers a real choice to go to when these other carriers go too far in thier consumer rape practices.
      And while it's desirable to have our communication infrastructure in american owned hands it is quite apparent that none of these owners are prepared to make the investment needed to give us a real choice and gain back some leverage in the contracts we can get.

      • Dima Aryeh

        You do have a point, Thank you for that POV.

  • http://twitter.com/deaddragonz K3V Productions

    More competition, the better...just kinda bad it took an out of country company to bring it...i hope they improve as much as possible n get VZN and ATT to remember theyre not alone in the market

    • DCMAKER

      my only worry is about the money going to be stripped out of our country and brought to Japan :/

      • Freak4Dell

        Softbank can't afford to do that. Sprint doesn't make a profit right now, and hasn't in ages, so there's no money to take back to Japan. The only choice Softbank has here is to pump money into Sprint until it becomes profitable, and then they still can't just take the money and run, because that will just send Sprint down the toilet all over again. The worst they could do after they finally get Sprint back on its feet is to stop pushing extra money in and just have Sprint run on its own cash flow.

        • DCMAKER

          I am referring to down the road......If they own 70% of Sprint and turn the company around in 4 years with pulling a yearly profit and boost subscribers than they could sell that company easy for 2-3 times as much.....if they turn it around. I won't be surprised if they do. All they need to do is get the LTE network up with a good chunk of coverage and that alone will make their 3g service somewhat work again. They have way to many people on 3G where all the network can support is voice. Data won't even work because their isn't even enough space. Sprint is like flipping a house. As soon as you turn it around traders will hope on sprint in a heart beat to get on top of forward momentum. That is where softbank could pull out with anywhere from 2-4 times as much money as they invested.

          • Freak4Dell

            That's certainly possible. However, when the company's value goes up, so does the amount of money you'd have to pay to buy it. It's not going to be easy to find a buyer looking to drop that much cash. But, it's always possible, and it's definitely a risk. Companies do stay in the US market all the time, though, so I'm not too concerned about that. Even if it does happen, the most important thing is that Sprint will at least be back on their feet and be a solid competitor again.

          • DCMAKER

            the public would be buying their shares. If the price goes from 7-21 in 4 years they can easily sell off their 70% over the course of a year without ruining share price

          • DCMAKER

            there doesn't need to be a single buyer.....you know that right?

          • Freak4Dell

            No, I was under the impression that only one entity could own 70% of a company. Yes, of course I know it doesn't have to be a single buyer. That still doesn't mean Softbank can just dump the company overnight. Like I said, it's definitely something that may happen, but it's a risk with any company. Right now, there are no US companies that want Sprint. If there were, somebody would have bid on Sprint by now. Softbank is the best thing we've got, and all we can do is be optimistic about it. It's almost impossible to have this go worse than just leaving Sprint out on its own, so no matter what happens, it will almost certainly leave Sprint in a better position than it is in now.

          • DCMAKER

            true true. It would have been smart for a US company to buy or any company to buy sprint wen it was at 2.xx dollars. Its at 5 bucks now...or 7. Not sure if prices jumped that high after announcement. You could have bought Sprint for almost 10B outright when it was 2.XX dollars hahahha. That is a steal of a price. Wish softbank would have bought it 6 months ago. could have thrown another 6 billion into infrastructure.

            Note all numbers are rough pulled out of my ass. If they spent 12B on shared and own 70% at 2.50 they could have owned the whole thing i bet for just 10B hahhaha

          • DCMAKER

            Also thats why i am personally more tuned to the idea of a US corporation buying up and investing into sprint because it could end up keeping 60 billion US dollars in the US market and not Japan. Though if i had to choose a market for our money to be funneled into Japan wouldn't be the last nor the first so its not the worst thing in the world

  • olbp

    OH NO, Competition sighted.

  • Lte_Addict

    yea i agree, at&t situation was completely different, im with at&t now but im curious about the sprint/softbank meger, if their service dramtically improves i may head back to sprint lol

  • Herpa Derp

    ATT crying about clearwire's 2500 mhz spectrum? The reason they have pretty much the whole damn thing? It sucks. It completely and utterly sucks. Ask any sprint user with current 4g. NO speed. NO building penetration.

    • DCMAKER

      speed is through if they used the spectrum. Sprint has hardly touched the spectrum it is the fact it can't penetrate buildings. Spectrum is Spectrum when it comes to data. When it comes to range and penetration that is a totally different story. As author said the 2500 band is really useful in cities because you can build micro towers and have plenty of spectrum to offer amazing speeds.

      • DCMAKER

        alright i typed the first sentence wrong and i have read over it 10 times and can't remember what i was thinking...oh well. Maybe speed is the same is they used the spectrum or speed eh whatever totally forgot what i meant to say lol

  • DCMAKER

    first of clearwires spectrum is worthless unless your outside so who the fuck cares hahahhaha AT&T=ginormo tard...not sure if thats how you spell it

    • DCMAKER

      AT&T is just being a big baby because they will not have competition big whoop. This deal better go through because Sprint needs it and so does the American consumer!

  • warcaster

    Aww..poor AT&T. They might get to have some real competition now, and they already started whining. They are free to buy carriers from other countries, just like Softbank did.

  • spydie

    I don't see the difference. Sprint sucks and has for years, on top of being a company that loses $900 million a year because they don't know how to run a business or get their network working. I used to be with sprint in a town with 3 towers and 2 have been "down" for the last two years and sprint says they are not going to invest anymore money in NM infrastructure. They need to go out of business entirely. I was hoping ATT would actually buy out Tmo because they'll never amount to a hill of beans. They don't even have data in my city because they don't have any towers IN the city. I think we could all live with the competition of just two carriers... ATT and Verizon. Then there would be enough money to keep upgrading the two systems instead of dividing up the money between 4 or more carriers and then nobody has enough money to keep their infrastructure working correctly.

    • Freak4Dell

      You're right. Sprint sucks. The whole point of this buyout is to try and make them not suck again (yes, there was a time when they didn't suck).

      However, if you seriously think that having AT&T and Verizon controlling the entire market would be all rainbows and unicorns, you're delusional. I don't have a problem with either AT&T or Verizon, but there's a reason I'm not a subscriber of either one (in wireless, anyway). T-Mobile offers a better value. I'd see my rates double if I switched to AT&T, and there is no way I would support that. There's already plenty of money to keep upgrading every system. It's just that DT chooses not to give it to T-Mobile, and Sprint wastes it on other things, like a phone that was supposed to save them but hasn't had any significant effect other than another $15 billion down the drain. Softbank is offering to pour money into Sprint so that it can get better. That's a win-win for everybody.

  • bedwa

    At&t doesn't see Sprint/Clearwire as a current threat due to lack of funds/global influence, whereas Softbank will have the funds to invest and global influence to push for better global roaming pricing as could have been the case with the At&t/T-Mobile merger. The issue here though is that there will not be a consolidation of US cellular subscribers. I say the DOJ will approve.

  • http://profiles.google.com/dc4316 Ismael Rodriguez

    I'm all for the deal. The U.S. has been lagging behind in mobile data speeds and standards. I'm hoping that having an outsider with their experience can improve that situation for Sprint and force competing companies to do the same.

  • qu4ttro

    boohoo...AT&T can stick it in their collective arses. Theres a reason I moved to Sprint this year after almost 15 years as a customer.