TC2's David Rohde on Telecom
By David Rohde Posted September 7, 2011
Sprint may realize that it needs to take care of business with its upcoming 4G strategic reset announcement. But back on the legal front, Sprint has followed the Justice Department into court with its own lawsuit against the AT&T/T-Mobile merger.
Chances are that Sprint is looking for leverage in the arena where the AT&T/T-Mobile deal is now headed – U.S. District Court for the District of Columbia. The Justice Department seems willing to talk to AT&T about reworking the T-Mobile acquisition so that it’s not the straight-up joining of two direct competitors that it appears to be at first glance. If so, Sprint probably wants its own lawsuit to serve as the vehicle for killing the deal outright, or to make arguments to change any settlement that AT&T might otherwise accept.
“Sprint seems to be adding an additional suit as insurance” against the government failing to stop the merger, says a former Justice Department lawyer in an article today in the Wall Street Journal that explains the matter quite well.
AT&T’s reaction to Sprint’s piling on is fairly comical. I get that there are subtleties to the AT&T/T-Mobile deal – building national networks is no small task, and joining AT&T’s and T-Mobile’s assets can be justified from an engineering standpoint. But AT&T’s typical line about network investment criteria trumping the reduction in the number of players (or words to that effect) was shelved in favor of accusing Sprint of being the one trying to stifle competition.
“Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers,” AT&T said in a statement about Sprint’s lawsuit. When you consider that that’s precisely the claim that opponents of telecom mergers typically throw at the merger parties, not the other way around, you can tell how thoroughly the stakes in mobile broadband have set the big carriers on edge.
The great thing about wireless is that user demands are so massive that no carrier executive can afford to spend all of his or her time on legal and financial maneuvering at the expense of ongoing operations (as was true of the pre-AT&T SBC, whose CEO Ed Whitacre tasked himself with pulling back together the local and long distance industries). But the big AT&T/T-Mobile deal that shook the industry when it was announced has now led at least AT&T and Sprint to a familiar place, where merger fights fully compete for executive attention with the daily contest for users. To say that there are risks in such split attention for both AT&T and Sprint, in their own separate ways, would be understating the matter.Tags: 4G, AT&T, Mergers, Sprint