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DealBook: 7 States Join Justice Dept. Suit to Block AT&T Deal

September 17, 2011 by NewsMaker Leave a Comment

Etienne Franchi/Agence France-Presse — Getty Images

8:05 p.m. | Updated

Seven states, including California, Pennsylvania, Ohio, Illinois and New York, said Friday they had joined the Justice Department’s efforts to block ATT’s $39 billion purchase of T-Mobile USA.

Industry analysts and experts said that the state’s involvement in the case added significant pressure to the effort to prevent the proposed sale — which many speculate may already be on the verge of collapse. Ever since the two wireless carriers announced plans to merge in March, public interest groups have criticized the move, saying the sale would harm consumers by reducing the affordability of wireless phone plans and slow innovation in the wireless industry.

The Justice Department’s complaint echoed those concerns and called for the courts to consider the long-term effects of the deal, which it said would be disastrous for cellphone owners and smaller carriers.

“ATT’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the complaint said. “Customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger.”

The amended filing comes ahead of a court hearing next week, when the sides are scheduled to discuss the prospects of a settlement.

Craig Moffett, an analyst at Sanford C. Bernstein who follows the telecommunications industry, said that the complaint from the states was likely to complicate ATT’s bid to buy T-Mobile.

“The addition of the states adds weight to the D.O.J.’s case in court,” Mr. Moffett said. “This makes it all the more unlikely that the D.O.J. can find an acceptable settlement with ATT.”

In a statement, an ATT spokesman said the company would continue its efforts to complete the sale.

“We will continue to seek an expedited hearing on the D.O.J.’s complaint. On a parallel path, we have been and remain interested in a solution that addresses the D.O.J.’s issues with the T-Mobile merger.”

The ATT spokesman added that the company had received encouragement and letters of support from 11 other states.

Michael J. de la Merced contributed reporting.

Justice Dept.’s New Complaint in ATT Case

Article source: http://feeds.nytimes.com/click.phdo?i=53f631355abc7075974c5560738fb892

Filed Under: Business News Tagged With: acceptable settlement, craig moffett, t mobile

Common Sense: AT&T and T-Mobile Merger Is a Textbook Case

September 10, 2011 by NewsMaker Leave a Comment

If it’s anything like mine, which has soared into the hundreds of dollars a month, you’ll understand why last week the Justice Department filed suit to block ATT’s takeover of T-Mobile.

The antitrust laws are intended to protect consumers, like wireless customers, by promoting competition. You could be forgiven for forgetting there are antitrust laws, given how feeble enforcement efforts have been over the last decade. Even Adam Smith railed against the pernicious effects of monopolies, but in recent years free market fervor and the writings of influential academics like Robert Bork have led many to wonder if the antitrust laws were just a quaint relic of a bygone era.

That, or something like it, may have been the thinking of the lawyers for ATT who negotiated the terms of the T-Mobile deal.

It’s hard to blame them: of the five major telecom mergers in the last decade, not one was challenged on antitrust grounds. ATT agreed to give T-Mobile a huge breakup fee of $3 billion in cash plus wireless spectrum and a roaming agreement valued at another $3 billion should the deal fall through on antitrust or other grounds.

Such confidence on ATT’s part seems inexplicable otherwise. For if ever there was a merger likely to be blocked on antitrust grounds, this is it.

“It’s only a slight overstatement to say that if they weren’t going to block this one, the Justice Department might as well just throw the antitrust guidelines out the window,” said Herbert Hovenkamp, professor of law at the University of Iowa, who is considered by many to be the dean of American antitrust law. “This merger clearly seems to violate them.”

The antitrust division has long published explicit guidelines that tell companies which mergers it is likely to block as anticompetitive.

The analysis begins with a mathematical formula for calculating the deal’s effect on competition. It’s called the Herfindahl-Hirschman Index, or HHI, a phrase you may want to drop at your next dinner party if you want to bring conversation to a halt.

Although the formula looks slightly complicated, it’s derived from the common-sense principle that the more competitors in a market, the lower the prices and the greater the innovation. In short, more competitors means more competition, which benefits consumers.

The Justice Department has officially used HHI since 1982, and the guidelines were revised by the Obama administration in 2010. Mr. Hovenkamp notes that despite tougher antitrust rhetoric from President Obama, the revision actually made it easier for proposed mergers to pass muster. Without getting too deeply into the math, industries can be scored on a scale up to 10,000, with 10,000 being a perfect monopoly. During the Bush administration, an HHI score of 1,800 or higher was deemed a concentrated industry, and a merger that increased the score by more than 100 points in such an industry was presumed to raise anticompetitive concerns. The new guidelines raised those numbers to 2,500 and 200.

“It was becoming legendary that the Bush administration wasn’t enforcing the old guidelines,” Mr. Hovenkamp said. “What good is a guideline that doesn’t provide any guidance? The Obama administration conceded that perhaps the old guidelines were too strict. So it made it easier, but at the same time said, ‘We’re going to enforce this.’ ”

How does the proposed ATT and T-Mobile merger fare under the revised guidelines? Let’s go to Exhibit B of the government’s complaint, in which the Justice Department does the math. ATT has argued strenuously that the case should be considered market-by-market, and not for the nation as a whole, where there are only four national wireless providers. So let’s look at some local markets.

Article source: http://feeds.nytimes.com/click.phdo?i=b269fddc17abe515979d1066dc1ed808

Filed Under: Business News Tagged With: antitrust guidelines, t mobile, wireless customers

DealBook: Justice Dept.’s Key Officials in Pursuing the AT&T Lawsuit

September 2, 2011 by NewsMaker Leave a Comment

Carolyn Kaster/Associated PressChristine A. Varney and James M. Cole, below, presided over the government’s decision to block the planned merger of ATT and T-Mobile.Chip Somodevilla/Getty Images

The names of 25 government lawyers are listed on the last page of the Justice Department’s lawsuit seeking to block the proposed $39 billion merger between ATT and T-Mobile USA.

But two senior lawyers who played crucial roles in bringing the lawsuit are nowhere to be found on the complaint.

Christine A. Varney, the government’s former top antitrust lawyer, oversaw the investigation into the planned merger until July, when she said she was leaving the Justice Department to join the law firm of Cravath, Swaine Moore. When she departed, the investigation was in its final stages but the government had not yet decided to bring a lawsuit.

And James M. Cole, the No. 2 official in the Justice Department, made the ultimate decision to bring what is the Obama administration’s most significant antitrust enforcement action to date. He announced the lawsuit at a news conference Wednesday, one of his more prominent public appearances since he assumed the post in January.

“The leadership transition has been seamless, and the right decision was reached in this case,” Mr. Cole said before he introduced Sharis A. Pozen, the acting head of the antitrust unit. “We are seeking to block this deal in order to maintain a vibrant and competitive marketplace.”

When Ms. Varney announced her departure, some lawmakers and consumer advocates had expressed disappointment that the Obama administration had not been tougher in antitrust. Instead of bringing legal actions, the division approved a number of large mergers, including Comcast and NBC Universal, as long as the companies made certain concessions.

And the Federal Trade Commission, which also has antitrust oversight, stole some of the Justice Department’s thunder in starting an investigation into whether Google had engaged in anticompetitive practices.

The legal action against ATT appeared to ease the concerns of antitrust enforcement advocates.

Ms. Varney had been skeptical of the T-Mobile acquisition since it was announced in March, said two people familiar with her thinking who requested anonymity because they were not authorized to discuss the case.

“Christine Varney set the table for this decision,” said Bert Foer, the president of the American Antitrust Institute. “We are delighted that the administration is committed to the vigorous use of antitrust even at a time of economic difficulties.”

President Obama’s appointment of Ms. Varney in January 2009 was seen as a step toward fulfilling his vow to “reinvigorate antitrust enforcement.” He had also criticized what he said was the Bush administration’s weak record in challenging mergers and failing to bring monopolization cases.

Ms. Varney was a Clinton administration antitrust veteran, having served as a former commissioner at the F.T.C. She joined the Obama White House from the Washington law firm of Hogan Hartson, where she focused on antitrust work.

One of Ms. Varney’s first moves was to name as her deputy Ms. Pozen, a fellow antitrust lawyer at Hogan Hartson and former colleague at the F.T.C. When Ms. Varney left the Justice Department, Eric H. Holder Jr., the attorney general, named Ms. Pozen as her temporary replacement. Ms. Pozen and another government lawyer, Joseph F. Wayland, led the decision to sue ATT.

Ms. Pozen then took the case up the Justice Department’s chain of command. Mr. Holder had recused himself from the investigation for unspecified reasons, so the final decision fell to Mr. Cole.

Mr. Cole, who wears a mustache like his boss, joined the Justice Department last December from the law firm Bryan Cave, where he was a white-collar defense lawyer.

Jumping between government service and private practice throughout his career, Mr. Cole, 59, is a longtime friend of Mr. Holder. The two worked together in the Justice Department earlier in their careers.

His confirmation as deputy attorney general was a bumpy one. It was delayed in the Senate in part because lawmakers expressed concern over his role as the independent monitor for the American International Group in the years leading up to the $182 billion bailout of the insurance giant. Mr. Cole’s work did not involve many of the issues at the center of A.I.G.’s collapse, including credit-default swaps.

As for Ms. Varney, she has moved to New York, where she starts her job at Cravath on Tuesday. She will advise the law firm’s clients on antitrust issues related to mergers.

Under government ethics rules, Ms. Varney is banned for two years from appearing in any matter before the Justice Department. And she is permanently prohibited from working on anything related to the ATT and T-Mobile deal, though at the moment Cravath is not involved in the case.

Article source: http://feeds.nytimes.com/click.phdo?i=4a7510d210e84cdb978d0002b3f9d92d

Filed Under: Business News Tagged With: federal trade commission, pozen, t mobile

Cellphone Networks Stood Up Well to Hurricane Irene

August 29, 2011 by NewsMaker Leave a Comment

Wireless phone networks held up well against Hurricane Irene despite widespread losses of power.

Many people who lost electricity were able to communicate using e-mail and social networks, thanks to battery-powered mobile devices.

As cleanup crews and homeowners began to assess the scope of the damage on Sunday, wireless phone companies were reporting that the storm’s effect on their networks was minimal and that most customers did not experience cellular disruptions, despite the high winds and ferocious rains. The providers said the full extent might not be known until after the storm moved offshore.

The Federal Communications Commission, which activated the Disaster Information Reporting System, an online tool that helps the agency gather information and assess the breadth of damage to the communications networks, is still gauging the extent of the disruptions. It said Sunday that no 9-1-1 center was without service and that it had received no reports of public safety communications disruptions.

Late Sunday afternoon, Julius Genachowski, the chairman of the F.C.C., said that a handful of radio sites and thousands of wirelines went down during the storm, leaving 132,000 landline subscribers without service. The majority of those were concentrated in North Carolina and Virginia. The F.C.C. said that 1,400 cell sites along the coast were down, and several hundred were running on backup power.

Mark Siegel, a spokesman for ATT, said Irene battered the company’s network in several areas, including North Carolina, Virginia, Delaware and Washington, D.C. The company is still working to assess the storm’s effect in New York, he said. “We are ready to respond as soon as our crews are safely able to,” he added.

Representatives at T-Mobile reported similar findings, saying that the damage to their networks was minimal. “We’re seeing, on average, a 10 percent impact across the East due to power outages and flooding,” said Troy Edwards, a spokesman for T-Mobile. “The majority of these outages are in our Virginia and Carolinas footprint.”

Crystal Davis, a spokeswoman for Sprint, said wireless service was spotty in parts of New York, New Jersey and Connecticut because of a loss of commercial power and local landline service.

Verizon’s network was “performing well,” said a spokesman, Howard Waterman. “Some cells in areas that lost commercial power have backup generators helping us continue to deliver wireless service,” he said.

What at first could appear paradoxical — Twitter and Facebook users posting that they had lost power — was feasible thanks to smartphones, laptop computers and tablets. In the days leading up to the hurricane’s arrival, advice to charge all portable devices became almost as commonplace as old standbys like making sure flashlights had batteries and bottled water was in supply.

Indeed, many people who lost power and access to news on television could view news over the Internet on battery-powered computers or cellphones. People with mobile battery chargers in their cars could recharge.

The rise of mobile devices turns the conventional wisdom about landline telephones on its head. For decades, the landline phone was trusted to be more reliable than the electricity grid because the phone network’s dedicated power supply often survived blackouts.

But the evolution of the landline — which first saw cordless phones (that do not work in blackouts) and Internet-based telephony (which requires a battery backup in case of blackouts) — has led to a decrease in its reliability. That hole has been filled, to some degree, by wireless voice and data networks.

Sam Grobart contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=f238cc250c607fd8f638ae2b9c2eac08

Filed Under: Business News Tagged With: cellphone networks, e mail, t mobile

DealBook: Big Names in Tech Back AT&T’s Bid for T-Mobile

June 7, 2011 by NewsMaker Leave a Comment

Alex Wong/Getty ImagesRandall Stephenson, the chief of ATT, during a Senate panel’s hearing in May, with Daniel Hesse, right, of Sprint Nexte.

In its quest to win approval of its $39 billion takeover of T-Mobile USA, ATT just got a lot of help from its friends.

Eight technology giants, including Facebook and Microsoft, and 10 venture capital firms, filed letters supporting the acquisition late on Monday. The letters, filed with the Federal Communications Commission, lent their support to ATT’s argument that the T-Mobile deal will help the company extend its next-generation data network across the country, helping to meet the growing need for wireless broadband services.

“Many policy-related efforts will not be able to quickly address near-term capacity needs,” the Microsoft-led group wrote in its letter. “The F.C.C. must seriously weigh the benefits of this merger and approve it.”

The letters are the latest salvo in the fight over ATT’s effort to become the nation’s biggest cellphone service provider.

It is a fight that has pitted ATT against consumer groups and smaller rivals like Sprint Nextel. Sprint and other service providers have argued strenuously that the deal would revive the “Ma Bell” situation of old, leaving ATT and Verizon Wireless in a duopoly that controls most cellphone customers. Such a combination could lead to higher prices and reduced service, they say.

Sprint, the nation’s third-biggest carrier behind Verizon Wireless and ATT, has been the most outspoken opponent of the deal. “I am here because Sprint believes in competition, which goes hand in hand with innovation,” the company’s chief executive, Daniel Hesse, testified at a Senate hearing last month.

Both sides have been racing to enlist as many prominent supporters as possible. Sprint has found common cause with consumer groups, while ATT has lined up support from unions, particularly the Communications Workers of America. And both sides have sought political leaders to speak out.

The outpouring of support is taking place within the confines of reviews by the F.C.C. and the Justice Department, which are aimed at determining if the deal is in the public’s interest and whether it harms competition. The process may take about a year. The deadline to file supporting comments for the deal is Friday, while the deadline to file opposing comments was last week.

The letters filed Monday provide solid support for the deal from Silicon Valley. Other companies that have signed on are Yahoo, Oracle and the BlackBerry’s maker Research in Motion. The venture capital firms include Kleiner Perkins Caufield Byers and Sequoia Partners.

As smartphones and tablets proliferate, so too have apps like one by Facebook that draw in ever-rising amounts of data. Monday’s letters cite ATT’s contention that the T-Mobile deal will allow the carrier to expand its nascent 4G network to cover 97 percent of the country and an additional 55 million Americans.

“The access aspect of this is so, so important,” Fred Humphries, Microsoft’s vice president for United States government affairs, said by telephone. “We quickly came to the conclusion that this is a good merger.”

Promod Haque, a managing partner of Norwest Venture Partners, said in a telephone interview that constraints on network capacity were harming new mobile applications and offerings.

“The lack of adequate spectrum is killing the quality of users’ experience,” he said. “Customers say, ‘I can’t even get a phone call and can’t get adequate reception. So you want me to use this new service?’ ”

Allowing ATT to consolidate its network spectrum with T-Mobile’s is easier and more cost-effective than alternatives, Mr. Haque added.

Microsoft approached “a select few” technology companies to support the deal, mostly those whose products would obviously also benefit from wider data pipelines, and received quick and positive replies, Mr. Humphries said. The software giant also contacted several trade associations to which it belongs, letting them know of the company’s position.

While Microsoft and Research in Motion have signed the letter, other notable smartphone players whose offerings consume large amounts of data, like Apple, have not.

Some of the signers said that while they had considered Sprint’s arguments that the deal would harm both competition and innovation, they disagreed. Jon Auerbach, a general partner at Charles River Ventures, pointed to smaller competitors like Leap Wireless and “virtual network operators” like Boost Mobile and Virgin Mobile USA as alternatives for consumers.

Mr. Auerbach and Mr. Haque also said that ATT had repeatedly shown a willingness to work with its portfolio companies. They argued that those business relationships showed a willingness by ATT to eschew existing technology in favor of new developments from unproven players.

“When a large provider is willing to take a bet on something that may not have the best balance sheet in the world or a long track record, that goes a long way,” Mr. Auerbach said. “ATT really wants to know what’s next.”

Article source: http://feeds.nytimes.com/click.phdo?i=fc7c0caebf17071bc4e0396831cd58a7

Filed Under: Business News Tagged With: facebook, federal communications commission, t mobile

Bucks: Wednesday Reading: How to Avoid Rental Car Fees

April 27, 2011 by NewsMaker Leave a Comment

April 27

Wednesday Reading: How to Avoid Rental Car Fees

How to avoid rental car fees, finding French cooking classes taught in English, T-Mobile’s new rate plan and other consumer-focused news from The New York Times.

Article source: http://feeds.nytimes.com/click.phdo?i=0d28419c0296d910a4a659c19a424d73

Filed Under: Your Money Tagged With: french cooking, rental car, t mobile