AT&T/T-Mobile Court Case Stayed at Request of AT&T and DOJ
AT&T’s buy of T-Mobile is officially on hold, after U.S. District Judge Ellen Huvelle agreed to stay the Justice Department’s lawsuit against the deal until Jan. 18. AT&T and DOJ jointly sought the delay in a motion filed Monday. Huvelle acted quickly, issuing an order putting off other deadlines in the case and scheduling the next status conference in her courtroom on that date. DOJ and AT&T were due back in court Thursday.
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Lawyers for AT&T faced tough questions from Huvelle last week after the company withdrew its merger application at the FCC (CD Dec 12 p1). Huvelle said she hoped to hear from FCC General Counsel Austin Schlick at Thursday’s now-postponed hearing.
AT&T said a time-out in the court case would give it and T-Mobile parent Deutsche Telekom more time to consider their options. “AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees,” AT&T said. “We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets."
Opponents of the merger said AT&T should recognize reality and pull the plug on the deal.
"AT&T is cutting its losses by getting five weeks within which to come up with a strategy,” said Andrew Schwartzman, senior vice president of the Media Access project. “After Friday’s hearing, it was clear that Plan B (or was it C, D or E) wasn’t going to work. Rather than run the risk of having the entire case thrown out so it would have to be refiled, AT&T’s action keeps the current case alive, if dormant.” The “underlying facts” don’t change, Schwartzman said. “There is no indication the Department of Justice will want to settle and it is unlikely that AT&T will be able to come up with a new framework which will address the concerns that were expressed by the FCC staff,” he said.
The stay is most likely a “cease fire before the formal surrender,” said Public Knowledge Legal Director Harold Feld. “It is difficult to see any path forward for AT&T/T-Mobile at this point,” Feld said. “If there were a settlement offer of some kind that was even close to feasible, the parties would have trotted it out as reason to go forward. The hearing Friday demonstrated that Judge Huvelle is extremely conscious of AT&T’s effort to short circuit the FCC’s review and has no sympathy for such a ploy. … AT&T is more likely to use the time to unwind the deal than to evaluate options for moving forward.” Free Press Research Director Derek Turner said: “The court was rightly skeptical about AT&T’s procedural games, and now it appears that AT&T is finally beginning to see the obvious -- this deal is dead, and nothing can save it."
Meanwhile, filings on the economic model underpinning the deal were due at the California Public Utilities Commission Monday. Replies are due Dec. 20. Sprint said the deal would result in substantial competitive harm, higher prices, the ability for AT&T to raise competitors’ costs, harm to innovation, “unprecedented spectrum aggregation” and job losses. The California commission was notified by AT&T regarding the withdrawal of application at the FCC. The comments were originally due in September. A CPUC administrative law judge had suspended the review process (CPUC Investigation Docket 11-06-009) pending a federal lawsuit.
The Communication Workers of America said the merger would create up to 96,000 new jobs based on AT&T’s commitment to spend an additional $8 billion over seven years on wireless infrastructure. T-Mobile employees would be better off working for a “financially healthy, growing AT&T” than a “stand-along T-Mobile that has no path” to 4G wireless, the union said. With next-generation technology, T-Mobile will be a “weakened competitor,” putting pressure on the company to reduce labor costs and capital spending, it said. CWA urged the California commission to propose to the FCC all of AT&T’s commitments on jobs and LTE build-out as conditions for approval with associated timetables, speed and quality benchmarks, reporting requirements, and penalties for non-compliance.
Concerns from the California independent telephone association, CALTEL, focused on AT&T’s domination of the special access market. A review of the data offered by AT&T and T-Mobile shows that AT&T is leveraging its control over special access in California to gain control over the market for emerging alternatives like Ethernet services. The group also claimed that AT&T violated federal regulations by failing to make certain special access terms it offered T-Mobile available to other carriers.