AT&T Gets Sued

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Courtesy of Karl Denninger, The Market Ticker 

I’m shocked – shocked I tell you - that the DOJ actually did its job.

The Department of Justice filed an antitrust lawsuit on Wednesday to block AT&T’s (T: 28.46, -1.16, -3.92%) $39 billion planned takeover of T-Mobile USA due to fears the controversial marriage will cause consumers to pay higher prices and have fewer options.

This doesn’t necessarily kill the deal, but it sure ramps up the pressure.  Among other things if the deal fails AT&T has to pay DT a break fee of about $3 billion, so this is by no means a "nothingburger" for them.

There’s a real issue identified here that finally got some attention: Pricing.

When the deal was announced, I said this:

There’s no chance that AT&T is going to get people to pay thirty to sixty percent more for the same service.  Not a snowball’s chance in Hell, and especially not when they can jump to either Sprint or one of the MVNOs.  It’s not worth moving to Sprint for me today only because I’m out of contract.

It’s rumored that AT&T intends to take the T-Mobile towers and use them for LTE.  That’s a cute way to try to force migration to AT&Ts exorbitant pricing.  See, on GSM/EDGE (2.5g) most modern phones will work on both the 1900 and 850 frequencies used in the US, so T-Mobile customers will be able to access AT&Ts towers (assuming, of course, they enable registration – at present in my area it is barred) and make calls, send texts, and use 2.5g (~150kbps) data speeds.

Apparently the DOJ saw it the same way I did.

To put some more color on this, readers probably remember that I recently ditched T-Mobile for Virgin Mobile (prepaid running on Sprint’s network) after T-Mobile decided to treat me to AT&T-style "customer disservice."  Well, they’ve gotten aggressive trying to get me back, but they’re not going to succeed.  Not only have I cut my bill in half for myself and my kid even given the incentives they’ve tried to lay on the table to get me to return but in addition the service I get is superior to what I had on T-Mobile and I have no contract commitment! 

If T-Mobile wants me back, that is what they have to match or beat.  Best-a-luck boys.

The media is of…