After Thanksgiving Flareup, AT&T and T-Mobile Endgame Unchanged

While most of us were sleeping off the effects off too much turkey and pumpkin pie, AT&T and federal regulators were engaging in a very public spat over Ma Bell’s $39 billion bid for T-Mobile USA. But now that things have simmered down a bit, it actually looks like the prospects for this deal haven’t changed a whole lot.

AT&T and Deutsche Telekom’s announcement that they were pulling their application from the FCC—expertly issued on Thanksgiving—was a counterpunch to the FCC chairman’s decision to send the case to an administrative law judge for a hearing. As The Associated Press succinctly explained, “that’s what the FCC does when it opposes a merger.”

But the real focus for this deal is the U.S. Justice Department’s antitrust lawsuit blocking the merger (you can check out the latest filings in the case at this DOJ site). As I wrote when the lawsuit was filed back in August, the DOJ’s civil suit essentially “yanks the merger away from regulators at the Federal Communications Comission and puts the whole thing in the court system.”

It’s kind of like that moment in a TV cop drama when the hardened detectives arrive at a crime scene and send the beat cop out to work crowd control. Yes, they’re separate agencies. And yes, the FCC would have to bless any deal that might be worked out. But the DOJ’s lawsuit is the main event.

So, while it has been fun to see the FCC and AT&T quibble over arcane procedural details—the FCC saying it will consider the withdrawal, and AT&T threatening to sue if the application isn’t dropped—the DOJ lawsuit has always been the place where this deal would really be killed or allowed to stand.

What could happen in that process is still anybody’s guess. A failure would definitely cost AT&T, though—the company said it would charge a breakup fee of $4 billion to this quarter’s earnings, a precaution that some analysts are saying is probably required by accounting principles at this point, given the lingering uncertainty.

Reading through all of the coverage of AT&T and T-Mo’s wild weekend is a very informative primer on the current state of the wireless industry, where big, traditional carriers are trying to consolidate scale and spectrum while cable companies and even software players like Google hint at greater involvement.

Among the mounds of excellent reporting out there, I recommend this overview by The New York Times and a breakdown of several industry analysts’ takes at The Wall Street Journal. Greg Lamm at TechFlash also gets great regional reaction from the CEO of a Portland, OR-based small carrier.

But it’s also remarkable to see how closely all of those possible ideas are tracking to this piece from GigaOm’s Ryan Kim, who rounded up the possible next steps for T-Mobile if the deal fails. Kim wrote his piece back on Aug. 31, the day the DOJ lawsuit was filed. The fact that we’re still talking about the same kinds of outcomes gives you a good idea of how little has changed in the big picture.

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