In twist, blocking AT&T deal could hurt rivals

Driven by antitrust concerns, U.S. regulators are fighting hard to block AT&T's $39 billion deal to buy Deutsche Telekom's T-Mobile USA. But, in an ironic twist, smaller U.S. wireless rivals may suffer more if the deal is blocked than if it is approved.

T-Mobile USA would emerge as a stronger, scrappier competitor thanks in large part to the hefty breakup fee it is entitled under the AT&T deal. And on its own, it is likely to fight harder for the low end of the market that is currently the playing ground for the likes of Sprint Nextel Corp, MetroPCS Communications Inc and Leap Wireless International, analysts said.

T-Mobile USA will "emerge as a stronger, more formidable competitor once the uncertainty of the merger has elapsed and its network quality is enhanced via the acquisition of the AT&T spectrum assets," said Jim Breen, an analyst at William Blair.

The AT&T deal -- the largest transaction announced this year -- has run into serious obstacles both at the Department of Justice and at the Federal Communications Commission, which worry about the antitrust implications of a merger of the No. 2 and No. 4 U.S. wireless carriers.

AT&T has said it would withdraw its application to the FCC to focus on persuading the Justice Department. The company also said it would take a $4 billion charge to account for a breakup fee in case the takeover fails.

Under the terms of the merger agreement, a failed deal would entitle T-Mobile USA to $3 billion in cash plus spectrum and roaming agreements.

In a research note, Moody's said that could also lead to a network sharing deal between the two companies, reasoning that it "would make sense given the spectrum that AT&T will have to cede to T-Mobile and the 3G roaming agreement between the two."

That would make life especially hard for No. 3 U.S. carrier Sprint, which has been one of the most vocal opponents of the AT&T/T-Mobile deal, going so far as to file a lawsuit.

William Blair's Breen predicts that because Sprint and T-Mobile serve similar segments of the market, Sprint will have to try and match T-Mobile's aggressive pricing to win postpaid customers, thereby diluting its average revenue per user.

"In terms of recruiting new subscribers, Sprint will no longer have the luxury of being the only value postpaid carrier in the market," Breen said.

Smaller rivals such as MetroPCS and Leap Wireless may be affected even more because T-Mobile is eyeing similar customer segments.

A failure to close the AT&T deal will turn T-Mobile into an even more aggressive competitor for urban prepaid users from these rivals.

MetroPCS and Leap would also lose an opportunity to buy T-Mobile USA assets that AT&T would have had to divest to overcome antitrust objections from regulators.

There has been speculation that AT&T -- in a move to assuage the DoJ's concerns -- could bolster MetroPCS' position to ensure that there is a fourth national competitor in the market but MetroPCS has made it clear that it has no ambitions to become a national carrier.

Representatives for MetroPCS, Leap Wireless and Sprint were not immediately available for comment.

The one winner from the uncertainty over the deal is the largest U.S. wireless carrier, Verizon Communications, Moody's said. Verizon gets room to execute its strategy while competitors try to salvage the transaction, Moody's said.

Apple's IPhone 4S Sales May Reach 4 Million This Weekend

Apple Inc. is poised to sell as many as 4 million units of its new iPhone 4S this weekend as customers around the world clamor for one of the last products developed under Steve Jobs.
The device, available today in the U.S., Australia, Canada, France, Germany, Japan and the U.K., is

projected to outperform last year's introduction of the iPhone 4, which topped 1.7 million units in its introductory weekend. For the iPhone 4S, most estimates range from 2 million to 3 million, with Yankee Group analyst Carl Howe predicting sales of as much as 4 million.
The release represents the end of Apple's era under Jobs, who died this month after an eight-year battle with cancer. The iPhone 4S has received mostly positive reviews for its voice- recognition software, speedier processor and improved camera. The device also provides Apple with fresh ammunition in its fight against Google Inc.'s Android software, which will appear on a host of new smartphones in the year-end holiday season.
“It's going to easily outpace any previous launch,” said Charlie Wolf, an analyst at Needham & Co. in New York. It helps that the iPhone is available on the three largest U.S. carriers for the first time, which will bring in new buyers, he said.
Apple also has released an update to its iOS mobile operating system, which customers can download to their existing devices. The software comes with 200 new features and a Web storage service for synchronizing photos, documents, music and other files across different Apple gadgets.
Google Competition
While the iPhone is the best-selling single smartphone, all of the devices running Google's Android operating system account for more of the industry's sales. HTC Corp., Samsung Electronics Co., Motorola Mobility Holdings Inc. and other manufacturers have adopted the software. Google offers Android for free and then makes money on mobile advertising and services. That revenue now accounts for $2.5 billion a year, the company said yesterday when it released quarterly results.
Apple's shares have jumped more than 10 percent this week, boosted by speculation that the iPhone 4S will be a hit. The stock closed at $408.43 in U.S. trading yesterday, making Apple the world's most valuable business. Its market capitalization now stands at $378.7 billion, compared with $371.3 billion for the second-ranking company, Exxon Mobil Corp.
In German trading, the stock today rose 1.4 percent to the equivalent of $412.42 as of 10:01 a.m. in Frankfurt.
‘Memory' of Steve
About 25 customers were lined up outside Apple's Midtown Manhattan store at lunch yesterday. In Australia, the first country where the product went on sale, Jackie Guo, 25, and his girlfriend, both students at Macquarie University, said they lined up as a tribute to Jobs.
“It's the iPhone for Steve, it's for the memory of Steve,” Guo said. “It was the last product he worked on. He pushed this company to become a viable company. His ideas are better than others. They make the market more hungry for the product.”
In Frankfurt, Grigory Stolyarov, a 27-year-old employee of Dekabank Deutsche Girozentrale, spent the night in front of the store in the city's main shopping street. He had put on two pairs of socks, sweaters and jackets to weather the first near- freezing night of the fall season and be among the first 20 people in the line of more than 1,000.
‘It's a prestige thing,” said Stolyarov, who picked up three iPhones and already owns an Apple iPad 2 tablet computer. “I feel like an onion and I definitely need some sleep,” he said.
Makeshift Memorials
In Tokyo, about 80 people were lined up a day before the debut and there were more than 800 people by 8 a.m. at the Ginza district store.
Jobs's admirers have turned storefronts into makeshift memorials, adding a solemn tone to the frenzy that accompanies the company's product releases. Jobs co-founded Apple and returned to the company after a 12-year absence, rescuing it from near-bankruptcy.
“They are going to sell out,” said Yankee Group's Howe, who is based in Boston.
High demand for the new iOS 5 software contributed to glitches at Apple even before the iPhone 4S went on sale. Customers downloading it to their older phones overwhelmed the company's servers, making it harder to upgrade.
Sell Out
Apple hasn't said how many people were affected. The wait time to get a call back from an Apple support representative via the company's Express Lane service is much longer than usual. Typically, an Apple rep will call back within a few hours. Now, the earliest appointments aren't for days.
Trudy Muller, a spokeswoman for Cupertino, California-based Apple, declined to comment
The iPhone 4S will go on sale later this month in 22 additional countries, including Ireland, Italy, Mexico and Spain. Apple didn't say when it will be available in China, a country Chief Executive Officer Tim Cook has said will be critical for the company's future growth.
Apple said earlier this week that it had received more than 1 million preorders for the iPhone 4S. The three U.S. carriers selling the device -- AT&T Inc., Verizon Wireless and Sprint Nextel Corp. -- sold out as well. The demand puts Apple on pace to sell a record number of iPhones in the quarter ending in December, according to the analysts' reports. Gene Munster, of Piper Jaffray Cos., estimates that Apple could sell more than 25 million iPhones this quarter.
Top Moneymaker
The iPhone, first introduced in 2007, has become Apple's top moneymaker, accounting for almost half its total revenue. Sales from the new model won't be part of the fourth-quarter financial results Apple is due to release on Oct. 18. Even so, profit rose about 60 percent in the period to $6.9 billion on sales of $29.5 billion, according to the average of analysts' estimates compiled by Bloomberg.
The release of the iPhone 4S, along with new Android models, should mean that smartphone users account for the majority of U.S. mobile-phone customers for the first time, said Roger Entner, an analyst at Recon Analytics LLC in Dedham, Massachusetts.
Apple controlled 19.1 percent of the smartphone market in the second quarter, according to research firm IDC, ahead of Samsung, Nokia Oyj and Research In Motion Ltd.
Few companies can build excitement around a new product the way Apple can, Yankee Group's Howe said.
“This is what they are good at,” he said. “They know how to make a big launch weekend.”

Sprint Offers Cheaper WiMAX 4G in Samsung Conquer 4G Android Smartphone

Sprint has made the availability of WiMAX 4G connectivity cheaper, teaming up with Samsung to launch Conquer 4G Android smartphone at $99 only.

The Samsung Conquer 4G will join the growing list of mobile devices that support Sprint’s WiMAX 4G

network, which started with the HTC EVO 4G, the best-selling smartphone in Sprint history.

Nearly one and a half years have passed since Sprint offered its first WiMAX 4G-capable Android smartphone, and including the Samsung Conquer 4G, the roster increased to seven smartphones, excluding 15 other devices that include hotspots, netbooks, USB modules, and tablets during the one year anniversary of EVO 4G’s launch.

However, the previous Sprint offerings, including EVO, EVO Shift, EVO 3D, Photon, Epic, and Nexus S, launched at hefty prices, considering 4G connectivity is an expensive feature and the smartphones had high-end specs.

The Samsung Conquer 4G is set to change that though, launching at only $99, with a new two-year Sprint contract and $50 rebate.

The $99 offer is also the current price for Samsung Nexus S, which launched at $200 last May.

The Samsung Conquer 4G touts a 3.5″ 320 x 480 HVGA touchscreen display, 1 GHz processor, Android 2.3 Gingerbread, 3.2-Megapixel camera with flash and a 1.3 megapixel front camera for video calling, 802.11 b/g/n Wi-Fi connectivity, stereo Bluetooth support, and WiMAX hotspot capability for up to five devices.

The Samsung Conquer 4G will hit the shelves of Sprint retailers on August 21.

AT&T asks for support on T-Mobile

Returning recently from a six-month leave to battle cancer, AT&T's top executive in North Carolina is leading a "full-court press" to generate public support in this state for AT&T's $39 billion acquisition of competitor T-Mobile.

Cynthia Marshall vows the corporate merger, which would create a telecom giant with more than 130 million customers nationwide, would alleviate the nagging problem of dropped calls and sluggish traffic that has overwhelmed AT&T's wireless network.

In North Carolina, as in many other states, regulators have no say over the merger.

Still, Marshall said support from North Carolina lawmakers, advocacy groups and others carries much weight in persuading federal regulators to bless the merger as being in the public interest.

"The voice coming out of North Carolina is powerful," Marshall said Wednesday during a meeting with reporters at The (Raleigh) News & Observer. "It's very important. We want this to happen."

Return from treatment

She estimates she is spending up to 40 percent of her time focused on touting the benefits of the T-Mobile deal. It will be the seventh merger during her 30-year career in telecommunications.

The deal was announced in March, as Marshall was consumed by chemotherapy treatments and her fight against colon cancer. Even during that time, she worked from home to promote the deal's merits. Now in remission, she returned to work full time this month.

Disparate groups - including labor unions, the NAACP, Gov. Bev Perdue and even the N.C. Sweet Potato Commission - have written to urge the Federal Communications Commission at AT&T's urging to approve the controversial merger as the best way to boost wireless coverage and expand broadband service, especially in rural areas.

"We all have experienced dropped calls, slow speeds and all that," Marshall said. "This merger is pretty much going to make this a thing of the past."

The FCC and the Justice Department aren't expected to rule on the deal until next year.

Foes cite costs

Opponents, including Sprint Nextel and some consumer groups, are urging regulators to block the deal or to require tough restrictions. U.S. Sen. Herb Kohl, a Wisconsin Democrat, wrote in a letter to federal regulators this week that the deal should be blocked because it will lead to higher prices and fewer choices for consumers.

Marshall said that's not true and that the acquisition is crucial because it would give AT&T access to T-Mobile's underused wireless spectrum. That would ease the data crush on AT&T's network, which is clogged with video and other downloads from smartphones and tablets. And that would allow it to expand its high-speed wireless network into rural areas and to add services.

Ken Rehbehn, an analyst with the Yankee Group, said in the nation's biggest metro areas, AT&T would expand its spectrum capacity by about 40 percent. T-Mobile's network is not nearly as congested as AT&T's. The deal would bring much-needed, albeit temporary, relief to AT&T and its customers.

"The work to get all this support just shows how vital this acquisition is to AT&T," Rehbehn said. "If they fail in this effort, I don't see an obvious Plan B to remain competitive."

T-Mobile's presence in North Carolina was negligible until its 2007 acquisition of regional provider SunCom Wireless. Neither T-Mobile nor AT&T will disclose T-Mobile's customer numbers in this state. T-Mobile's customers are mostly clustered in the New Jersey-New York corridor as well as other urban centers.

Marshall expects the deal, which also has support from a large telecom labor union, won't result in widespread job cuts. AT&T employs about 7,500 people in North Carolina and would continue hiring as it invests billions to expand the reach of its broadband networks.

She didn't provide specific hiring projections.

AT&T and T-Mobile: Wireless megamerger(Video)

The No. 2 and No. 4 wireless carriers announce a $39 billion merger deal that would create a company with nearly 130 million subscribers, easily leapfrogging Verizon Wireless for the No. 1 spot.

Wireless CEOs spar onstage at CTIA

Chief executives of AT&T, Verizon Wireless, and Sprint are forced to discuss the elephant in the room: AT&T's proposed acquisition of T-Mobile USA.

• Audi signs T-Mobile, gets AT&T

(Posted in Signal Strength by Marguerite Reardon)

March 22, 2011 8:17 a.m. PT

What would AT&T, T-Mobile deal mean for Sprint?

Sprint Nextel may find it difficult to compete on its own if the deal between AT&T and T-Mobile is eventually approved by regulators.

(Posted in Signal Strength by Marguerite Reardon)

March 21, 2011 9:56 p.m. PT

AT&T: Buying T-Mobile speeds LTE shift in U.S.

Facing regulatory scrutiny, AT&T argues that buying T-Mobile USA will bring next-gen mobile networks to more Americans at a quicker clip and make the United States more competitive.

• Study: Verizon fastest among 4G networks

(Posted in Deep Tech by Stephen Shankland)

March 21, 2011 7:52 a.m. PDT

AT&T and T-Mobile: Good for whom?

analysis AT&T announces it will acquire T-Mobile for $39 billion. Though the carrier is preaching nothing but upsides for T-Mobile customers, I'm not so sure.

• Video: What consumers think about AT&T and T-Mobile merging

(Posted in Dialed In by Kent German)

March 20, 2011 8:09 p.m. PT

AT&T and T-Mobile--listen before you judge

analysis Consumer advocates have already condemned the AT&T and T-Mobile USA as "unthinkable." But Larry Downes argues jumping to conclusions doesn't help anyone, especially consumers.

(Posted in Signal Strength by Larry Downes)

March 20, 2011 6:02 p.m. PT

T-Mobile: Business as usual for now

In the wake of the AT&T acquisition news, T-Mobile assures its customers that nothing will change. At least for the next 12 months.

(Posted in Dialed In by Bonnie Cha)

March 20, 2011 2:54 p.m. PT

AT&T-T-Mobile merger: By the numbers

On the cusp of a historic mobile operator merger between AT&T and T-Mobile, a look at some key stats.

(Posted in Dialed In by Jessica Dolcourt)

March 20, 2011 6:16 p.m. PT

Current AT&T and T-Mobile plans compared

After the AT&T and T-Mobile merger news broke, one of the first concerns many T-Mobile customers had was with pricing plans.

(Posted in Dialed In by Nicole Lee)

March 20, 2011 9:51 p.m. PT

Will AT&T kill T-Mobile's lovely anti-AT&T ads?

The news that T-Mobile USA is being bought by AT&T might mean the end of the T-Mobile campaign that attacks, um, AT&T.

(Posted in Technically Incorrect by Chris Matyszczyk)

March 20, 2011 1:58 p.m. PT

AT&T to acquire T-Mobile USA for $39 billion

T-Mobile's 33 million subscribers will give AT&T the dominant position in the mobile market and leave the U.S. with only one GSM carrier.

(Posted in Wireless by Steven Musil)

March 20, 2011 12:03 p.m. PT