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AT&T abandons T-Mobile merger plans (updated)
AT&T has officially given up on its plans to buy out T-Mobile. In a statement, the company said it had agreed with Deutsche Telekom to cease pursuing a merger, which has come under increasing scrutiny from both the government and advocacy groups. The failed attempt to snatch up its smaller, German-owned competitor will ultimately cost Ma Bell $4 billion and it's not paying those dues without some grumbling. In the release the FCC and DOJ bear the brunt of AT&T's ire, which are accused of harming customers and exasperating the already looming spectrum shortage. Of course, this also hurts the carrier's ability to compete with Verizon which has been on a spectrum buying spree as of late. As a consolation prize Deutsche Telekom and AT&T have entered a roaming agreement, though the structure of that deal and whether it's purely international or domestic roaming remains to be seen. The complete press release from AT&T can be found after the break.
AT&T asks judge to stay T-Mobile merger court proceedings until January 18th (update: granted)
Just last week, the US Department of Justice indicated its desire to dismiss the lawsuit it filed to stop the union of AT&T and T-Mobile because of Ma Bell's withdrawal of the merger's FCC application. It looks like that's given the telco plenty more issues to ponder, so now it's asking Judge Huvelle to postpone further antitrust court proceedings until January 18. The folks at AT&T need the extra time to "evaluate all options" and "revise our current transaction to achieve the necessary regulatory approvals" for the merger. Because the DoJ has signed off on AT&T's petition, it seems likely the court will go along with the plan -- as opposed to killing the deal via a case dismissal at the hearing currently scheduled later this week. We'll have to wait and see if the Judge Huvelle grants the request, but if she does, this much is certain: Ma Bell's lawyers will be doing more work than merrymaking over the holidays. Update: It looks like Christmas came early for AT&T&T, as the New York Times reports that Judge Huvelle has granted the stay.
Judge to reconsider DoJ's AT&T antitrust suit
Late last month AT&T withdrew its application with the FCC to acquire T-Mobile, in an attempt, it said, to focus on winning approval from the Department of Justice, first. Now a district court judge is considering dismissing the US' antitrust suit against ole Ma Bell. According to Bloomberg, the DoJ is looking to either "withdraw without prejudice" or "stay" the suit, as a result of AT&T pulling its application from the FCC. Judge Ellen Segal Huvelle scheduled a hearing for December 15th to decide whether the deal is still possible in the proposed timeframe and the suit still worth pursuing. She had this to say: We don't have any confidence that we are spending all this time and effort and the taxpayers money and that we're not being spun. The landscape has changed. AT&T's lawyers remained steadfast, however, demanding the company's "day in court," and reiterating that approval from the DoJ would improve its chances of getting the thumbs-up from the FCC. For more sordid details on this legal ping-pong match, hit the source link below.
AT&T, Deutsche Telekom withdraw FCC application for T-Mobile merger, look toward DoJ
Now that FCC Chairman Julius Genachowski has called for an administrative hearing on AT&T's proposed buyout of T-Mobile, the two parties have decided to formally withdraw their application to the Commission. The confirmation came today, with an announcement from AT&T and Deutsche Telekom, which owns T-Mobile USA. In a statement, the two companies reiterated their commitment to the deal, adding that they're looking to receive final approval from the DoJ: "This formal step today is being undertaken by both companies to consolidate their strength and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice." AT&T also reaffirmed that it would incur a $4 billion hit should the deal fall through, and that it expects to take out a pretax charge for that amount during the fourth quarter of this year. Of course, Genachowski's decision must still obtain approval from the full Commission, but it certainly looks like both parties are gearing up for a courtroom battle.
DoJ: Stingray cellphone tracking device falls under Fourth Amendment, but don't ask about it
In 2008, federal authorities arrested David Daniel Rigmaiden on charges of spearheading a massive identity theft ring in Arizona. Rigmaiden allegedly led this operation from January 2005 to April 2008, harvesting some $4 million off of more than 1,900 fraudulent tax returns. He was ultimately nabbed, however, thanks in part to controversial, and somewhat mysterious tool known as a "stingray" -- a device that effectively acts as a fake cell tower, allowing authorities to locate and track a cellphone even when it's not being used to place a call. Since his arrest, the 30-year-old Rigmaiden has been battling the feds in the U.S. District Court of Arizona, on allegations that their tracking tactics constituted an unlawful search and seizure, thereby violating his Fourth Amendment rights. For more than a year, the Department of Justice has maintained that the use of stingrays does not violate the Fourth Amendment. When it comes to sending data from a mobile device, the DoJ has argued, users should not have a "reasonable expectation" of privacy. Recently, though, the judge overseeing the case has indicated that he will press the feds for more information on how stingrays actually work -- something the government clearly has no desire to disclose. Prosecutors are so reluctant, in fact, that they may be willing to sacrifice their case against Rigmaiden in order to safeguard the stingray's secrecy. Read more about the latest developments, after the break.
AT&T reportedly talking to rivals about asset sales in effort to save T-Mobile deal
It's far too early to be writing it off, of course, but AT&T's proposed acquisition of T-Mobile is facing some fairly significant hurdles that could throw a big wrench in the companies' plans -- not the least of which is a lawsuit from the US Department of Justice. Now, according to Blooomberg, AT&T is proactively talking to a number of smaller rivals about selling some of its assets (namely, "spectrum and subscribers") in an effort to save the deal. While talks are described as "preliminary," AT&T has reportedly already reached out to MetroPCS, Leap Wireless, Dish Network, CenturyLink and even Sprint, although Bloomberg notes that any such sell-off may still not be enough to please the DOJ. As you might expect, all of those companies are remaining mum on the matter.
AT&T files response to DOJ suit, says regulators just don't understand
It's no secret or surprise that AT&T is unhappy with the DOJ's decision to try and block its merger with T-Mobile. But issuing public statements is one thing, officially filing papers in court is another. Ma Bell submitted a 25-page document arguing that the Justice Department's claims represent a misunderstanding of the market and dismisses competition from "innovative upstarts," like MetroPCS and US Cellular. AT&T's lawyers point out that T-Mo, currently the fourth largest provider, has been losing customers for years and it's German parent company may not be inclined to invest much in improving it. By contrast, AT&T has spent $30 billion over the last two years to boost network quality and capacity, yet still struggles to keep up with demand. We can't say the arguments are without validity, but the government's fear of a market dominated by just three companies with little incentive to innovate or drive down prices also seems well founded. Well, the pageantry officially gets underway on September 21st, when the US District Court hearings begin.
AT&T may get a discount if T-Mobile bid concessions prove too expensive
When the DOJ blocked AT&T's deal to snatch up T-Mobile, did you think Ma Bell would end up shelling out some ridiculous sum to lock things up? Well, the opposite may be the case -- according to Bloomberg, the company can get a reduced rate if regulator's requests become too pricey. A discount of sorts would be available to AT&T if the remedy to-do list surpasses 20 percent of the deal's original $39 billion price tag (about $7.8 billion). Also of note here: the company could leave the proverbial table altogether if the concessions top the 40 percent mark, only owing a break-up penalty... and shelling out the $3 billion contingency fund to Deutsche Telekom AG.
AT&T willing to make concessions to save T-Mobile merger, sources say
Now that the US government has moved to block its merger with T-Mobile, AT&T is gearing up for a long and potentially pricey legal battle with the Department of Justice. According to Reuters, however, the provider is also working on a settlement offer, in the hopes of bypassing the courtroom altogether. Sources close to the matter say AT&T will soon present its proposal to antitrust regulators, who are concerned that the company's purchase of T-Mobile may hinder market competition. Details on the proposal remain vague, though it will likely include promises to keep T-Mobile's low-cost data and calling plans, along with pledges to sell off some of its own assets. But some insiders say the carrier may have to sell up to 25 percent of T-Mobile's business in order to put regulators' minds at ease. AT&T has yet to comment on the report, though one of Reuters' sources claims that its lawyers are "pretty determined that they can find a solution, and they are pretty confident."
US government files to block proposed AT&T / T-Mobile merger (update: companies respond)
You heard right. Bloomberg is reporting that the United States government (!) just filed court papers in Washington, D.C. to block the much ballyhooed tie-up between AT&T and T-Mobile USA. Oddly enough, T-Mobile and AT&T promised this morning that a total of 5,000 jobs would be hand delivered to the US if the two telcos were allowed to become one, but it'll take a heck of a lot more convincing now. For what it's worth, this doesn't mean that the deal is or isn't happening -- it's just another step in the process -- but it most certainly doesn't bode well for proponents. Nor for AT&T's share price. According to the report, the Justice Department feels that the deal would "substantially lessen competition" in the wireless space. In fact, it boldly stated the following: "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market." If things end up falling apart, it's important to remember that AT&T would be forced to pay Deutsche Telekom $3 billion as a break-up fee, which ought to make Tiger Woods' misfortunes look like an outright bargain. Update: Full press release is now embedded after the break, and meanwhile, Federal Communications Commission Chairman Julius Genachowski has issued the following public statement: "Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition." Update 2: Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement (seen after the break)... [Thanks to everyone who sent this in]
Google reaches $500 million settlement with DOJ over drug ads
We had heard that Google irked authorities at the Department of Justice when ads advertising illegal and counterfeit drugs started popping up. But, we didn't realize just how expensive the offense would be. The government is expected to announce a $500 million settlement with the web giant later today that cut quarterly profits by 22-percent. Google told the New York Times that it had since banned the advertisers, but admitted they never should have been allowed in the first place. We'll just have to go back to getting our cheap Viagra where we used too -- our spam folder.
Ramona Fricosu case to determine if decrypted laptop files are safe under Fifth Amendment
So far, we've pretty much decided that the Fifth Amendment of the US Constitution covers those zany thoughts within your skull. But when it comes to more tangible things, it's hardly as clear. In the past, convicted persons have been forced to cough up keys to what eventually becomes evidence, and in the case of one Ramona Fricosu, the US Department of Justice is assuming that a computer passphrase is no different. But that assumption is causing shock waves throughout the tech community, as the decrypting of one's laptop files is arguably causing someone to become a "witness against himself." Of note, no one's asking that Ramona actually hand over the password per se, but even typing in the unlock code while not being watched results in effectively the same conclusion. The San Francisco-based Electronic Frontier Foundation is clearly taking a stance against the proposal, noting that this type of situation is exactly one that the Fifth was designed to protect. Only time will tell if Fricosu's offered immunity as a token for complying, but the precedents that are set here are apt to be felt for decades to come. Tap that CNET link for an in-depth report.
Department of Justice probe eyes Sony's rechargeable battery business
After the headache-inducing bout of hacking woes that beset the corporation in recent weeks, a new Department of Justice-led investigation into Sony's US electronics division may have the company emptying that aspirin bottle. Details of the inquiry are scarce at the moment, but with the company's cooperation confirmed, all signs lead to an alleged price fixing of its rechargeable battery business. Citing data from a Tokyo-based research firm, a Bloomberg report indicates that a 2010 market surplus had Sony Electronics (amongst others) lowering battery prices at the expense of less financially-cushioned players. The notorious sector of the multinational's operations has been in the hot seat before -- namely, for actual laptop explosions -- but this time 'round the judicial maypole, it seems the Japanese giant may have been partaking in some anti-competitive shenanigans. If the DoJ hammer does happen to fall on Sony's already bowed head, the company could be facing a very expensive slap on the wrist and a fundamental change to its business practices. Luckily for Sony, we happen to believe in a little something called "innocent until proven guilty."
DOJ gives Apple the green light to bid on Nortel patents
One by one, companies are getting the green light from the Department of Justice to bid on over 6,000 patents being auctioned off as part of Nortel's bankruptcy. Google received approval earlier this week, and Apple is supposedly next. Nortel is auctioning off its patents on June 27. Google has already bid US$900 million and will receive this treasure trove of intellectual property unless a competing bid is entered by another company, like Apple. Nortel's attorney has not released the names of any additional bidders and will remain silent until it picks a winner in the next few weeks. Despite the high price and regulatory hurdles, companies like Apple, Google and Microsoft are actively pursuing these patents. It's not very often that such a large number of wireless and networking patents become available at one time. The company that walks away with the lion's share of this property will have a robust arsenal to both initiate and defend itself in patent infringement cases.
US DOJ greenlights Google's $900 million bid for Nortel patents; Apple, RIM also interested
It looks like Google will be able to bid on Nortel's patent portfolio after all, now that the Department of Justice has weighed in on the matter. According to the Wall Street Journal, El Goog's $900 million bid has passed a governmental antitrust review, just a few days ahead of next week's auction. Rivals like Microsoft, AT&T and Verizon had previously filed complaints with the DOJ, arguing that the sale of Nortel's 6,000 patents would give an unfair advantage to the auction's winner by providing it with a fresh arsenal for patent-infringement lawsuits. Google, however, claims it needs the portfolio to defend itself against legal challenges, since it has comparatively few patents to its name. The DOJ apparently sees nothing illegal with this argument, having determined that singular ownership of Nortel's intellectual property would pose no threat to market competition. This is obviously music to Google's ears, but the battle isn't over yet. Sources tell the Journal that both RIM and Apple are interested in filing their own bids for the patents, and have already begun discussing the matter with the Justice Department. None of the companies involved have commented on the story, but it'll all go down on June 20th, when the auction finally gets underway.
Regulators worried about Apple's interest in Nortel patents
On June 20th, Canadian telecommunications equipment manufacturer Nortel will be auctioning off over 6,000 patents in order to restructure its debt and pay off financial obligations. Last December we reported that among the companies interested in the patents are Google, Research in Motion, and Apple. Now the Wall Street Journal is reporting that the US Department of Justice has concerns over Apple acquiring Nortel's patents. The Journal states that at first the DOJ was concerned about Google, but the Internet giant worked with the department to address any concerns. It then bid US$900 million for the patent portfolio. With the Google concerns addressed, the DOJ has turned its eyes to Apple. According to the Journal, the DOJ "has greater concerns about Apple" because of the way the company "has often tangled with rivals in patent suits." However, the Journal also reports that Apple "has been in talks with the Justice Department to address its concerns" before the June 20th auction. Patents have obviously become a hot issue in the smartphone market and companies that own the most could in theory stifle the innovation of other companies by not allowing them to license the patents or accusing them of patent violations for similar technologies. However, owning a trove of patents could also help your company from getting its products ripped off, as Apple is alleging Samsung has done.
The AT&T / T-Mobile senate hearing: deciphering the war of words
Over the course of the next year, AT&T and its opponents will be in the ring, duking it out in a war of words in attempt to convince the government that a $39 billion takeover of T-Mobile by AT&T should or should not take place. Consumers have the most to win or lose here, yet we are resigned to watching from the sidelines as both sides lob countless facts and stats at each other like volleys in a tennis match. If you look at the merger process as a stairway to climb up, AT&T is still near the very bottom. Every rung will be full of intense scrutiny as it is: if the two companies are allowed to merge, the national GSM market becomes a monopoly, and the wireless industry as a whole would shift to only three national players plus a handful of less-influential regional carriers. The carrier's going to blow as much as $6 billion if the merger is not approved -- almost enough to buy Skype -- it can't just expect to put up some feel-good facts and stats to win the hearts of the decision-makers. AT&T has to be absolutely sure it'll come out victorious in the war, else it risks losing the trust (and money) of its shareholders. But to accomplish such a feat, it has to be on top of its game. There was no better time to show off what it's made of than last week's Senate Judiciary Committee hearing conducted by the Subcommittee on Antitrust, Competition Policy and Consumer Rights. When the Committee entitles a hearing "Is Humpty Dumpty Being Put Back Together Again?," it's either exercising a sense of humor or a preconceived notion of the merger due to the implication that Ma Bell is simply reforming. CEO Randall Stephenson appeared as a sacrificial lamb, going before Congress and his opponents to explain his side of the story, answer hardball questions, and endure a hard-hitting round of criticism. Continue reading as we take you topic by topic and examine what he -- and his opponents -- had to say about the merger.
Google's potential $500M fine linked to illegal online pharmaceuticals
When Google revealed it would take $500 million first-quarter charge ahead of "potential resolution of an investigation" by the United States Department of Justice, the company offered few details. A three-line non-explanation pointed the finger at "advertising by certain advertisers." Now The Wall Street Journal reports that the mysterious half-billion-dollar hit may stem from advertisements placed by "rogue online pharmacies" that break US laws. The DOJ investigation has focused on whether the search behemoth knowingly accepted ads from shady pharma sites, but it's unclear whether those sites sold counterfeit or expired drugs, failed to require doctor's prescriptions, or both. Obviously, if the company profited from illegal activity, it can be held liable -- a fact Google knows all too well after a 2007 settlement over ads for online gambling. The impending fine would rank among the highest paid to the US government; this news, by the way, did not come from Facebook.
US DoJ approves Google's acquisition of ITA, but not without stipulations
The United States government may be dissolved tomorrow, but it's certainly taking care of one final piece of business before going into shutdown: this. If you'll recall, Google announced its intentions to acquire ITA for $700 million in July of last year, and as we cruise into the start of America's summer travel season, all signals are go. Today, the US Department of Justice approved Google's request to move forward with the buy, but rather than having the entire travel search market under its wing, El Goog's going to have to make a smattering of concessions in order to get the right signatures. For starters, the search monolith will allow ITA's existing client contracts to extend into 2016, and it'll let both current and new customers license ITA's QPX software on "fair, reasonable and non-discriminatory terms." No one's saying when the integration will be complete (or start, for that matter), but we're desperately anxious to see just how Kayak and Bing Travel react after this launches in earnest. Power to the searchers, as it were.
Senator asks DOJ and FCC to do their jobs, provide friction for AT&T / T-Mobile tie-up
There's always one. Back in the winter of 2009, Senator Kerry made public his request for Fox and Time Warner to keep the Bowl Games online, and one Chuck Schumer took to writing an open letter to Steve Jobs regarding the iPhone reception woes that eventually led to a dedicated press event (mostly) disputing the matter. Now, Minnesota Senator Amy Klobuchar is urging the FCC and DOJ to "take a close look at the proposed AT&T and T-Mobile merger," noting that the outcome would undoubtedly have a huge impact on consumer choice, price and service in the wireless industry. Of course, it's not like these two wouldn't be doing just that in the coming months, but it's good to see a fire starting early in Congress to make sure due diligence is done. Having a carrier that provides service to 42 percent of all US wireless subscribers has the potential to seriously shift the economics of things, and potentially more interesting are the implications of a rejection. In fact, many are suggesting that AT&T will likely have to sell off major assets and promise expansion to rural / poor areas in order to gain approval, which ties in nicely to Verizon Wireless CEO Dan Mead's own comments regarding concessions. We're also hearing that regulators could take as long as 18 months to fully investigate, and you can bet we'll be following the play-by-play as it all unfolds.
