The likelihood of the AT&T and T-Mobile USA merger happening in its present form appears to be shrinking by the day. While the forces arrayed against it going ahead are formidable, this hasn't stopped Deutsche Telekom from stating that it remains completely focused on winning regulatory approval, and that a "Plan B" doesn't exist.
This robust approach should receive full marks for doggedness, but a rather lower score for accepting that this first battle is all but lost and a fresh strategy is required.
Unnamed sources cited last week by the Wall Sreet Journal already claim that initial discussions have taken place between AT&T and Deutsche Telekom's management concerning what viable options are available. According to the report, the most likely option is a joint venture to share network resources. While this is significantly less ambitious than merging the two companies, it would address the primary issue of AT&T's lack of spectrum.
Under the deal, both companies would get access to T-Mobile's spectrum, but Deutsche Telekom would maintain T-Mobile's customers. The hope, according to the report, is that if T-Mobile were left as a viable competitor, such a deal would pass muster with the U.S. Department of Justice, which has sued to block AT&T's purchase of T-Mobile on antitrust grounds.
It should be noted, however, that shortly after the Journal report ran, a separate Reuters report cast doubt on the possibility of a joint venture. "There are currently no talks about a (network sharing) joint venture," one source told Reuters. "This would signal that they have given up. This is not the case, we're still betting on victory, not on the second-best solution," the source said.
Ovum's chief telecoms analyst, Jan Dawson, told FierceWireless:Europe that some form of network asset sharing should now be taken seriously and that regulators should be approached to seek approval. However, Dawson accepted that adopting this route is not without issues given that no examples of network sharing by mobile operators exist in the United States today.
"It's not clear how the U.S. regulators would view this suggestion, albeit that network sharing is now commonplace outside of this market," he said.
But the forces aligned against a full-scale merger also need to be alert to the damage they could cause by not agreeing to some form of compromise deal. The alternative is having a near-crippled T-Mobile USA that does nothing to help competitiveness, promote investment or make for secure jobs.
Altogether, a delicate hand is required in crafting a settlement whereby inflated egos are satisfied, and the mobile community and its customers derive real benefit.--Paul