What is going on with the US Telecoms mega merger scene?

Written by on June 26, 2017 in Guest Blog with 0 Comments

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As we put the proverbial pen to (digital) paper, US telecoms merger talks and considerations are underway.

We recently discussed (here) the on-again, off-again now on-again telecoms merger between the now very familiar dance partners T-Mobile and Sprint. According to Bloomberg and Handelsblatt, the prospective partners are more excited than ever.

German newspaper Handelsblatt reported that T-Mobile US Inc.’s parent company favors a merger of the two American wireless providers.

Deutsche Telekom AG, which controls T-Mobile, aims to maintain control of the combined company after an all-stock deal with Sprint, according to Handelsblatt, which cited sources close to the German company’s management committee and board.

Executives of both companies have said a merger would produce billions of dollars in cost savings and help them compete against larger rivals AT&T Inc. and Verizon Communications Inc.

SoftBank — Sprint’s parent company — reportedly had not pushed the subject due to strict U.S. Federal Communications Commission rules prohibiting rival carriers from conspiring during airwave auctions.  Now, reports claims that final measures are being put in place to complete the merger and the all-stock agreement would eliminate transaction costs with a deal like this because both companies would be exchanging stock rather than actual money.

This news also comes right after Sprint introduced its new promotion to encourage customers to ditch their current carriers. Those who switched to Sprint would receive unlimited data for up to five lines for free — making it clear that the carrier might be in trouble.

At the other end of the telecoms merger spectrum

Detractors of the AT&T-TW telecoms merger have been voicing their concerns.  AT&T`s planned $85 billion merger with Time Warner will lead to “higher prices, fewer choices, and worse service for consumers,” 11 senators warn in a letter to Attorney General Jeff Sessions.

The lawmakers are urging the Department of Justice to “closely scrutinize” the deal and reject the merger if they find that the “substantial harms arising from the transaction outweigh the purported benefits.”

Sen. Al Franken (D-Minn.) and the other lawmakers raise a host of specific concerns about the proposed deal, including that it could spur AT&T to add HBO content to the “zero-rating” program — a billing system the lawmakers believe violates net neutrality principles.

AT&T currently zero-rates its DirecTV video streams — meaning that data streamed through the DirecTV app is excluded from wireless customers` monthly data caps. But video streamed through many other services, like Netflix and Amazon Prime, counts toward subscribers` data caps.

AT&T has said that DirecTV pays to have its content zero-rated, and that other companies can also pay for that feature. But Franken and the other lawmakers say the program is still anti-competitive, given that AT&T owns DirecTV.

“The cost of participation has a different financial impact on AT&T-owned DIRECTV than on competing streaming services” they write. “If competitors to DIRECTV Now, including more traditional streaming services like Netflix and Amazon Prime … choose to pay for equal treatment, they would be forced to raise their monthly user rates to make up for the cost of participation, thus forcing their users to foot the bill for the AT&T subscribers` data.”

The lawmakers add that the “anticompetitive problems” would worsen if AT&T decides to zero-rate HBO.

“By offering popular HBO programming free from data charges under an arbitrarily low data cap, AT&T could capture subscribers from competing wireless providers, and DIRECTV Now could capture users from competing streaming services that can`t financially justify participation in the Sponsored Data program,” the letter states

For its part, AT&T says the merger “is about giving consumers more choices, not less,” and that the deal “will expand distribution and creative opportunities for diverse and independent voices..” The company also says that exempting data from subscribers` caps benefits consumers and saves them money.

More on 4-traders/Digitaltrends

This article was first published on Pricing Data Plans.

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About the Author

About the Author: Jonathon has been lurking around the Telecoms and Internet space for the last 20 years. He is now a man on a mission – that being the reformation of the Industry Analyst business. He is working with his co-conspirators on transforming the Industry Analyst world forever as an Expert with EMI. .

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