The AT&T merger's trust issues
Adriene Hill: After months of back and forth AT&T has dumped its $39 billion deal to take over T-Mobile. They just couldn't come up with a plan that made regulators happy.
Joining us now to explain why is Daniel Crane. He's a law professor at the University of Michigan. Good morning.
Daniel Crane: Good morning.
Hill: What were the specific concerns that regulators had about this deal?
Crane: Well there were really two concerns. One is that on a national level, T-Mobile has been an innovator, it has been a firm that has led to price discounting in the market. And because of the merger, that kind of competition would cease.
Secondly, there was a concern on a market by market basis that the merger would lead to many customers only having a choice of two different carriers, and that kind of local market competition would be lost.
Hill: And what's next now for AT&T?
Crane: AT&T will have pay a $4 billion breakup fee to terminate the merger, and is going to take that as a charge. It will continue to explore the possibility of expanding its wireless spectrum; it has a roaming deal with T-Mobile that will try to tap into some of the areas where T-Mobile has more spectrum than AT&T does.
Hill: Now when you say spectrum, what do you mean?
Crane: Spectrum means the wireles capacity to carry calls.
Hill: So fewer dropped calls?
Crane: Fewer dropped calls, right.
Hill: And what's next for T-Mobile?
Crane: T-Mobile has made it clear that it doesn't view itself as being able to survive in this market alone. It may now try to partner with a smaller carrier in the market.
Hill: Daniel Crane is a law professor at the University of Michigan. Thanks so much.
Crane: My pleasure.