AT&T Pulls Bid for T-Mobile

When AT&T reached a deal to acquire T-Mobile about a year ago, it seemed like a reasonable deal.  AT&T gained some needed spectrum and improved its signal coverage areas.  In particular, the added spectrum and ability to repurpose some overlapping coverage areas would speed up its ability to roll out broadband 4G and broadband WiFi service.  T-Mobile subscribers would see their coverage areas expand significantly.  On the other hand, whenever you have merger and acquisition activity among the 4-6 largest firms in an industry, you have monopoly concerns.  With evil old AT&T (or at least its corporate name) involved, it also attracted a host of negativity from activists.
  This should have been of less concern in this case, as cell and wireless services are not monopoly services.  These firms face direct competition from multiple wireless and wired direct competitors in almost all markets.  Even with AT&T also a major landline telecom operator in some parts of the U.S., it's unlikely that the proposed acquisition would create any large monopoly markets, or even increase AT&T's "monopoly power" in major markets in the U. S.
  While it was anticipated that both the Justice Dept. and the FCC would look at the merger closely and investigate it's potential anti-competitive impact, it was highly unusual for both the Chairman of the FCC to publicly announce his opposition to the acquisition, and the Justice Dept. to launch an anti-trust suit against AT&T, before the results of those studies were in.  It was more like the administration opposed the purchase for political reasons and pressure from activist groups linked to the administration, rather than concern over the potential impact on public welfare.  So AT&T, reading the tea leaves, bowed to the pressure and pulled out of the deal.
  By the way, T-Mobile is still being shopped around by its current owner, Deutsche Telekom, with current rumors pointing to a deal with Sprint, which is a rung or two below AT&T in market size.  And for you non-economists, that deal is actually more likely to impact market concentration and result in increased monopoly power.  So much for the concern being driven by anti-trust concerns rather than being a result of anti-AT&T hysteria and political motivations.

Sources - AT&T Pulls $39 Billion T-Mobile Bid After Regulator Opposition, Bloomberg BusinessWeek
Activist Groups: Ding-Dong the AT&T-T-Mobile Deal is Dead, Broadcasting & Cable