This is definitely a surprise, but it looks like AT&T finally read all the writing on the wall, and realized it was unlikely to win its fight with the DOJ and FCC and has officially killed its plan to try to purchase T-Mobile... meaning that it now has to pay the $4 billion breakup fee. While the trend of where this was heading was becoming increasingly obvious over the past few months, it's still pretty shocking on the whole. Getting big mergers like this through had become pretty standard, and AT&T (especially) excelled at the political dealing to make such things work. However, the growing public outcry and concerns over the lack of competition that would result seemed to finally have had a real impact.

Wow! Well, this is a bit of a surprise. The US government, who had been rubber stamping various mergers for a while now, especially in the telco/broadband space, may finally have had enough. The Justice Department has officially moved to block the merger, technically filing a lawsuit against it on antitrust grounds. From the beginning, most people had assumed that no one would block the merger, though in the last few weeks there were definite rumblings suggesting that the tides were shifting. Even so, having the DOJ jump in with a lawsuit is a surprise. AT&T insists that the move was a surprise to it as well, which is also a bit odd. Typically, the DOJ tends to telegraph this kind of move, in order to either pre-emptively end the merger attempt or to get much greater concessions. It's not entirely clear what pushed the DOJ off the fence on this one, but AT&T accidentally revealing that it had lied about the key reasons for the merger couldn't have helped...

A few weeks ago, AT&T accidentally revealed that it had a plan to cover 97% of the population with its 4G/LTE service. That's a big deal, because a big part of the rationale for the T-Mobile merger was that it simply could not deliver that kind of coverage without the merger. AT&T has worked furiously since then to basically deny what the filing clearly stated. They've been doing so by trying to change around what basic words mean (which is kind of funny). However, it looks like they haven't convinced one rather important player. The FCC is now asking for evidence that AT&T actually needs T-Mobile as it keeps claiming. It's still pretty likely that this all gets approved, but it definitely has presented pretty clearly how the rationales being given for why this deal is "necessary" are hogwash. No one denies that it will be much easier for AT&T, but that's not the same thing as necessary.

One of the key talking points from AT&T in support of the T-Mobile merger is that it "needs" T-Mobile's spectrum in order to expand its planned 4G/LTE networks to cover 97% of the population. And, there's no doubt that having T-Mobile's spectrum will make it easier, but that's not the same as it being necessary. As Broadband Reports has been pointing out for a while, Verizon has less spectrum than AT&T but can cover the same 97% of the population with it. Apparently a lawyer for AT&T accidentally posted a document to the FCC's site that more or less admits that AT&T doesn't need T-Mobile's spectrum, and that it could invest $3.8 billion to catch up to Verizon in terms of LTE coverage. $3.8 billion is a fair bit of money, but it's a hell of a lot less than the $38 billion that it's spending for T-Mobile. Yes, AT&T also gets T-Mobile subscribers with that, but it certainly raises questions about AT&T's claims that it would be too "costly" to invest to get to 97% coverage with its existing spectrum. As BBR notes, the timing of the letter also suggests that AT&T knew it was planning to buy T-Mobile when it decided to claim that it would "not" build out its network, perhaps recognizing that this would help give it a talking point for why the merger should be allowed.

In the typical push to get big mergers approved, we often see particularly dumb arguments. Sometimes these involve astroturfing attempts or lobbyists signing arguments for others (or sometimes forging the letters entirely). And then, sometimes, the companies just get people to push crazy arguments on the off chance that someone might believe them. Take, for example, this absolutely bizarre claim from the executive director of the Texas Rural Education Association, Don Rogers, that allowing AT&T to buy T-Mobile would be good for Texas schools:

The proposed merger between AT&T and T-Mobile will be a giant stride toward providing ALL Texas children quality educational opportunities and experiences. Every Texas student, whether they attend school in inner-city Houston or in rural West Texas, should have access to modern technological advancements, including high-speed wireless Internet.

The resources made available by the merger would make high-speed wireless available to many Texans, both rural and urban. This is vitally important for schools in rural Texas that will finally have the ability to access a high-speed wireless broadband network and all it brings.

He doesn't explain much further. He does explain the importance of wireless broadband, which is great, and we agree that there should be more of it, especially for schools. But what does allowing AT&T and T-Mobile to merge have to do with that at all? The real answer is nothing whatsoever. Nothing in the merger will make it any more or less likely that Texas schools will get mobile broadband. But, Rogers is sure of it:

I know of what I speak when I say that Texas--in particular our rural schools--will benefit substantially from this merger. To deny the educational opportunities this merger would provide to students living in rural areas would do our children a disservice. This merger will ensure that every young Texan will be learning and performing to the best of their abilities.

I know of what I speak when I say the above is pure hogwash. Whether or not you think the merger makes sense, it has nothing whatsoever to do with broadband in schools. And it certainly would not "ensure" that "every young Texan will be learning and performing to the best of their abilities." It's incredibly disingenuous for someone supposedly heavily involved in children's education to suggest that some totally unrelated corporate merger will somehow "ensure" that kids are learning to the best of their abilities.

A few years back, we discussed an article by Declan McCullagh, which laid out some of the sneakier tactics of lobbyist groups to pressure the government to support some position using letterhead from various special interest groups:

"You go down the Latino people, the deaf people, the farmers, and choose them.... You say, 'I can't use this one--I already used them last time...' We had their letterhead. We'd just write the letter. We'd fax it to them and tell them, 'You're in favor of this.'"

It looks like AT&T's lobbyists went through the list and they're back around to the top with the "Latino people." Suddenly, and for no clear reason, The Hispanic Institute and the Latino Coaltion have decided that supporting the merger of AT&T with T-Mobile is of utmost importance to them. They've put out statements with such nonsensical claims like:

The proposed merger of AT&T and T-Mobile holds great promise for all Americans, and especially those of Hispanic heritage.

What's in it for these groups? Money, mainly:

One DC insider informs us that rumblings on K Street suggest AT&T had called every civil rights group in the United States for support within fifteen minutes of the deal being announced. Fearful of losing AT&T donations -- most of these groups quickly got to parroting prepared AT&T statements, unconcerned about the actual impact of a T-Mobile deal. Getting funding for a new events center apparently dulls any ethical pangs felt using your organization as a hired stage prop.

It's really difficult not to be cynical when you see this kind of thing playing out. What's really depressing is that no matter how many times this rather obvious practice is exposed, it just keeps on happening.