@jbtaylor on tech

If you thought AT&T was the only company spinning a revisionist history in the wake of AT&T's failed bid to takeover T-Mobile, think again. Deutsche Telekom is spinning like crazy today.

"There's no Plan B," a DT spokeswoman tells the New York Times today.

She must have forgotten what DT's CTO told Reuters in September which reported he said any rational company has a Plan B.

"It's not as if we have no other opportunity than to close T-Mobile USA if the deal doesn't work. We have other opportunities. (T-Mobile USA ) may not be an economical jewel, but it is a true asset that has many ways to be valued," the DT CTO said.

Of course, that was then. This is now.

I guess that the Plan B was thrown out in September and now DT is no longer the rational company its CTO described just 4 months ago.

On the afternoon of Dec. 19, AT&T announced that it was abandoning its bid to takeover T-Mobile from Deutsche Telekom.

The companies involved no doubt read what Judge Huvelle said about their arguments before her court. Just 10 days earlier, on Dec. 9, the judge eviscerated the lawyers representing AT&T, T-Mobile and Deutsche Telekom. On five separate instances, the judge called their arguments "presumptous" and she accused the attorneys of attempting to "use" the court. "The landscape has changed," Huvelle said.

It was a devastating day for AT&T and friends.

And AT&T would just as soon pretend it never happened.

So that's exactly what the company did. In its statement announcing the news of the failed merger, AT&T's CEO blamed the FCC and the Justice Department for a problem which Judge Huvelle said was "self-made". And then predictably, AT&T's friends at conservative think tanks and editorial pages chimed in to inject President Obama into the debate.

Nonsense.

AT&T, DT and T-Mobile could go back to court in January and argue that the DOJ and FCC were wrong on the law. But they knew that was a losing battle. Their own documents contradicted every claim in their endless press releases.

It was just easier to say that they were beat up by overzealous regulators appointed by a liberal President who disregards the law.

Give me break.

This was never about politics. It was about consumers, competition and antitrust law. That's why a bi-partisan group of state attorneys general joined with the Justice Department in filing suit to block the deal.

Not that AT&T didn't try to make it all about politics. They touted the political support of governors and members of Congress and civic groups, nearly all of whom had received cash from the company. And AT&T loved to tout the political support of state attorneys general who opted not to participate in the National Association of Attorneys General task force which investigated the deal.

Each of these AGs, who didn't investigate the proposed transaction, yet endorsed it, also were getting campaign cash from AT&T.

There is certainly an argument worth having about the role of regulators in telecom policy. But in this case, AT&T's bid to takeover T-Mobile was not stopped by the FCC or the Justice Department or state attorneys general, or rivals Sprint or C Spire, or the legions of consumer advocates or the tens of thousands of consumers who protested this stinker of a deal from day 1.

It was stopped by Deutsche Telekom and AT&T, who walked out of court, unwilling to face further scrutiny not from a regulator whom they rail against, but scrutiny from a Federal judge, who found their legal arguments unconvincing.

p.s. Please remember that this is my personal blog and does not necessarily reflect the views of my employer.

Yesterday's status conference for the Justice Department's antitrust case against AT&T, Deutsche Telekom and T-Mobile should have been a snoozer. For weeks I had told media not to bother to attend as I expected several hours of discussion about pre-trial procedures and planning. Chatter about how many witnesses will be called and when depositions would be held don't make for good news stories in my view.

"Come in February when the actual trial begins," I said.

But that changed when AT&T and Deutsche Telekom attorneys decided to yank their merger applications from the FCC at 2:30 in the morning on Thanksgiving Day.

The attorneys didn't anticipate that the FCC would release to the public its report on the investigation into the proposed transaction. The report made it clear that no matter how you slice it, the proposed takeover of T-Mobile is anti-competitive and not in the public interest.

Never mind, said AT&T. The report is a draft. It's a preliminary report. It has no weight of law. It's unprecedented to have released such a report.

None of that was true, of course.

But AT&T told media that it had decided to focus on beating the Justice Department and state attorney generals in court. Then, the theory went, they would go to the FCC and say, "See, there's nothing anti-competitive about our mega-merger. Approve it please."

Well, yesterday Judge Ellen Segal Huvelle was having none of that. She had read the FCC report and told AT&T's attorney who urged her to ignore it, that, "It was fairly negative, sir."

Talk about an understatement.

Then, for the next hour or so, she eviscerated lawyers from AT&T and Deutsche Telekom, repeatedly telling them that their position was, "presumptuous" and at one point, she said, "I think you're flatly wrong on the law."

My favorite part was when the AT&T lawyer was complaining about how unfair it was that the judge was reconsidering the expedited schedule which set the trial for February.

Pointing out that it was AT&T and Deutsche Telekom who pulled their application from the FCC, an action which prompted her to reconsider the February trial date, Judge Huvelle said, "your problem is self-made."

At that point, AT&T's lawyer said, "Let's forget about the FCC for a moment" -- which prompted the entire courtroom to burst into laughter.

I'm told by a reporter that during the laughter, Judge Huvelle said, "I'm not forgetting about the FCC."

And that, ladies and gentlemen, is now the biggest problem facing AT&T, Deutsche Telekom and T-Mobile.

Next week, on Dec. 15, the parties are back in court to argue a motion from the Justice Department which would essentially put the case on hold until AT&T and Deutsche Telekom file a new merger application at the FCC. The judge indicated that she would like to have an FCC official appear in court next week, but it is not clear if the FCC will send a representative.

While attorneys will also argue some pre-trial motions related to the Sprint and C Spire Wireless antitrust suits against AT&T, Deutsche Telekom and T-Mobile, I think the most interesting part of the day will be to hear how AT&T plans to convince a skeptical judge that she should, "forget about the FCC."

p.s. Please remember that this is my personal blog and does not necessarily reflect the views of my employer.

Media covering AT&T's tantrum over the FCC's decision to make public the results of its investigation into the company's proposed takeover of T-Mobile should know by now that AT&T has repeatedly misled reporters and the public about the facts surrounding this proposed transaction.

The latest example is what AT&T's top lobbyist Jim Cicconi told reporters yesterday about the FCC's decision to release the report on the Commission's investigation into the proposed transaction.

Mr. Cicconi said:

"The decision to issue such a report that has no legal status, without a vote of the Commission, and in a proceeding that has been withdrawn, was also without precedent, and underscores that this was intended more for advocacy and to impact public perceptions. And neither is a proper basis for action by a regulatory agency."

Well, over the last decade, the FCC has released 414 staff written reports that never were voted on by the Commission. So it is simple not true to say that it is "without precedent".

Furthermore, the legal status of the report was established when the FCC voted to approve AT&T's and Deutsche Telekom's request to withdraw their merger application (which is technically an application to transfer spectrum licenses.)

In that order granting the request to withdraw the application, the FCC indicated that the report was "prepared specifically for public release prior to the applicants' filing to withdraw their application." Three of the Commission's four Commissioners issued formal statements strongly supporting this agency action.

What AT&T knows and what it fears is that the courts give great weight to the opinion of the FCC because it is the independent, expert agency charged with reviewing whether or not the proposed transaction is in the public interest. If AT&T doesn't want Judge Huvelle to consider the reports findings, it can and should make that request in court. Just like Verizon, AT&T has a long history of suing the FCC when it doesn't get its way. No one should expect AT&T to abandon its long held legal strategy in combating adverse FCC rulings.

But I go back to this fact: this situation is entirely of AT&T's making. Let's remember, if AT&T didn't want the report to be made public, it could have kept its application on file at the FCC and allowed the matter to go before an Administrative Law Judge.

Now AT&T's lawyers must live with the consequences of a choice which, in retrospect, they likely realize was not in AT&T's best interest.

One last note: it's rather late for AT&T to be concerned about "public perception" surrounding this proposed transaction. Since the proposed takeover of T-Mobile was announced in March, the public has been galvanized against this deal and against AT&T in particular. That's why tens of thousands of individuals took the time to write the FCC to ask it to block this transaction.