Many people are under the impression that once Apple finally launches its smartwatch, the market for wearables will suddenly become mainstream and be taken to the next level. Taking an idea that already exists and making it incredibly successful isn't something new to Apple, but does the Apple Watch have what it takes? The wearable hasn't even shipped yet, but has already won multiple awards and has been featured on numerous fashion magazine covers. Do you think the Apple Watch will be a huge success? Let us know your thoughts.
AT&T Giving Up On T-Mobile, Has To Pay $4BN Breakup Fee
AT&T said on Monday that it is dropping its proposed $39 billion acquisition of T-Mobile, through which it would have become America’s largest wireless carrier. This comes after the US goverment filed a lawsuit in August to block the deal, and the FCC released a report in November, concluding a merger would eliminate jobs and hurt competition.
The carrier itself claims that “customers will be harmed and needed investment will be stifled”, as a successful merger “would have offered an interim solution to […] spectrum shortage”. However, a letter leaked in August suggests otherwise: expanding its LTE network would cost AT&T only $3.8 billion, compared to the $39 billion needed to buy T-Mobile.
Now that the merger has failed, AT&T will have to pay Deutsche Telekom, the German parent company of T-Mobile USA, the promised breakup fee consisting of $3 billion in cash and roughly $1 billion in wireless spectrum, both of which should help T-Mobile build its own LTE network and thus become more competitive. It remains to be seen, though, how Deutsche Telekom is going to handle this turn of events, since they’re unwilling to spend more money on its US subsidiary.
Below is AT&T’s full press release. Updated: Here is Deutsche Telekom’s press release.
AT&T Inc. (NYSE: T) said today that after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA, which began in March of this year.
The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.
“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO. “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.
“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.
“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.
To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.
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