Ina Fried

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Were T-Mobile’s Ads More Persuasive Than AT&T’s Filings?

During the months leading up to its $39 billion deal to be acquired by AT&T, T-Mobile pitched itself as a scrappy and affordable alternative to big carriers, particularly AT&T, that were offering poorer service and higher prices.

In television ads, the No. 4 U.S. carrier crafted an image of itself as an attractive woman in a pink dress, only too happy to aid customers with faster service and cheaper prices. AT&T and other rivals were portrayed as stuffy men in suits, literally looking to grab every nickel and dime from consumers. The ads were so popular that merger opponents even seized on the metaphor.

When it came time to argue in favor of the acquisition, AT&T painted a different picture, arguing T-Mobile was actually a weak player, lacking the needed resources and spectrum to compete. AT&T aimed to paint T-Mobile as just one of many competitors in a field that included a range of regional players such as Metro PCS and Cricket.

“Sprint, MetroPCS, and Leap are rapidly gaining customers while T-Mobile USA is losing customers, especially contract customers,” AT&T maintained in a June filing with the Federal Communications Commission. “Those providers — along with U.S. Cellular, Cellular South, and a host of others — can rapidly fill any competitive gap T-Mobile USA leaves upon the completion of this transaction.”

By bringing a suit to stop the deal on Wednesday, government regulators made clear how they saw things. Wednesday’s legal filing borrows much from T-Mobile’s positioning of itself as the scrappy carrier ensuring competition.

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” Acting Assistant Attorney General Sharis A. Pozen said in a statement announcing the DOJ suit to block the deal. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

To be sure, federal regulators had plenty of more substantive arguments against the deal, including filings from Sprint and a number of consumer groups. But much of the decision essentially boils down to whether T-Mobile is a significant fourth competitor, as its ad campaign had argued, or if, as AT&T was arguing, T-Mobile was a weak player whose acquisition would not substantially harm competition.

And, when forced to make that decision, regulators were clear. They went with the lady in the pink dress over the guy in the suit.


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