Google also stressed that the delay is not a change in the company’s policy, which is to release new versions of Android into the open source community shortly after their release.

“Android 3.0, Honeycomb, was designed from the ground up for devices with larger screen sizes and improves on Android favorites such as widgets, multi-tasking, browsing, notifications and customization,” the company said in a statement.

“While we’re excited to offer these new features to Android tablets, we have more work to do before we can deliver them to other device types including phones.”

Google has been quite vague about when some of the new features in Honeycomb would make their way into phones.

“Until then, we’ve decided not to release Honeycomb to open source,” Google said. “We’re committed to providing Android as an open platform across many device types and will publish the source as soon as it’s ready.”

That doesn’t mean that tablet makers can’t still get their hands on it, I’m told. Members of the Open Handset Alliance already have access, and other tablet makers can get access by contacting Google.

What it does mean, though, is that folks who want to do other kinds of things with Honeycomb will have to wait a little longer.

The reason, Google says, is that it took a bit of a shortcut. It wanted to get a tablet-optimized version of Android quickly. To do so, it stopped making sure Honeycomb would work on phones. The company is concerned that if it released Honeycomb source code now, someone would try to cram it onto a phone, creating a potential problem for customers and a black eye for Android.

The delay in releasing the source code may well make sense and be a good thing for the Android ecosystem, but it also highlights the fact that Google still controls a lot when it comes to Android.

The news comes on an interesting day, just as Research In Motion announced that its PlayBook tablet will include Android support. That support, though, is only for programs written for Android 2.3 and earlier, RIM said.

Obviously. Though it’s interesting to hear an FCC official say that on the record. During an appearance at CTIA earlier this week, FCC Chair Julius Genachowski declined comment on the deal, which is burdened by all sorts of competitive concerns.

AT&T, which has been spinning the acquisition as a boon for Americans and their country, says it’s confident it will win approval. “We understand that Congress, the DOJ, the FCC, as well as wireless consumers will have questions about the transaction. We look forward to answering and addressing those questions,” said a company spokesman. “We are confident that the facts will demonstrate that the deal is in the public interest and that competition will continue to flourish.”

I hope so. AT&T stands to lose $3 billion if the deal falls through.

Meet up with anyone in Orlando for CTIA and the first topic is likely to be where you were on Sunday when you first heard about AT&T’s plan to buy T-Mobile.

For answers, I’ve heard everything from cooking to napping to arm-deep in Play-Doh. Nearly all of T-Mobile USA’s PR team was on a plane to Orlando when the news broke. HTC North America head Jason Mackensie was watching his son play at a basketball tournament in Texas when his phone started buzzing with messages from co-workers, as well as folks from both carriers.

But, seek to discuss the topic of the merger in detail and few will comment.

Samsung Mobile Senior Vice President Omar Khan had to be pressed to answer whether he was surprised or not. Eventually, Khan admitted he was surprised, but declined any further comment on the deal. Many other executives and non-executives followed suit, most notably FCC Chairman Julius Genachowski–one of the people whose opinion matters the most.

“Of course you will understand I am not going to comment on that,” he said during an on-stage appearance.

Those that do offer up a comment usually characterize it as good news or business as usual.

“The fortunate thing is we’ve got good relationships with both companies,” Mackenzie said.

Oddly enough, the people most willing to talk are those closest to the deal. Sprint is vocally concerned, while Verizon Wireless CEO Dan Mead says that he isn’t going to get distracted and assumes the deal will probably go through.

“I do have concerns that it would stifle innovation and too much power would be in the hands of just two,” Sprint CEO Dan Hesse said during a keynote in which he shared the stage with Mead and AT&T’s Ralph de la Vega.

Mead, meanwhile, appeared unshaken. “We have a tremendous amount of competition in the industry,” he said, adding that the industry will go through continued change, such as the AT&T purchase. “I’m not concerned about it.”

For everyone else in the industry, it is both the thing on everyone’s mind and the topic no one is quite ready to discuss.

At a press conference, Scott Durchslag, president of Expedia.com, was expected to unveil Expedia Hotels, a free iPhone app that lets users filter and book hotel rooms from their device.

The app will be available once it gets rubber-stamped by Apple, and an Android version is expected to follow in April. Expedia Hotels is the first product built by Mobiata, a developer of mobile travel applications, that Expedia acquired in November 2010.

In an interview prior to the press conference today, Durchslag told us that the hotel app is the first in a series of initiatives that the company will roll out in mobile this year.

The hotel application will automatically use GPS to find hotels nearby. The results can be filtered by price, rating, popularity or distance, and ratings are provided by TripAdvisor. Durchslag said from their experience with users on the mobile web, 70 percent of people searching on the phone are looking for a room for a single person, for a single night for the same day.

The application will default to those settings.

To be sure, Expedia’s plans don’t stop there. More apps will come later this year, and it doesn’t intend to stop with smartphone owners.

Phase two and three includes working with handset makers and carriers to embed applications onto devices before they are shipped to consumers.

While those types of partnerships used to be standard in mobile in order for companies to get wide distribution, the focus more recently has shifted to building applications for smartphones because of the speed to market and fewer barriers.

Durchslag defends the strategy: “Expedia is the world’s largest travel site, and while smartphones are the trend, and they are big and growing in Europe and Asia, there’s still a big portion of the population that doesn’t have one. Preloading onto feature phones is phase two, and building an unbelievable experience on smartphones is job one.”

Durshlag also says the plans synch up with what Expedia’s broader goal is for the company, which he calls “Expedia Everywhere.”

“The essence of that vision is to delight the earth’s travelers, and to help them find the perfect trip whenever and wherever they want. Mobile becomes really important when you are traveling,” he said.

Other companies have also identified travel as the latest frontier on mobile. Kayak says its mobile applications have already been downloaded more than five million times, and it recently started allowing customers to book hotel accommodations directly from them instead of referring them out to third parties, such as Expedia.

In the past, Boingo’s app was really only useful to its customers as it located paid locations. That made sense, of course, since Boingo makes its money by selling Wi-Fi, either on a subscription or pay-as-you-go basis. Although it operates only a smattering of its own networks at some airports and other public locations, it has roaming agreements allowing it to sell unlimited access at more than 325,000 locations.

The new app, which will be free, will be of use for non-customers as well, displaying a map with Boingo’s paid hotspots in red and free Wi-Fi locations in blue.

Boingo spokesman Christian Gunning said the company hopes to sway a few new customers to its paid network. Even those that don’t become paying customers will help improve Boingo’s database by validating which free networks are indeed up and running.

“We all get something out of the equation,” Gunning said.

The app can even help users automatically log-on to the free locations. Gunning, who lives in Los Angeles, said he once logged into a free hotspot provided by a Jewish museum along his commute. Now, every time his car stops at that stop light he notices his Android phone automatically log onto that network.

At a press conference this afternoon, CEO Dan Hesse was expected to unveil two devices called the HTC EVO View, a 7-inch tablet, and the HTC EVO 3D.

Both will operate on Sprint’s 4G/WiMax network.

The HTC EVO 3D is notable for its ability to display and record 3-D images, much like the upcoming launch of the Nintendo 3DS. In both cases, viewers can see the hologram-like images without the need for special glasses.

Pricing will be announced later this summer when the two devices get closer to availability. With most devices now priced similarly to Apple’s iPad2, it will be imperative to be competitive, while also keeping down the cost of its mobile data fees.

On CTIA’s opening day this week, it’s already turning out to be a tablet-focused event–which as of recently has been par for the course at any wireless trade show.

For example, at Samsung’s press conference this morning, it unveiled two super thin Galaxy Tabs with an 8.9-inch and a 10.1-inch display. RIM also announced that its Playbook will be available starting April 19.

The EVO 3D will be running the Android Gingerbread operating system. It has a 4.3 inch display and packs inside a 1.2GHz Qualcomm Snapdragon dual-core processor. It has two five-megapixel cameras for filming conventional and 3D images and videos. Similar to the original EVO, it’s the 3-D that makes it different.

This may be the first 3-D phone that doesn’t require glasses, but it’s also a niche that Nintendo is trying to carve out with its upcoming release of its 3DS. The handheld game unit launches on Sunday for $250. UPDATE: AT&T also announced a glasses-free 3-D device yesterday. The LG Thrill 4G will also let users shoot 3-D in addition to viewing it.

The HTC EVO View is the first time Sprint has launched a 3G and 4G Android together with HTC. The device will have a 7-inch display with a 1.5 GHz Qualcomm Snapdragon processor, and the latest version of HTC’s software overlay called Sense. The device will have two cameras, a HD-capable video camcorder, and is being described as weighing less than a paperback book.

What is the right size for a tablet–7 inches? 8? 9? 10?

Now, you don’t have to decide. Well, except that you do.

Samsung introduced the 8.9-inch and the 10.1-inch super-thin tablets, which will release this summer. The 10.1-inch tablet will be available June 8. A sixteen gigabyte Wi-Fi version will cost $499. The 32GB version will cost $599. The 8.9-inch version will cost $469 for 16GB, and $569 for the 32GB. No word on when this size will launch, except that it is coming this summer.

In the end, there will be a mind-boggling number of options.

Both models will also have the option of 4G connectivity, WiMax or LTE, which is promised to be priced very competitively, according to Samsung Mobile’s SVP Omar Khan.

The announcement, which was made at CTIA this morning in Orlando, included a few user videos, featuring ideal users for the different sized tablets. The filmmaker preferred the larger screen to view video, and the travel writer preferred the more portable size to stay in touch with friends while on the go.

The hardware, which is both insanely thin and lightweight, is also robust. Both Samsung Galaxy Tabs have a 1GHz dual-core processor, a long-lasting battery and cameras in the front and back.

The tablets will also come with Samsung’s entire array of software, including Readers Hub, Social Hub, Music Hub, and its Touchwiz 4.0 software overlay, which will include live panels that can be customized on the home screen. They both will be running Honeycomb, Google’s latest Android operating system.

The topic of tablet size can be quite polarizing since Apple believes that the iPad’s nearly 10-inch screen is the ideal size.

Apple’s CEO Steve Jobs went on a tirade back in October, saying that the seven-inch screens that Samsung and other Android vendors originally launched were going to be dead on arrival.

He went as far as to say that users will have to sand down their fingertips in order to use the touchscreen effectively. “Apple has done extensive testing on how close you can put elements on the touchscreen, and 10 inches is a minimum size to create great tablet apps,” he said.

It appears that Samsung took Apple’s user research to heart.

“Samsung has always been about choice, and building products that fit the unique needs of our consumers,” Khan said.

“I do have concerns that it would stifle innovation and too much power would be in the hands of just two,” he said.

Sharing the same stage, Verizon Wireless CEO Dan Mead said that the company is clearly watching things, but noted that his company was built through acquisitions.

“We have a tremendous amount of competition in the industry,” he said, adding that the industry will go through continued change, such as the AT&T purchase. “I’m not concerned about it.”

Mead said that his company had not considered a purchase of T-Mobile ahead of the deal and also told Reuters that his company isn’t pondering acquiring rival Sprint.

As for the AT&T-T-Mobile deal, Hesse noted that it doesn’t really matter what he thinks, since it will be regulators at the Department of Justice, FCC and elsewhere that get to decide.

FCC Chairman Juiius Genakowski, who spoke before the CEO panel, acknowledged the elephant in the room, but declined comment on the deal.

AT&T’s Ralph De La Vega didn’t say too much about the deal, other than to repeat the company’s case that the deal is in the public interest as it helps alleviate the looming spectrum crunch and will expand high-speed LTE service to more of the U.S.

Sprint CEO Dan Hesse, Verizon Wireless CEO Dan Mead and AT&T President Ralph de la Vega are set to speak in a discussion moderated by CNBC’s Jim Cramer. T-Mobile CEO Phillip Humm was also set to be on the panel, but dropped out following AT&T’s announcement that it plans to buy T-Mobile USA for $39 billion.

Before the CEOs take the stage, though, there will be comments from FCC Chair Julius Genachowski.

Mobilized is here in Orlando and will have live coverage when Genachowski starts speaking in just a short while.

6:24 am: Still speaking is Sprint CEO Dan Hesse, acting in his capacity as Chairman of the CTIA.

6:28 am: Hesse has covered off on a laundry list of stuff from distracted driving, to the explosion of apps to recycling cell phones, to the role cell phone cameras have played in uprisings in the Middle East.

He’s finally wrapping up with a plea for the FCC to free up more wireless spectrum.

“Spectrum is also the oxygen that gives our industry life and growth,” he said. “But we are running out of oxygen.”

Genachowski takes the stage, reading his remarks off a tablet.

6:34 am: Genachowski addresses the elephant in the room: the AT&T-T-Mobile deal. Of course you will understand I am not going to comment on that.

6:35 am: He switches back to a popular topic in the crowd–freeing up more spectrum.

6:36 am: Surely it is just a matter of time before 5G will revolutionize the industry, Genachowski quips.

6:38 am: Genachowski is making the case that the mobile sector is critical to U.S. leadership and talking about the importance of the industry. But he’s preaching to the choir.

6:48 am: A lot of carbon dioxide being expended at CTIA talking about how spectrum is the industry’s oxygen.

Starting to wonder when we are going to get to the CEO panel. This keynote only scheduled to run until half past the next hour.

6:51 am: First potentially adversarial comments come as Genachowski extols virtues of open internet.

6:53 am: Now back to talking about spectrum. Everyone can breathe now. More oxygen.

Genachowski touts benefits of voluntary incentive auction where broadcasters and others get a piece of the revenue generated by auctioning off their spectrum.

“it’s the right idea at the right time.”

6:55 am: (Methinks wireless industry would prefer mandatory auctions and sooner rather than later.)

6:56 am: Voluntary incentive auctions could raise $30 billion, Genachowski says. “Not pocket change.” Costs of inaction exceed that, he adds.

6:58 am: Genachowski wraps up and hands off to CTIA president Steve Largent.

6:59 am: Largent mentions that NTT DoCoMo was planning to exhibit at CTIA but says they are understandably not here in wake of Japanese quake.

Largent encourages audience to text REDCROSS to 90999 to donate to relief effort.

7:01 am: Largent said he was on plane when he heard about AT&T-T-Mobile deal.

7:02 am: Jim Cramer introduces Ralph De La Vega and other panelists with a hearty “booya”

7:03 am: Cramer: Other than this weekend’s news, how did you like the play, Dan Hesse.

7:03 am: After joking about the elephant in the room, Cramer asks Hesse about the role cell phones have played in recent revolts in the Middle East.

“I think we are going to play a big role in social change,” Hesse said.

7:05 am: Is any government safe from power of tech, even China, Cramer asks.

“I think mobility creates democracy,” AT&T’s De La Vega. People around the world are speaking and it is our technology that lets it happen.

7:08 am: Cramer: What’s the next equivalent of text messaging — which was huge boom for the industry.

De La Vega says video communication is probably the next big wave. (Of course, video takes up a lot more capacity than texts)

7:09 am: Cramer: Why is my bill so high and why does he have to subsidize the people downloading so many movies.

Verizon’s Dan Mead: First of all, we appreciate your business. Mead says unlimited data plans have been key to fostering growth. However, the whole industry is looking at whether there should be caps or metered use like a water bill.

“It’s certainly an area of interest for the industry,” Mead said.

Hesse is asked if Sprint will have to shift. “Not necessarily,” he said. He notes that home internet is still unlimited, although there clearly is a difference, he said.

“Customers will actually pay a premium for simplicity,” Hesse said. “For now we are monitoring usage very closely” but we are maintaing unlimited.

7:11 am: Cramer asks De La Vega how much of the T-Mobile buy was about spectrum.

De La Vega says it was important, but doesn’t quantify, but notes it’s one of the reasons why the deal is “in the public interest.”

Cramer: Dan Hesse, Do you agree?

Hesse: “My opinion doesn’t matter. I think the FCC and DOJ will have the say on that.”

Notes that if the deal goes through 80 percent of power in two companies.

“i do have concerns that it would stifle innovation and too much power would be in the hands of just too,” he said.

Mead says Verizon is interested and will be observers, but notes that its company was built through acquisitions and that is how it got its spectrum position. “We’ll be watching what goes on here. There may be some things market by market that will be of interest. We are not going to be distracted by this.”

7:11 am: Cramer asks De La Vega how much of the T-Mobile buy was about spectrum.

De La Vega says it was important, but doesn’t quantify, but notes it’s one of the reasons why the deal is “in the public interest.”

Cramer: Dan Hesse, Do you agree?

Hesse: “My opinion doesn’t matter. I think the FCC and DOJ will have the say on that.”

Notes that if the deal goes through 80 percent of power in two companies.

“i do have concerns that it would stifle innovation and too much power would be in the hands of just too,” he said.

Mead says Verizon is interested and will be observers, but notes that its company was built through acquisitions and that is how it got its spectrum position. “We’ll be watching what goes on here. There may be some things market by market that will be of interest. We are not going to be distracted by this.”

7:15 am: Mead said Verizon never really looked at buying T-Mobile.

7:16 am: Cramer asks why his video freezes.

Hesse quips “Because you are on Verizon.”

7:23 am: Cramer: Has AT&T lost a significant number of customers with Verizon getting the iPhone.

De La Vega: Still hasn’t been a quarter. Can’t really comment, he says.

7:31 am: Cramer asks who is a friend and who is an enemy.

Panel lists Microsoft, Google, Twitter and Facebook as all friends, though Facebook could be a “frenemy” if it became its own carrier.

RIM said that Best Buy stores will take pre-orders for the Wi-Fi PlayBooks starting immediately.

“Previews of the BlackBerry PlayBook have generated tremendous excitement and we know that customers are eager to get their hands on one,” RIM’s Craig McLennan said in a statement. “We share that excitement and we are very pleased to announce that customers can begin placing their orders with Best Buy today.”

The April 19 date is a little bit later than the first quarter timing that the company had originally targeted.

T-Mobile also announced plans for a new mobile broadband hotspot coming this spring as well as a USB stick modem that will ship this week.

The carrier also announced the first three areas where it will introduce its fastest network technology–a so-called HSPA+42 network. The network is an incremental improvement on the network that T-Mobile already sells as 4G (although from a technology perspective both the current and faster flavors are based on T-Mobile’s existing 3G network).

Las Vegas, New York and Orlando will be the first to get the HSPA+42 network, which offers peak theoretical speeds double the fastest speeds available on its current “4G” network. Chicago will follow suit, with 25 markets due to get the speed bump by mid-year.

T-Mobile’s announcements follow those from rival Sprint, which earlier on Monday announced plans to offer a version of the Nexus S that runs on its Wi-Max-based 4G network. In a further tie-up with the search giant, Sprint also said that it will enable Google Voice to run on its complete lineup of CDMA-based smartphones.

There was also device news from T-Mobile’s would-be merger partner, AT&T, which announced plans for its first 3-D smartphone, the LG Thrill 4G. It will also carry an additional Windows Phone–HTC’s HD7S, notable for being the largest-screen device in AT&T’s lineup of Windows phones. The move comes as Sprint is due to begin selling the Arrive, its first Windows Phone. Both the Arrive and HD7S will come pre-loaded with Microsoft’s NoDo software update that adds copy and paste abilities.

The phone maker, whose presence in the U.S. smartphone market is already small, has announced it plans to move away from its Symbian operating system in favor of Microsoft’s Windows Phone 7. The company has high hopes of boosting its presence in the U.S., but its first Windows Phone devices won’t be ready until late this year, at the earliest.

And it’s at least as awkward a time for T-Mobile USA, which was already struggling as the No. 4 carrier and now has announced plans to be sold to AT&T.

So, perhaps it is only fitting that the two parties gathered in Orlando for what has to be one of the more awkward press conferences I’ve attended in a decade and a half of covering tech.

Drawing reporters to the Crave family restaurant on the outskirts of a suburban mall, the Finnish cell phone maker announced plans with T-Mobile to start selling the Astound, a rebranded version of the company’s Symbian-based C7 smartphone.

With a small stage separating the reporters from the smattering of patrons enjoying dinner, the company showed off the device, which features decent hardware including an eight-megapixel camera, along with the same Nokia store and services that few Americans have heard of.

But what it lacks in brand power, the companies hope it can make up for with value. Indeed, the Astound’s tagline is “Smart Phone. Smart Price.”

Nokia representatives said the company is aiming to reach those moving up from feature phones by offering the product inexpensively–$79, with data plans starting as low as $10 a month (a dollar less than an order of the calamari goes for on the other side of the divider.)

For those tempted by the phone, it goes on sale early next month. For those looking to catch happy hour at the Crave, it’s Monday through Thursday from 3 p.m. to 9 p.m.

Bernstein Research analyst Craig Moffet calls the deal a “clear win” for AT&T, despite T-Mobile USA’s high price tag. “Even paying a premium to market for T-Mo, AT&T believes it can acquire the asset for free,” he writes. “The relative compatibility of the two companies suggests that very high synergies in this range are, in fact, plausible. The company can point to synergies in the areas of network, advertising and marketing, retail stores, support and SG&A, and spectrum.”

At Barclays, James Ratcliffe also describes the deal as a win, but worries about regulatory challenges. “While we don’t expect this deal to have an easy time getting approval in Washington, AT&T’s offer to expand its LTE coverage (feeding into administration goals of nationwide wireless broadband) and support from AT&T’s unions (T-Mobile is non-union), certainly help,” he says. “AT&T’s regulatory team is high-quality, and we don’t think the company would be going down this path (given $3BN breakup fee, especially), if they didn’t have high confidence of success.”

Simon Flannery at Morgan Stanley, too, sees the acquisition as a good move. “The AT&T/T-Mobile USA merger fits our thesis of logical combinations, with synergy opportunities and a common network technology,” he told clients this morning. “The deal would increase AT&T’s wireless revenues by 36.4 percent bringing wireless to 55 percent of consolidated revenues versus 47 percent currently. It would also raise AT&T to the number one place in terms of subscribers, revenue and EBITDA. Importantly, from a spectrum standpoint, the deal relieves significant pressure off AT&T.”

Over at BTIG Walter Piecyk applauds the deal for similar reasons. “[It] solves AT&T’s longer term spectrum issues,” he says. “It also eliminates a price aggressive competitor and blocks Sprint from merging with TMO.”

And Piper Jaffray’s Christopher Larsen states the obvious, saying the merger will make AT&T a more formidable competitor. “First, all of the carriers have been feeding off of T-Mobile’s subscriber base due to its lack of differentiated service,” he writes. “AT&T’s market position and reputation should help stem subscriber defections over the long-term (there could be some losses early due to merger-related distractions or forced divestitures). Second, the combination should allow AT&T to accelerate its 4G network build. Finally, AT&T’s new spectrum position gives it an opportunity to build the premier wireless network in the nation, as it relates to quality and capacity.”

At Oppenheimer, Tim Horan praises it as a wise strategic move, noting that it undermines a potential Verizon-Sprint deal. “In our view, from AT&T’s perspective, this is a smart time to come to an agreement of this magnitude and we believe the deal should be approved by regulators,” he writes. “By taking the strategic initiative, we believe [the carrier] is precluding other major deals from taking place.”

Consensus, then, seems to be that the deal is a savvy one which brings serious scale benefits and synergies–if AT&T can win the necessary regulatory approvals.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

The company positioned the deal as key to ensuring the U.S. stays competitive, saying that the country needs ubiquitous wireless broadband and has limited spectrum to get there.

As expected, there was also a lot of talk on how the deal will improve call quality and and about AT&T’s history of successfully digesting large acquisitions.

Also, check out our coverage from yesterday, including an interview with AT&T’s Ralph De La Vega, objections from Sprint and what AT&T will owe T-Mobile if regulators squelch the deal.

Live Blog

4:48 am: Mobilized is hoping that the government requires better hold music on all conference calls as a condition of allowing the deal to go through, should it allow the purchase. (Actually, the music today isn’t so bad as far as these things go. Mobilized just isn’t a morning person.)

4:56 am: AT&T clearly has its regulatory work set out for itself, with Sprint urging close scrutiny and at least a few lawmakers already calling for an inquiry.

4:57 am: Meanwhile, Business Insider notes that Sprint’s shares are taking a beating in pre-market trading, trading off around 12 percent.

Deutsche Telekom, T-Mobile USA’s owner, surged as investors cheered its strategy to unload the troubled North American carrier.

5:02 am: We’ve just been warned to silence cell phones and electronic devices. I’d love too, but of course, the cell phone is the very thing dialed in to the call.

5:05 am: Call now getting underway. AT&T chief executive officer Randall Stephenson is set to speak first.

“What I want to do over the next hour…” Well, there you go. That’s how long this will go.

Transaction represents a “unique opportunity,” Stephenson says, promising the deal will improve quality, enhance the spread of LTE and reward investors.

5:07 am: Stephenson positions deal as essential to protecting America’s leadership, saying that wireless broadband is key to national competitiveness.

He also points out that AT&T is the only major carrier that has a union workforce.

5:09 am: Now he is talking LTE, making the case that the merger will allow AT&T to spread the next-generation network further.

“As for the regulatory process, we’re very respectful,” Stephenson said. But, he said, now is the time for the deal.

“We can’t afford to wait.”

5:11 am: Capacity needs have grown and will grow another 8-10 times in the coming years, Stephenson said, pointing to growth of tablets, mobile video and other services.

“Every time we have increased speeds, usage has jumped,” Stephenson said.

5:13 am: Stephenson handing things over to the company’s general counsel to talk about the regulatory process.

5:14 am: Company is “very confident” it can achieve regulatory approval, the top lawyer says. He notes history of past mergers.

“We studied the law, we studied the facts,” he says.

Says company did its own rigorous internal review, expects regulators to do their own.

5:15 am: Says FCC will look at whether deal is in the public interest, while the DOJ will look at whether it benefits competition.

“We are confident we can meet these standards.”

5:16 am: General counsel notes spectrum challenges and the fact that T-Mobile had no clear path to a next-generation network on its own.

He also makes the “benefits U.S. competitiveness” argument. Sounds like this deal is being wrapped in the flag. “An American company investing billions of dollars in America,” he says.

5:19 am: On the competitiveness front, AT&T is touting not only competition from Sprint and Verizon, but also from prepaid and smaller competitors such as Leap Wireless and Metro PCS.

“These aggressive competitors are not sitting still,” AT&T’s top lawyer said.

AT&T’s general counsel Wayne Watts is wrapping up. Says expects thorough review and some conditions, but sees deal being approved after market-by-market analysis.

5:22 am: On to head of AT&T’s business solutions unit, who is outlining why wireless broadband is so critical to American industry.

5:23 am: Meanwhile, Sprint thought now would be a good time to introduce its Nexus S 4G phone and plans to bring Google Voice to all its CDMA phones. Mobilized will get to that in a sec, Sprint. We’re a little busy here.

5:25 am: Don’t like your cell service today? Well, this transaction is for you. Greater cell density and other benefits will improve service, exec promises.

5:28 am: Integration plan. First, combine companies’ 2G and 3G networks. Identify which cell sites to keep, make them dual-band to support T-Mobile and AT&T’s separate frequencies.

Second step will be to rationalize spectrum owned by two companies, which should free up spectrum for LTE.

5:31 am: Exec speaking now is John Stankey, head of business solutions unit, FYI.

5:33 am: Next up, Ralph De La Vega, president and CEO of AT&T Mobility and Consumer Markets. He notes that he personally has a lot of experience, having led deal 7 years ago between Cingular and AT&T Wireless.

5:34 am: Interesting balance between touting deal for investors and not spooking regulators and the public.

De La Vega did talk about higher ARPU–that’s average revenue per user. Investors like higher ARPU, but consumers have another term for it–higher prices.

5:38 am: Interesting point–”Retail store rationalization.” Just figured out another party that won’t like this deal: Mall owners.

5:39 am: On to CFO Richard Lindner, who is outlining some financial details.

There is a collar on AT&T’s share price, as well as further limit that Deutsche Telekom’s ownership in AT&T won’t drop below 5 percent.

Lindner reiterates company hopes to close deal in 12 months and will work with regulators promptly to try to reach that goal.

5:42 am: Back to touting investor benefits, such as higher margins and revenue over the long haul.

Again, this will be a fascinating balance for the company to strike as it tries to sell investors and regulators on the deal at the same time.

5:43 am: Expect $7 billion in integration expense and $2 billion in capital expenses, but will be offset as starting in third year of deal AT&T expects $3 billion per year in efficiencies.

5:45 am: Modest dilution over the first three years, Lindner said, with deal accretive after that, Lindner said.

5:47 am: Synergies in this deal should be even more than in Cingular-AT&T Wireless deal of seven years ago.

“We’ve done this before so we are confident in our ability to execute,” Lindner promises.

5:47 am: While dividends are up to the board, Lindner said there should be enough cash flow for merged company to continue dividend.

End of formal remarks and on to Q and A.

5:52 am: Company asked about change to companies’ plans before deal closes.

No change, AT&T says. LTE roll-out will continue as planned ahead of deal closing. However, companies will continue to be competitors.

5:53 am: Asked if they had a chance to pre-vet the deal with regulators, AT&T says no.

Has given heads-up calls and started dialogue, it says.

5:53 am: Asked what concessions it might be willing to offer, such as willingness to accept price caps or other consumer assurances.

AT&T says deal not just about going from 4 to 3 carriers, says regulators will look at local markets which are actually more competitive with regional carriers.

“That’s where you find lots of competitors,” Stephenson said.

“There will continue to be enormous competition.”

Says will have detailed conversations with staff at regulators, but too early for specifics on possible concessions. “I cannot now predict what other issues may arise.”

5:58 am: AT&T says it doesn’t plan to drop previously announced deal to acquire former MediaFlo spectrum from Qualcomm for nearly $2 billion.

“We want that spectrum. We need that spectrum.”

6:00 am: Also interesting: No T-Mobile presence on the conference call. Just AT&T talking about the deal.

6:04 am: Asked whether AT&T thinks it may have to shed subscribers on the order of 15 percent, as Verizon was forced to as condition of Alltel acquisition, Stephenson said his expectation is that no divestitures should be required. But, he said, “I don’t even want to get into that right now.”

6:10 am: Last question. On network synergies and capital spending relative to “uneven performance” of network in recent years. (I think that is a subtle reference to all the dropped calls and other complaints)

There’s a lot of variables more than just capital spending, AT&T said.

With that, the call ends with a final wrap-up from AT&T placing the flag back around the deal.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

Such morally admirable altruism and patriotism. But few, it seems, are buying it. On Sunday afternoon Sen. John Rockefeller (D-W.Va.), chairman of the Commerce Committee, urged “both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.” A few hours later, Sen. Herb Kohl (D-Wisc.), chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, promised a hearing on the deal. “The explosion of cell phone usage – especially smartphones – makes competition in this market more important than ever as a check on prices, consumer choice, and service,” Kohl said in a statement. “That’s why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family and the Internet.”

Consumer groups echoed those concerns, with Public Knowledge president Gigi Sohn calling the combination of America’s second-largest wireless carrier with the fourth-largest “unthinkable” and Bert Foer, president of the American Antitrust Institute, reminding us of AT&T’s monopolistic past. “AT&T was broken up and now it’s back with a vengeance,” he said. “We have to decide if we’re happy with the idea of going back to monopolistic treatment of the telecom industry. AT&T has come back to monopolistic power just like the Terminator.”

A colorful analogy and one which I’m sure will irk AT&T to no end. But Foer’s point is well taken. The wireless business is becoming more concentrated; the Federal Communications Commission said as much in its last Mobile Wireless Competition report. “One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in the most recent year for which data is available,” the agency concluded.

Thing is, the FCC didn’t say that there wasn’t effective competition in the market. Which is perhaps why AT&T seems so confident it will get regulatory approval for the deal. “This is probably the most fiercely competitive wireless market in the world,” AT&T CEO Randall Stephenson told The Wall Street Journal. “The majority of Americans have the option of five different wireless carriers.”

Complete Coverage:

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

Sprint has itself been seen as a potential merger partner for T-Mobile and has been tapped as one of the companies hardest hit if the deal goes through. The company itself seemed to echo that take in its comments.

“If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80% of the US wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete,” Sprint said. “The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely by this dramatic change in the structure of the industry.”

A Verizon Wireless representative declined to comment.

AT&T has said it thinks it can win regulatory approval for the deal.

“Today when you look across the top 20 markets in the country, 18 of those markets have five or more competitors, and when you look across the entire country, the majority of the country’s markets have five or more competitors,” AT&T President and mobile unit CEO Ralph De La Vega told Mobilized on Sunday. “I think if the criteria that has been used in the past is used against this merger, I think the appropriate authorities will find there will still be plenty of competition left.

Meanwhile, at least one person on Capitol Hill is urging scrutiny of the deal. Democratic Senator Jay Rockefeller of West Virginia called on regulators to “leave no stone unturned” in their examination of the proposed merger.

“With every passing day, wireless services are becoming more and more important to the way we communicate,” he said in a statement. “So it is absolutely essential that both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.”

Rockefeller also promised his Commerce Committee would be looking into the matter.

Should it fail to get approval, AT&T could owe T-Mobile $3 billion in breakup fees and be forced to handover spectrum and other considerations.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

“T-Mobile will not be joining due to extenuating work demands,” a CTIA representative said, in response to our query. So far, Verizon Wireless, Sprint and AT&T are still on, the representative said.

In any case, the proposed AT&T buyout of T-Mobile is likely to dominate the CTIA trade show that takes place this week in Orlando. However, it will be very interesting to see who shows up Tuesday and just what gets said in that opening keynote.

Mobilized will be on hand with live coverage of that, as well as Monday morning’s conference call where AT&T and T-Mobile are set to talk about the planned merger. That call is slated for 5 a.m. PT.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

As part of the deal, AT&T has agreed to pay T-Mobile $3 billion and promised valuable spectrum and a roaming agreement should the deal fail to garner approval.

“In the event the transaction does not receive regulatory approval satisfactory to AT&T and the transaction does not close, AT&T will be required to pay a breakup fee of $3 (billion), transfer to T-Mobile certain AWS spectrum that is not needed by AT&T for its initial LTE roll out, and provide a roaming agreement to T-Mobile on terms favorable to both parties,” the company said in a fact sheet posted on Sunday.

AT&T has said it thinks the deal should pass muster.

“Today when you look across the top 20 markets in the country, 18 of those markets have five or more competitors, and when you look across the entire country, the majority of the country’s markets have five or more competitors,” AT&T President and mobile unit CEO Ralph De La Vega told Mobilized on Sunday. “I think if the criteria that has been used in the past is used against this merger, I think the appropriate authorities will find there will still be plenty of competition left.”

However, not everyone is so convinced. Democratic Senator Jay Rockefeller of West Virginia on Sunday urged regulators to “leave no stone unturned” in their examination of the proposed merger.

“With every passing day, wireless services are becoming more and more important to the way we communicate,” Rockefeller said in a statement. “So it is absolutely essential that both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.”

There are also some other interesting financial details in the deal. For example, AT&T has the right to increase the cash versus stock part of the deal by up to $4.2 billion. There is also a collar on the AT&T stock price used to determine that part of the deal, meaning that no matter what happens to the stock, the price of AT&T shares used to calculate the deal won’t be less than $26.0165 per share and no more than $30.2354.

The company also lays out its views on other deal-related matters in this question-and-answer document.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

“We do not offer the iPhone,” the company said in a question-and-answer page for customers. “We offer cutting edge devices like the Samsung Galaxy S 4G and coming soon our new Sidekick 4G.”

As for what the deal does mean for current customers, T-Mobile doesn’t offer up too many details, but did note that it “will honor all contracted plans that are entered into before the change of ownership.”

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

Here’s the memo to staff from T-Mobile CEO Phillip Humm (which we should note was posted earlier on Sunday by newly formed Seattle-area tech site GeekWire). And for more, check out Mobilized’s just-published interview with AT&T executive Ralph De La Vega offering his take on the deal.

Dear colleagues,

I write to you over the weekend with important news. Today we announced the beginning of a new journey for T-Mobile USA. AT&T and Deutsche Telekom have reached an agreement for AT&T to acquire T-Mobile USA, positioning the combined company to create a world-class platform for mobile broadband innovation and growth. Deutsche Telekom will become the largest shareholder of AT&T.

The sale of T-Mobile USA to AT&T is the best possible solution for our business and for our customers. The merger will ensure the deployment of a robust 4G network to 95% of the U.S. population, something neither company could achieve on its own. Also, because of our compatible networks and spectrum, the customers of T-Mobile USA and AT&T will experience improved voice and data service almost immediately after the networks are integrated.

Additional details about this transaction are included in a press release attached to this e-mail.

I know this news is unexpected and may be somewhat unsettling, but I am confident that our strong culture and T-Mobile USA Values will help guide us through this process.

Bringing together these two world-class businesses will create significant benefits for our customers. T-Mobile is a wonderful business, with great employees who have always demonstrated a willingness to do what it takes to be successful. Frankly, that is exactly why AT&T expressed an interest in combining our organization with theirs.

AT&T has a proven track record of growing through successful integrations. Their leaders recognize that making this combination a success will require the talent and commitment of T-Mobile USA employees. I believe you will see that reflected in their statements and their actions. In fact, AT&T’s leadership has said keeping our talented people through this transition is one of their top priorities.

It is important to keep in mind that this transaction requires regulatory approval from government agencies; until that time we remain T-Mobile USA and must continue to operate independently. It is expected that this deal will close within 12 months. With that in mind, I ask that each of you remain focused on the outstanding work you do every day to meet and exceed our customers’ expectations.

I ask you to join me in embracing this new opportunity to build America’s premier mobile broadband company. In the meantime, continue to execute our Challenger strategy – there‘s a lot of work to do in the year ahead.

I promise to make more information available to you in the coming days and weeks on OneVoice and through your leaders.

Thank you for your ongoing commitment and support.

With sincere appreciation,

Philipp Humm
CEO & President
T-Mobile USA

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion

Here is an edited transcript of our conversation.

How did this deal come about and why does it make sense?

De La Vega: The first thing is, this deal alleviates the impending spectrum exhaust challenges that both companies face. By combining the spectrum holdings that we have, which are complementary, it really helps both companies.

Second, just like we did with the old AT&T Wireless merger, when we combine both networks what we are going to have is more network capacity and better quality as the density of the network grid increases.

In major urban areas, whether Washington, D.C., New York or San Francisco, by combining the networks we actually have a denser grid. We have more cell sites per grid, which allows us to have a better capacity in the network and better quality. It’s really going to be something that customers in both networks are going to notice.

The third point is that AT&T is going to commit to expand LTE to cover 95 percent of the U.S. population.

T-Mobile didn’t have a clear path to LTE, so their 34 million customers now get the advantage of having the greatest and latest technology available to them, whereas before that wasn’t clear. It also allows us to deliver that to 46.5 million more Americans than we have in our current plans. This is going to take LTE not just to major cities but to rural America.

You guys are already pretty big, already right up there with Verizon. How do you address any regulatory concerns that arise?

We are very respectful of the processes the Department of Justice and (other regulators) use.

The criteria that has been used in the past for mergers of this type is that the merger is looked at (for) the benefits it brings on a market-by-market basis and how it impacts competition.

Today, when you look across the top 20 markets in the country, 18 of those markets have five or more competitors, and when you look across the entire country, the majority of the country’s markets have five or more competitors. I think if the criteria that has been used in the past is used against this merger, I think the appropriate authorities will find there will still be plenty of competition left.

If you look at pricing as a key barometer of the competition in an industry, our industry despite all of the mergers that have taken place in the past, (has) actually reduced prices to customers 50 percent since 1999. Even when these mergers have been done in the past they have always benefited the customers and we think they will benefit again.

The other big concern with any merger is that you become busy with integration issues. Obviously this is a fast moving industry. How do you make sure that you guys are still doing what you need to do, rolling out the latest stuff, while you are handling a merger of this size?

I did this before when I combined the old AT&T Wireless with Cingular Wireless. I was the chief operating officer for Cingular.

Within three years we had reduced the churn rate in half and we had improved margins by 1,000 basis points. At the time of the merger, back in 2004, they said that we would lose customers and we would be too busy doing the merger integration process. The first process out of the chute, we led the U.S. industry in total net adds for that quarter, the fourth quarter of 2004. We have the same team. I am here and we are going to make sure this great AT&T team does exactly that again.

More Coverage

• AT&T Wraps Self in Flag, Says T-Mobile Deal Essential to U.S. Competitiveness
• The AT&Terminator: Rise of Ma Bell
• Sprint: AT&T’s T-Mobile Buy Would “Dramatically Alter” Market
• First Casualty of AT&T Deal: T-Mobile Drops From CTIA Panel
• What AT&T Owes T-Mobile if Deal Doesn’t Go Through
• T-Mobile USA: No, We’re Not Getting the iPhone Yet
• T-Mobile’s Memo to Staff on the AT&T Deal
• AT&T’s President on Why T-Mobile Deal Should Pass Muster and Won’t be a Customer Nightmare
• T-Mobile: We Were Totally Kidding About AT&T’s Crappy Network!
• AT&T Agrees to Acquire T-Mobile USA for $39 Billion