As AT&T Inc. defends its intentions to acquire T-Mobile USA Inc. in antitrust court, the company’s executives are meeting in Silicon Valley hoping to garner support from top venture-capital firms and technology companies.
In the proposed $39 billion acquisition of T-Mobile USA by AT&T, regulators will likely be interested in how the purchase may affect business in the Valley, particularly in the field of innovation. That’s why AT&T is hoping to convince the valley to support its cause, which may potentially sway regulators or at least strengthen AT&T’s case.
On Tuesday, AT&T’s delegation led by James Cicconi and chief technology officer John Donovan, met for nearly two hours with ten large technology companies, reported The Wall Street Journal. Later in the day, AT&T execs hosted a lunch meeting with 20 venture capitalists from big name firms like Kleiner Perkins Caufield & Byers as well as Google Inc’s Google Ventures.
Sources close to the matter told the Wall Street Journal they are concerned the acquisition may impact spectrum availability, innovation, and the openness of wireless networks. One venture capitalist also expressed concern that data-service plans might become more expensive if the two companies merged. AT&T has openly stated it believes the merger will actually keep costs down for consumers.
In the opening days of the trial, AT&T CEO Randall Stephenson said, “This transaction is all about consumers. It’s about keeping up with consumer demand and having the capacity to drive innovation and competitive prices for consumers.”
Whether these Silicon Valley VCs will believe the hype is still to be determined.
AT&T executives made a case for VC support of the acquisition, explaining that it will increase the power of the network and bandwidth available, something essential for developing wireless programs in Silicon Valley.
One person attending the meeting noted the stark change in the attitude of Valley execs towards telecoms. He said, “Most people were there in a be-friendly mode. No one was grilling them. Nobody was being confrontational.”
Typically, Silicon Valley has had a strained relationship with telecoms mostly because of the tight control they imposed over the networks. Since the inception of the Apple iPhone in 2007, the balance of power seems to have shifted towards Silicon Valley, forcing carriers to loosen control over the networks and devices thus lessening the strain between the two sectors.
AT&T and T-Mobile are facing an uphill battle to pass this acquisition deal by the FCC and Dept. of Justice. Sprint CEO Dan Hess has gone as far as to say “Just say no to this takeover,” citing the “1980s style duopology” it will create in the wireless industry.