At&T Economics

Unit 5 Assignment

GB540 – Economics for Global Decision Makers

January 10, 2012

AT&T’s Domestic Operations

AT&T has some substantial obstacles to overcome in its domestic operations. Due to intense industry competition and market saturation AT&T’s growth rate will likely be moderate in comparison with historical growth rates. While the wireless telecommunications industry continues to grow, strong competition exists among four national carriers, as well as smaller regional carriers. This competition will continue to put pressure upon pricing while reducing margins as the carriers compete for customers. In addition to increased competition, one of the most important factors that is currently contributing and will continue to affect AT&T’s inability to grow is the regulatory environment of the telecommunications industry. Within the U.S., AT&T is subject to regulatory authorities where their services are provided. In order to reduce barriers to entry and reduce networks costs, AT&T is aggressively engaged in lobbying within the U.S.

AT&T recently made a deal with T-Mobile in which it agreed to pay $39 billion to merge the two companies. AT&T did this in order to improve their quality of its wireless network due to its much maligned track record for poor service, however in December 2011 AT&T ran into a lot of government opposition to its proposed $39 billion takeover of mobile company T-Mobile, and the companies have since decided to throw in the towel on the deal. In a statement, AT&T said: “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 spectrums that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have...