FCC to AT&T: Forget About It

The Federal Communications Commission has released a report attacking AT&T’s proposal to buy T-Mobile as a damper on competition. The 157-page report was released on Wednesday, after the FCC accepted AT&T’s move to withdraw its request for approval of the US$39 billion deal.

The report evaluates the impact the merger would have on competition in the wireless market. While AT&T argued that it would result in cost savings for consumers, the FCC claimed that it would give AT&T incentives to raise prices.

The combined entity of AT&T and T-Mobile, plus Verizon, would constitute 75 percent of the U.S. wireless market, create a duopoly, according to the FCC, which concluded that any potential upsides to the deal were outweighed by the likelihood of greatly decreased competition.

Where Are the Jobs

The FCC’s distaste for the merger may in part be its likely effect on the job market in a difficult economy.

“It’s interesting how much a presidential election can change other areas far away,” Allen Nogee, principal analyst for wireless technology at In-Stat, told the E-Commerce Times. “I think there has been a strong push to put the economy first, especially jobs, and rightly so. That’s at the heart of this.”

Such mergers were almost always approved in the past, whether they were good for consumers or not, Nogee noted.

“Currently these types of deals are being looked at much more closely,” he said. “As the FCC looked closer, it was clear that this deal wouldn’t help create jobs but would hurt total jobs. That killed the deal in its present form.”

What’s Next for AT&T?

On Monday, AT&T indicated it would withdraw its effort to pick up T-Mobile and would instead purchase some of T-Mobile’s assets from its owner Deutsche Telekom.

“There will need to be major concessions to keep this alive,” said Nogee, “or ATT may just give up.”

In fact, recent moves indicate AT&T is ready to give up on the merger, which means forking over $4 billion to Deutsche Telecom for its trouble.

“T-Mobile will be fine, and the extra money from AT&T will certainly help,” said Nogee. “In the end, I don’t think this move changes the North American market much. Others will probably leave T-Mobile and Sprint alone for a while.”

We’ll Be Back

Part of the difficulty between the FCC and AT&T may be due to the way AT&T has behaved as it attempted to gain support for the merger.

“The FCC is really mad at AT&T,” Sue Rudd, director of service provider analysis at Strategy Analytics, told the E-Commerce Times. “AT&T needs to be more humble, but it hasn’t been.”

Still, much of what’s happened over the past week or so may amount to one overreaction after another.

“The FCC floated they were going to put AT&T through a real trial, but it wasn’t final,” said Rudd. “Then AT&T hustled around on the 23rd. That included AT&T announcing it would withdraw the deal. FCC released the report anyway because they know AT&T will be back.”

The underlying assumption is that AT&T still wants to get the merger through.

“AT&T will absolutely be back with this,” said Rudd. “They really want the spectrum they would get with T-Mobile.”

That spectrum is entirely compatible with what AT&T already has, she noted, and “they can divest some of their older spectrum to get the T-Mobile spectrum.”

2 Comments

  • I have a pretty basic senior value cellphone from tracfone. I accidentally know that it makes use of AT&T’s network, but I get to pay a lot less than being AT&T’s spread sheet by getting it through tracfone. This in itself is unremarkable, AT&T not getting the spectrum they’re crying for is much more remarkable: It’ll only be a matter of little time before the spectrum that AT&T can afford to resell, starts running thin, and the invariable consequence of paying higher prices – this is not good for me as a senior. I hope the merger happens, AT&T get their spectrum, and that world peace is just around the corner.

  • I have been a T-Mobile customer for many years (back to VoiceStream days) and frequently had problems with network roaming where AT&T refused to allow T-Mobile roaming on their network. Even now my office can pick up a T-Mobile or AT&T signal and I am required to force my phone to ignore the AT&T roaming. If my phone jumps over to the AT&T network I could make an outbound call but inbound calls would just ring without connecting. This is indicative to me that AT&T has been deliberately hampering the ability of T-Mobile to do business by paying only lip-service to the idea of network roaming.

    In the AT&T world it is either "their way or no way" and they were perfectly willing to debilitate any competition through such tactics. This anti-competitive behavior has been in place for years as a way to keep other GSM providers from daring to exist and to force them into a disadvantage in areas where they practically held a Monopoly.

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Intuit’s $12B Mailchimp Purchase Breathes New Life Into Email Marketing

Intuit on Monday announced an agreement to acquire Mailchimp, a global customer engagement and marketing platform for small and mid-market businesses, for $12 billion in cash and stock advances. The purchase could be the linchpin that thrusts the mostly financial software company into solving more fertile mid-market business challenges for its customers.

The planned acquisition is part of Intuit’s mission to become an AI-driven expert platform. With the acquisition of Mailchimp, Intuit will accelerate two of its previously-shared strategic big bets: to become the center of small business growth and to disrupt the small business mid-market, said the company in its announcement.

Intuit’s acquisition of Mailchimp sends a great message to all entrepreneurs around the globe that venture capital is not always necessary, observed Michael Kawula, co-founder of CBA, a marketing agency for YouTube monetization. Mailchimp is a bootstrapped success story that has not raised any outside venture capital.

“This is a very clever growth strategy for Intuit, who wants to get in front of SMBs, which is difficult and expensive. Similar to HubSpot’s recent purchase of The Hustle newsletter, a much smaller acquisition, this also is brilliant,” he told the E-Commerce Times.

The acquisition marks a significant impact in industry, according to Osiris Parikh, sales marketing manager at Lilius. He also sees the deal as another reminder that email marketing is not dead — and data is power.

“Intuit has made a strong move to broaden its portfolio and become a leader in catering to the needs of SMBs. It is also a great story of success during Covid-19,” he told the E-Commerce Times.

Deal Basics

Intuit provides a global technology platform that makes TurboTax, QuickBooks, Mint, and Credit Karma. Intuit and Mailchimp will offer an innovative, end-to-end customer growth platform that allows customers to get their business online. It will also enable them to manage marketing, customer relationships, payment processes, and access insights and analytics, along with optimizing their cash flow and staying compliant with experts at their fingertips, according to Intuit.

Key to this process is Intuit’s ability to enable businesses to combine their customer data from Mailchimp and QuickBooks’ purchase data to get the actionable insights they need to grow and run their businesses with confidence.

“We’re focused on powering prosperity around the world for consumers and small businesses. Together, Mailchimp and QuickBooks will help solve small and mid-market businesses’ biggest barriers to growth, getting and retaining customers,” said Sasan Goodarzi, CEO of Intuit.

Mailchimp brings to Intuit technology at scale along with global customer reach.

Founded in Atlanta, in 2001, Mailchimp began by offering email marketing solutions. The company evolved into offering customer engagement and marketing automation processes fueled by an AI-driven technology stack. Mailchimp’s data and technology spans 70 billion contacts and more than 250 rich partner integrations. Its AI-powered automation at scale fuels 2.2 million daily predictions.

“Over the past two decades, we have vastly expanded and evolved Mailchimp’s platform to help millions of small businesses around the world start and grow,” said Ben Chestnut, CEO and co-founder of Mailchimp.

Why Mailchimp’s Worth It

While the email marketing sector is pretty crowded, Mailchimp stands out in terms of size and scope. The company reportedly has 13 million total global users, 2.4 million active monthly users, and 800,000 paid customers, noted Charles King, principal analyst at Pund-IT.

“Plus, half of its customers are outside of the U.S. Additionally, while people tend to focus on the mass/might of large enterprises, small businesses are really the heart and soul of most economies,” he told the E-Commerce Times.

The acquisition likely represents a lucrative opportunity for Intuit to integrate Mailchimp data with QuickBooks and provide greater analytical capabilities to customers. The synthesis of financial and marketing data in this case provides valuable and actionable insights about an organization’s clients, added Lilus’ Parikh.

“It’s also a great diversification of offerings to centralize SMB operations through one platform and benefit from Mailchimp’s established user base,” he said.

Another supporting factor for Intuit’s interest in Mailchimp is the renewed stature of email, according to Elice Max, co-owner of EMUCoupon and someone who has been involved in online marketing for eight years.

“Email marketing has made a comeback in recent years. With increased digitization caused by the pandemic, all digital mediums including email have gained a renewed importance,” she told the E-Commerce Times.

Email Marketing’s Resurgence

Technology giants are looking to build more integrated and holistic solutions. Microsoft recently bought Clipchamp, a video production tool. Both companies are looking to build platforms for the new tech-savvy SMBs, Max Suggested.

“More than anything, it means a renewed confidence in the field. Experts have been talking about the death of email marketing for a while now. But a $12 billion acquisition by a big player like Intuit means email promotion is alive and kicking,” she said.

Another factor is Intuit keeping its eye on the ball. It is important to remember the significance of Mailchimp as the pioneer in marketing automation and email marketing in particular.

“Intuit is looking to make a statement that it wants to become more than a financial software company,” Max observed.

QuickBooks Synergies

One of the motivations that lies behind Intuit’s purchase of Mailchimp is its desire to lead a revolution in the CRM capabilities of SMBs, according to Will Ward, CEO of Translation Equipment HQ . Think about the effect the pandemic has had on the popularity of remote work and the amount of remote SMBs being established.

“You would expect there to be a lot of growth potential here in the next few years. With Mailchimp and QuickBooks, Intuit is providing an end-to-end customer growth platform, and with around $20 billion invested already its belief in SMBs is evident,” Ward told the E-Commerce Times.

Like any other system that handles transactions such as orders and payments, you need to work closer to the actual customer channels. With the Intuit e-commerce product, launched about a year ago, this seems like a natural step by adding marketing automation and reaching out with its e-commerce offering to the MailChimp customer base, suggested Johan Liljeros, general manager and senior commerce advisor, North America for Avensia.

“The acquisition has added synergies between the platforms while still being able to operate as independent platforms. Looking at Intuit’s offerings, it appears they are moving towards expanding [into] digital transactional experience,” he told the E-Commerce Times.

Final Thoughts

Email marketers should be ready for disruption along with other business services providers. Intuit has been both savvy and aggressive in the way it built its business, effectively becoming the 800-pound gorilla of small business accounting and tax solutions, according to Pund-IT’s King.

“With that kind of ally behind Mailchimp, life is going to become a whole lot more ‘interesting’ for other email marketers,” he predicted.

The Intuit-Mailchimp deal should offer Intuit customers significant benefits, such as new solutions and services for bolstering their businesses. At the same time, the deal highlights the fact that old technologies can continue to be vital and dynamic.

“For years, many have claimed that email is dead or dying and quickly being replaced by whatever the tech du jour happens to be. Mailchimp — and now Intuit — beg to differ,” King quipped.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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