Negotiation Analysis

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Table of Contents

Introduction
The merger will provide T-Mobile management workers a voice in the work place
Phases of a Negotiation Process
Steps in Negotiation Process
Conclusion
References

Introduction

The term negotiation refers to a dialogue between two or more parties or people. It is aimed to reach an understanding, gain advantage in the result of dialogue, produce an agreement upon courses of action, resolve a certain issue and bargain for an individual or group. Negotiations always aim at compromise. Negotiation usually happens in businesses, non-profit organizations, legal proceedings, among nations and even in personal situations like marriage, divorce and parenting (Sparks, 2003).

Because of the growing trends in business and globalization, negotiation is usually used in the market places. Teams can effectively come to a conclusion to break down a negotiation.

Partners must practice listening, writing and roles as team members (Sparks, 2003).Most of business and organizations are forced to merge and sell their businesses when they want to change their services or when they are faced with problems in the organization. This paper will discuss the negotiation of AT&T and T-Mobile and the United States government who want to block the merger between the two mobile carriers.

AT&T and Mobile U.S. Mobile Carriers Case

The merger of AT&T and T-mobile started on March 20, 2011 and on 31^st August the same year the Antitrust Division of the Department of Justice in USA resolved to block the merger and it filed a lawsuit in federal court. AT &T came up with the idea to buy T-Mobile for $39 billion from Deutsche Telekom (Weaver, 2011).

AT&T is the largest mobile company in the United Sates that has 33.7 million subscribers and if the deal were to succeed, AT&T would have a 43% market share of mobile phones. On March 20, 2011, Deutsche Telecom accepted the stock and cash purchase that was offered by AT&T for T-Mobile USA (Kent, 2010).

After introduction of iPhone in 2007, T-mobile USA lost most of the rewarding customers and it dropped to 78.3% of subscribers in 2010 compared to 85% in 2006. T-Mobile had to come up with comparison with other mobile supporters like Verizon Wireless and AT&T Mobility and it found that network upgrades and spectrum purchase were risky with the drop of customers and this led Deutsche Telecom to come up with the idea to sell.

The merge must pass through a regulatory review whereby the two parties expected it to take 12 months and the deal requires an approval by the Department of Justice and Federal Communication Commission in US. Hearing on the acquisition of T-Mobile USA by AT&T was held in May by the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. During this hearing, senators raised questions to the companies CEOs about the effects of the merger and competition issues. The two companies denied the right that they were competitors (Kent, 2010).

The suit that was filed by the DOJ in the District of Colombia was to have the court stop the merger of AT&T with T-Mobile. It claimed that the combination of the two companies would lead to a situation where customers of mobile wireless telecommunications services would face higher prices, there would be less product variety and innovation and the services offered would be poor due to reduction in incentives to invest than would be without the merger.

The suit argued that the market of T-Mobile strategy had been to be the challenger brand hence it would bring new innovations and new prices to the market place (Leo 2001).

According to Andrade (2001), the proposed merger of AT&T with T-Mobile will improve the future for wireless consumers that will help the young people to have internet connections. The combination would also shape the future for wireless consumers. With the wide creation of devices and an increase in adoption rates of wireless service, the merger would lead to many arguments.

The representatives of the companies argue that it will be an advantage to merge the two mobile supporters. This is because they are convinced that combining AT&T and T-Mobile’s mutually compatible networks will deliver numerous benefits to consumers especially for the Latino communities (Andrade, 2001). This is because the resources, skills and experiences of the workers will be merged to have one common mobile carrier that ensures quality services and prompt responses to customer care.

Merging the two networks will help the combined company to deliver the world’s best-advanced wireless services to all communities in America. This will enable people to have access to a wide variety of distance learning, telemedicine and applications of e-commerce (Andrade, 2001).It will create new opportunities of mobile broadband for Latinos who were underserved with the service.

The merging will benefit the citizens so matter where they live. Because large numbers of Latinos live a mobile life style, including many migrant workers, they must accept a transaction that would increase the ability of Latinos to keep in touch with their employers, schools, and family. The merger will add value and increase personal and professional opportunities for Americans. They will be able to have so many chances to enjoy their lives and take part in e-learning hence improving the living status of the citizens (Andrade, 2001).

It is argued that the merger would create many high quality jobs and provide access to new economic opportunities to the citizens. AT&T had announced to come up with 5,000 job opportunities to the jobless in the society and no job losses to the people who will be working in the wireless call centre when the merge will be approved. There were some people and organizations who criticized the merge with the argument that the merger will reduce employment (Andrade, 2001).

The promise of the merging the two companies and the expansion of wireless networks that support Latinos’ increasingly mobile lifestyle, the expansion of job opportunity, and AT&T’s performance in managing the job impacts of past mergers, has proven that the merger deserves support from Americans and the community as a whole (Andrade, 2001).

Public comments seem to be against the merger, but AT&T has been skillful to come up with support from all corners of the technology world. Microsoft, Qualcomm and Facebook joined with the technology giants to offer support t AT&T and T-Mobile merger (Kent, 2011).The combination of the country’s second- and fourth-largest wireless carriers would lead to violation of the antitrust law and lessen competition in the market place (Tom, Sara and Jeff, 2011).

A rejection of the merge by regulators would leave AT&T liable to pay Deutsche Telekom $3 billion in cash, to give T-Mobile USA wireless spectrum, and to reduce charges for calls into AT&T’s network, a package valued at as much as $7 billion, Deutsche Telekom place (Tom et al, 2011).

The acquisition would lead to AT&T displacing Verizon Wireless that belongs to Verizon Communities Inc and Vodafone Group PLC as the number one U.S wireless carrier. AT&T and Verizon would control most of the profits in the market place (Tom et al, 2011). The AT&T – T-Mobile merger would be a major achievement for AT&T and it would make the mobile carrier the largest provider in the United States.

According to Leo (2001), AT&T has effectively neutralized T-Mobile as a competitor, especially since T-Mobile’s current owner, Deutsche Telekom AG, has indicated that it did not plan to make any more investments in T-Mobile. AT&T enjoys many of the benefits of the merger like reduced number of competitors with paying billion for the acquisition.

If the merger between AT&T and T-Mobile is successful, Verizon will not have a rest.The deal would allow Verizon to maintain its spectrum advantage and negotiation leverage it currently enjoys. However, if the AT&T – T-Mobile deal goes through, regulators likely will not approve consolidation.

If the AT&T/T-Mobile merger is approved by the Department of Justice and the FCC, they will review their combined network assets. (The Department of Justice sued to prevent the merger in August, so the merger may not go through or AT&T and T-Mobile may have to negotiate a settlement that involves the sale of some network assets to other wireless providers like Sprint or MetroPCS (David and James,2006).

AT&T and T-Mobile moved to dismiss the complaints, arguing that Sprint and Cellular South failed to adequately show the merger would cause them antitrust injury. Judge Ellen Segal Huvelle said the majority of the claims would actually be dismissed, but let a few of Sprint and Cellular South’s complaints stand.

According to Leo (2011), AT&T will not just walk away from the merger because if the merger does not occur AT&T has to pay a breakup fee of $ 3 billion in cash and make other allowances to Deutsche Telekom worth other $3 billion hence it will pay a break up cost of $6 billion.

Such a breakup would strengthen one of its main competitors in communication. AT&T will not surrender unless they see that the case is hopeless. AT&T will have to pose a challenge to the government’s case. The major idea of the case is the concentration of the carrier in the market (Tom et al, 2011).

Without T-Mobile, the market would have no effective check on price increases or technological stagnation by AT&T and Verizon. Franken’s section on consumer prices concludes that Sprint places very little pressure on the prices of AT&T and Verizon, because it charges only marginally less than they do. The elimination of the lowest cost national wireless option likely explains why so many T-Mobile customers are opposed to this deal (Leo, 2011).

According to Tom et al, (2011) AT&T submitted new economic models to the FCC and it stated that the merger would lead a reduction of price and increase the services in the metropolitan markets. These models gave more detailed support for the arguments that the merger will reduce strains on the company’s wireless network, lower costs and increase quality of services provided since the resources and personnel will be merged. It will also increase the number of expatriates in the communication sector.

The merge of AT&T and T-Mobile would lead to tens of millions of consumers all across the United States facing higher prices, there will be few choices and lower quality products for mobile wireless services. Consumers across the country even those who live in the rural areas and those who have lower incomes will benefit from the competition amount the wireless carriers.

The FCC cannot reject or accept the merger proposal but it has to be involved in the negotiation process because it helps in the regulation of wireless spectrum and since AT&T and T-Mobile have their license from FCC, it must approve the transfer of those licenses (Tim, 2002).

Communication has to be used as a link to have effective negotiations. Communication workers of America (CWA) reported that the merger would create new job opportunities and they had to support the deal.The AT&T/T-Mobile merger will save, and create more U.S. jobs than when T-Mobile is alone in the market.

On the other hand, some of the people including Sprit Nextel argue that if the two companies merge there will be reduced competition in the cell phone industry, it will raise cost of the services provided, there will be few choices of handsets, the quality of the services will be poor and less innovative(Tom et al, 2011).

The Justice Department will look for any violation of antitrust law. FCC has to evaluate whether the issue is in the public interest it will also take into account whether the deal will encourage competition and use of new services and whether it increase the prices or harm consumers through anti-competitive behavior in the markets.

If FCC sees that the merger is the best for the interest of the consumers, it would reject the merge and then AT&T would not be able to make a transfer the T-Mobile license and use of that spectrum and AT&T would appeal any decision by FCC.

The U.S. government does not have the power to approve or disapprove of a merger. Companies are free to merge if they like, but for mergers and acquisitions of a certain size, they are required to notify the government of the transaction. This requirement was established under the Hart-Scott-Rodino Act, which mandates that companies involved in the merger should provide the Federal Trade Commission and the Department of Justice with information about the merger before it occurs (Tim, 2002).

If the merger occurs without divestitures, T-Mobile and AT&T are going to do away with some cell sites. The eliminating of these types of expensive redundancies was a large part of the merger with AT&T. Sprint’s and Cellular South’s complaints provide realistic support for the allegation that AT&T already has a significant market power as a purchaser of mobile wireless devices, and that the acquisition of T-Mobile would threaten them with harm.

Sprint alleges that the proposed transaction would add T-Mobile’s 34 million customers to AT&T’s 95 million customers, leaving the merged entity with 129 million customers that is an increase (David and James, 2006).

Sprint alleges that the Federal Communications Commission (FCC) has found that while larger carriers can negotiate handset exclusivity agreements, smaller carriers such as Sprint cannot. Sprint cites Apple’s iPhone as an example. AT&T was the exclusive provider of the ‘iconic’ iPhone from 2007 until early 2011, when Apple ‘gave Verizon a time to-market advantage most likely because Verizon had the largest subscriber base in the United States.

The merger will provide T-Mobile management workers a voice in the work place

It will be neutral and allows workers to make their own decisions about whether or not to join a union. T-Mobile will actively intervene in this process through such practices as requiring workers to attend anti-union meetings, pressuring workers to report on any union contacts, and taking photos of workers accepting union literature. After the merger, T-Mobile’s workers will be able to make their own decision without fear or management interference (David and James, 2006).

Phases of a Negotiation Process

According to Juan (2001), there are four phases of negation process namely; pre-negotiation, Conceptualization, Settling the Details and Follow-up and these will be discussed.

Pre-Negotiation

This is the phase whereby the partners determine whether there is a good reason to conduct the negotiation. The parties come up with the specifics that they want to negotiate about, and then establish an agenda before they commence the talks. It is in this phase that the identification of the people who will take part in the talks is done considering their authority and responsibility in the talk.

It is essential to collect the information of the interested parties, their companies, and the individual interests. This is a critical process as it aids in the formulation of the goals and objectives that are to be achieved. It is also in this phase where time, location and date for the process of negotiation are determined. This can be done though faxes, phone calls and e-mails. The two parties have already passed this phase.

Conceptualization

This is the second phase of the negotiation process. Here, the basis of the negotiation is created with the use of the issues at hand. Discussions are held to have a common understanding of the basic concepts of agreement sought. Definition of goals and objectives of the parties is done though establishment of compatibility.

Both parties have to be satisfied with the agreement reached and if not terms of partnership have to be reframed until they are in agreement. In the case of AT&T and T-Mobile case, the two carriers have already reached a consensus for the agreement and the problem is not the government that has filled a case to block the merger.

Settling the Details

This is the final stage of the agreement. External specialists are involved to complete the details of the business enterprise and risks that are to be taken. The possible problems that may occur are discussed and possible solutions are formulated. Details relating to production, task responsibility, management and authority are discussed. The last part of the agreement is left for the legal experts.

These individuals critically scrutinize the document and come up with final draft that clearly states the rules, regulations and obligations of each party to the contract that legally binds them. In the case of AT&T and T-Mobile, they are in the phase of settling details where the government is giving the possible risks of the merge, the problems and how it will affect the state negatively. The government is claiming that, services will be poor after the merge.

Follow-up

The two parties have not reached this phase that is the final phase in negotiation process. There will be no follow-ups because the negotiations and contract between the two parties has not been resolved. Government officials were involved in the process and there are those who supported and those who opposed the merger idea.

The attorneys general of Arkansas, Utah, Alabama, Georgia, Kentucky, Michigan, Mississippi, North Dakota, South Dakota, West Virginia, and Wyoming wrote a joint letter of support to the FCC on July 27. In addition, on September 16, the attorneys general of California, Illinois, Massachusetts, New York, Ohio, Pennsylvania, and Washington sent their letter opposing the merger.

Months earlier, New York Attorney General Eric Schneiderman made an announcement that his office was to take a thorough review of T&T’s acquisition of T-Mobile and come up with an analysis of the effects anticompetitive effects of merger on businesses and consumers (German, 2010).

Steps in Negotiation Process

The negotiation process has to involve many steps for them to come up with a partnership. According to Calum (2010), there are five styles of negotiation namely, compete, accommodate, avoid, compromise and collaborate. These styles will be discussed to see the styles that are applicable for the AT&T and T-Mobile case.

Compete (I win – You lose)

This is where the negotiators follow their own needs even if it means the others suffer. The negotiators are focused on their shorter terms gains, they use powers, personality, market share, economic threats, brand strength. In the case of AT&T and T-Mobile, the parties can negotiate with the government with the argument that AT&T is facing economic problems and cannot meet the market demand. The parties can use this style of negotiation because they need immediate compliance Calum (2010).

Accommodate (I Lose – You Win)

This is the style whereby relationship is everything. The negotiation aims at giving people what they want. In the case of T-Mobile and AT&T versus the United States Government, they would conduct a negotiation process that will benefit the citizens because most of the citizens are for the idea of the merge so that there can be improved services. So in this case the government will lose and the mobile carriers (AT&T and T-Mobile) will win the case and embark to merge their services (Calum, 2010).

Avoid (I Lose – You Lose)

This is also referred to as passive aggressive negotiation whereby the parties do not want conflict. This can be used when the value of investing time to get a negotiation outweighs the benefit or when the case is trivial to both parties.

Because the two parties do not want to lose, then they should not apply this style in their negotiation process. If this style is used it will lead to a loss because AT&T owes T-Mobile a check for $3 billion and reduced charges for dialing into AT&Ts network as part of a package that’s worth somewhere around $7 billion (Calum, 2010).

Compromise (I Lose / Win Some – You Lose / Win Some)

This style involves splitting the difference that results to half way to both parties. This is where both parties win and lose. In the case of AT&T and T-Mobile if this style is used it will not have good results because the resources will not be merged fully (Calum, 2010). The US government should look at a situation whereby each party will win and lose a situation so that the best services can be provided to the citizens.

Collaborate (I Win – You Win)

It is also called win-win style whereby negotiation make sure that both parties have their needs met. The two mobile carriers can use this style to come up with a situation where neither of the party will lose. They can negotiate and make some adjustments and the partnership can make a contract to provide high quality services after the merger.

In this case, it means that the government will win for the services and the mobile carriers will win to merge. This should be a negotiation in which both parties feel positive about the situation when the negotiation is concluded. This helps to maintain a positive working relationship afterwards. If the styles are used appropriately, the negotiation process will be successful

Conclusion

Every negotiation starts with a process followed by a strategy because without either, then it would be just a disagreement with any kind of resolution to the issue. Making sure that you get what you set out for is important but does not necessarily mean that the other person has to lose in the negotiation so making sure to go through the process and then coming up with a strategy ensures that all parties come out with a win-win rather than a win-lose negotiation.

Quality of Service for AT&T Will Improve because of a reduction in the number of dropped calls, less network congestion and an increased speed of connections due to added spectrum from T-Mobile, increased cell tower density and broader network infrastructure. In the long term, a post-merger AT&T will be better able to retain and increase jobs because it will be in a more significant position to expand and extend its business than either AT&T or T-Mobile could as separate carriers.

References

Andrade, J. (2011) AT&T/T-Mobile Combination Is A Good Deal for America And For Latinos. Fiercereason. Web.

Calum, C. (2010) Negotiation Conflict Styles. Web.

David, L. & James, S. (2006) 3D Negotiation. Harvard: Harvard Business School Press.

German, K. (2010) States weigh in on AT&T-T-Mobile merger. CNET. Web.

Kent. G. (2011) On Call: Civil rights groups line up behind AT&T-T-Mobile merger. CNET. Web.

Leo W. (2011) AT&T/T-Mobile Merger: Let’s Call It What It Is, Part II. Web.

Sparks, B. (2003) The Dynamics of Effective Negotiation (second edition). Houston, Texas: Gulf Publishing Co.

Tim C. (2002) Regulators may approve AT&T merger with T-Mobile after all. Web.

Tom, M., Sara, S. & Jeff, K. (2011) T-Mobile Antitrust Challenge Leaves AT&T With Little Recourse on Takeover. Web.

Weaver, P. (2011) Deutsche Telekom keeps it US Options Open. Telecoms. Web.

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