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AT&T Buys Dobson Communications

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Scratching my head and puzzled.

nextel18

Jun 29, 2007, 6:14 PM
I am a bit confused and puzzled with AT&T’s move to buy out DCEL because I do not feel that it would be good to buy DCEL just to obtain 1 million or so customers for more than $7B with the assumption of debt. The $2.5 B in synergies is very good but I do not understand why AT&T would especially when it has to deal with that AT&T had a great roaming deal with DCEL that it would be years before they would pay out a few billion dollars.
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titans2323

Jun 29, 2007, 6:22 PM
part of it could be roaming agreements as dobson has agreements w/ cingular and tmobile. therefor buy purchasing dobson they could not only gain more coverage in rural areas where they might not have service they will gain more money off of roaming agreements.
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nextel18

Jun 29, 2007, 6:31 PM
Let me post you a post that I did on the other forum perhaps you will see the context.
I think this is a very this company perhaps to be bought out because it relies heavily on roaming revenues primarily from Cingular or the new AT&T, which stands at 89% of DCEL’s roaming traffic which was up 9% year over year. DCEL also has an alliance with T-mobile.

Through the current valuation, that Alltel was bought out for $27.5 billion for 12 million subscribers, which is about $2291 per subscriber. DCEL has 1.7 million subscribers using that multiple of $2291 per subscriber values the company at $3.895 billion. I think it will be difficult for them to grow in the future, as there are stronger players in this industry who are stronger than DCEL s...
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tonsofun5610

Jun 29, 2007, 6:44 PM
Actually it has to do more with the fact that Dobson has a potential customer base of 17 million than anything else.
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nextel18

Jun 29, 2007, 6:49 PM
Very true but I highly doubt they will get 17 million customers and the fact that they are paying a lot of money for non-organic growth I don’t think is a good idea. Of course we will have to see in the next few years but I would have let the roaming deal continue with them and obviously as the years come and go the rates will go down which means that there will be less roaming charges to AT&T.
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terryjohnson16

Jun 29, 2007, 6:55 PM
I wonder how many Dobson customers will leave now, that AT&T is taking over, and also how will this affect T-Mobile's roaming agreement.
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nextel18

Jun 29, 2007, 7:11 PM
Very true. All of these questions are why I don’t think that AT&T did a good thing for them by buying DCEL. Of course there will be synergies but the money they are spending is a lot of money just to gain those subscribers, towers, and spectrum. That roaming deal that they had in place would amount to many years of less than what it would cost in roaming than the actual deal itself. What about if DCEL has any TDMA customers and now since Cingular is shutting down that network what will happen?
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tonsofun5610

Jun 29, 2007, 7:25 PM
As far as the TDMA customers, they have already received notice that Dobson's TDMA network is going to be shut down around the end of August.
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nextel18

Jun 29, 2007, 7:35 PM
I see. So that could pose some problems or perhaps some losses in those current TDMA customers.
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cingagent

Jun 29, 2007, 8:39 PM
All i have to say is: FINALLY! I have seen far too many customers accounts cancelled because they were using too much roaming off of the dobson network, which is the ONLY carrier in a lot of rural upstate NY, namely the adirondack region, and a lot of the rural college campuses. I hope that with all the new towers and spectrum they will be able/willing to expand into some of the more rural areas where they couldn't before.
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nextel18

Jun 29, 2007, 8:45 PM
Very true.
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bojmir

Jun 29, 2007, 9:25 PM
There is a DCEL cor store 2 stores down from my store...should be interesting to see how this turns out.
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flod logic

Jun 30, 2007, 12:10 AM
I kind of doubt that. The few people who are still on TDMA have known for a long time (years) that their service is going to be shut off soon - their bills have been increased by $5 several times over the past couple years; they've gotten many reminders; they've been offered other incentives to switch, etc. In spite of all the chances they've had to switch to GSM, they just haven't bothered for whatever reason. I think the small number of people the company could lose isn't going to have a very big impact.
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nextel18

Jun 30, 2007, 6:37 PM
I just do not like the fact that they continue to charge them money even if they do not want to move. It is forcing them and that is the only reason why I do not like AT&T as much is because they force people.

Of course, the number will be small but it still will lose some customers making the valuation a bit more expensive than current levels.
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algorithmplus

Jul 1, 2007, 10:30 AM
Well, the wireline companies in the past forced customers to abandon their crank phones in favor of rotary dial phones. They didn't give customers a choice, they told them they were changing the system and they would have to buy a new phone.
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nextel18

Jul 1, 2007, 4:58 PM
Same situation now.
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JasonT1273

Jul 1, 2007, 10:22 PM
It costs more money to operate and maintain an aging and obsolescent network. Those costs are simply being passed along to the customer who chooses to remain on that network despite alternatives. Kind of like keeping an old car you really like. Sooner or later it needs fixed and the parts are harder to find and more costly. GSM and newer technologies allow companies to fit more customers on their spectrum than TDMA and analog providing both a better call experience for the customer and a more cost effective means of handling calls for the carrier.
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algorithmplus

Jun 29, 2007, 7:46 PM
I'm pretty sure AT&T isn't the only company shutting down TDMA systems...
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nextel18

Jun 29, 2007, 7:53 PM
Perhaps. Obviously it is better for them to shut down TDMA but obviously we have been noticing how badly those TDMA customers were treated which obviously hurts because they could choose another carrier.
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algorithmplus

Jun 30, 2007, 12:12 AM
Most of the carriers have had it. Verizon went through a time it was very nasty to its analog subscribers, as did Alltel. Cingular/AT&T wireless are shutting down TDMA, not different. And, of course Sprint will have the iDEN thing in the future (which they could be different, but I doubt they would).

There comes a time when older technologies require so much bandwidth in regards to newer technologies that it is no longer efficient to run them.

The only major player that this hasn't seemed to affect so far is T-Mobile.
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nextel18

Jun 30, 2007, 6:34 PM
Oh, of course the demise of older technology will happen I am just curious how many customers are left on that older network for Dobson.
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jad856

Jul 1, 2007, 6:34 AM
As I am sure your aware of, Dobson started the GSM conversion in 2004. There are approximately 5% of the 1.6 million still on tdma. Most of these customer are in a very rurual area and for the most part are elderly and would rather not change or have tried it in the past when it was not as good and are afraid to try it again.
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nextel18

Jul 1, 2007, 4:57 PM
I understand but Cingular and Dobson will not force them to switch and it isn’t good business practices to do that, and perhaps they should offer them a discount to switch to the GSM network. That could pose some issues into the future as they move over those TDMA customers to the GSM network.
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jad856

Jul 2, 2007, 9:39 AM
I agree, they should offer some kind of incentive to migrate to GSM. I am sure they do not want to force them off the tdma network, however cingular(AT&T) has already taken steps to shutting down most of their tdma network and alerted the customers of this. Dobson had plans of shutting theirs off in 2008. I don't know all the regulations, but I do know it is controlled mostly by the government(FCC) and if the carriers do not update their tdma network to meet with certain standards and regulations like 911 etc... they have no choice but to shut it off. Of course let's not forget about the money, it cost the companies a lot to keep the tdma network and even though they may lose a lot of customers it may be worth it to their bottom line.
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algorithmplus

Jul 2, 2007, 6:15 PM
The FCC mandates that any established analog network must sustain availability until February 2008. At that time, analog networks are no longer required to run, and it is expected that companies such as AT&T, Verizon Wireless, and Alltel will shut down analog networks.

TDMA is under no such mandate, but TDMA in the 850 mHz band (the same band analog originally operated on) is normally intertwined with analog, and therefore these areas will be up and running albeit at a reduced rate, until the analog network is shut down. Cingular has already started shutting down the TDMA network in areas where it operated in the 1900 mHz range, and I'm sure Dobson was taking those steps as well.
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JasonT1273

Jul 1, 2007, 10:58 PM
T-Mobile has the distinction of never really having had a TDMA network in the U.S. I remember a time when that sort of a bragging point of theirs... having the same network and technology coast to coast. Lest we forget that they, too, were once a different company called VoiceStream. Jamie Lee Curtis was pitching for them long before Catherine Zeta-Jones (Douglas) and made it sound like the sexiest and best new thing even though their coverage map looked more like a half-finished interstate highway map.
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algorithmplus

Jul 2, 2007, 6:17 PM
Yeah, Sprint and T-Mobile used to have similar coverage maps, and once Sprint allowed analog and 850 mHz CDMA roaming, there was additional coverage.
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algorithmplus

Jun 29, 2007, 7:45 PM
I'm sure T-Mobile's roaming will still continue. Perhaps AT&T is trying to get a true nationwide network, preparing to have the only nationwide network when the AMPS sunset date comes?
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JasonT1273

Jul 1, 2007, 10:53 PM
Good point. They could get a lot of mileage, both literally and figuratively, from having such a nationwide presence.
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algorithmplus

Jul 2, 2007, 6:18 PM
And, from a consumer standpoint, the closest thing to a true NATIONAL network would be a good thing.
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Versed

Jun 29, 2007, 10:56 PM
Or how many iphone customers from middle america they may get?
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yeahright

Jun 29, 2007, 9:28 PM
long time ago,seems likeanother life i worked for dobsons and back then at&t owned like 49% of them anyway ao i was not overly surprised, but back then at&t and cingular where two different companies and tdma was still around so a lot has changed. this purchased would have made perfect sense tome three years ago but maybe when the whole merger went down they wanted it anyways just now got around to it??? who knows
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nextel18

Jun 30, 2007, 7:01 PM
Very true. I just mentioned a few times that even though they did purchase Dobson, I am not sure if this wise a wise purchase given that they could use that money elsewhere, but more importantly have that great roaming deal in place.
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algorithmplus

Jul 1, 2007, 10:27 AM
As noted in another thread, it will be good for customers, as no more customers will be dropped for roaming too much on Dobson's network. I knew of thousands of customers who were dropped in Morgantown, WV, and I'm sure there were many more in other places.

Now, if AT&T could get the GSM network from Alltel...
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nextel18

Jul 1, 2007, 5:01 PM
AT&T buying out Alltel will be a little bit of a stretch as that company dominates the rural area raising concerns and scrutiny.
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algorithmplus

Jul 2, 2007, 6:07 PM
nextel18 said:
AT&T buying out Alltel will be a little bit of a stretch as that company dominates the rural area raising concerns and scrutiny.


Well, since Alltel doesn't have any GSM customers, it could sell the GSM network, and there would be no competitive concerns. Actually, that would add a competitor in the choice of consumers, and thus be beneficial.

And note that I'm only talking about the GSM network, not the CDMA network, brand, stores, employees, or customers.
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yeahright

Jun 30, 2007, 7:56 PM
i know in eastern ohio they were basicaly overlapped with the coverage so seemed kinda of dumb to me
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JasonT1273

Jul 1, 2007, 10:32 PM
You may be thinking of NORTH eastern Ohio but in this part of eastern Ohio AT&T is surrounded by Dobson in just about every direction except toward Pittsburgh, not overlapping. They lose out to Alltel in this largely rural market because Dobson just couldn't pony up the cash to build out their network to compete, leaving those roaming over from AT&T with minimal coverage in neighboring areas.
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abizzle

Jun 29, 2007, 11:05 PM
I can tell you why, we had a stranglehold on much of the rural markets that AT&T does not even have a presence in. Much like the market i live/work in. Southwestern Pennsylvania and northern West Virginia. I'm not sure what the AT&T to dobson ratio is in the rest of the company, but I'm pretty sure that they do not have anything but roaming agreements in most of our markets. And believe it or not WVU has a lot of our customers there, but even more of their customers there. I remember when dobson first went GSM and the students came back into town. There was no service. The population of Morgantown WV grew by about 50,000 in one week. And at least half or more were using our network to roam off of. So Money to customer wise yeah it doesn't se...
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nextel18

Jun 30, 2007, 6:59 PM
I just figure that the money they paid for Dobson can be money well spent somewhere else especially since they have a great roaming deal with Dobson and it can be lowered overtime.
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JasonT1273

Jul 1, 2007, 10:43 PM
Having lived my entire life in the Tri-State area including SW PA this will be a welcome change especially since I have family in CellularOne markets both in PA and MN and I am in an AT&T market. Mobile to Mobile never looked so good! Morgantown is a great example of a town that will benefit from the improved network amd the students of WVU will enjoy being able to get the same services as they do "back home" without fear of being released due to excessive roaming.
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