A Foolish Week of Telecom

Dan Radovsky, The Motley Fool
Updated

Top story of the week
AT&T (NYS: T) has decided to continue pursuing its merger with Deutsche Telekom's T-Mobile USA unit in spite of Federal Communications Commission Chairman Julius Genachowski's calling for administrative hearings on the $39 billion deal.

But AT&T doesn't sound too encouraged about the prospects of it jumping ahead of Verizon (NYS: VZ) to become the largest U.S. wireless carrier. With the FCC news coming three months after the Department of Justice filed an antitrust lawsuit against the acquisition, AT&T gave notice that it is preparing to take a fourth-quarter charge of $4 billion toward payment of the deal's breakup fee.

Even more bad news for this telecom
After last week's confession by Clearwire (NAS: CLWR) CEO Erik Prusch that the company is considering defaulting on its $237 million debt payment due Dec. 1, it wasn't much of a shock that Moody's dropped a dime this week on Clearwire's credit rating. Some consider Prusch's statement a desperate ploy to force its on-again off-again partner (and its majority owner) Sprint Nextel (NYS: S) into bailing it out with the $1 billion Clearwire needs to upgrade and maintain its network.

Sprint, though, has had its own discouraging encounters with the credit ratings agencies.

DSL users, slow down...
If DSL users don't slow down, Internet service provider CenturyLink (NAS: CTL) writes on its website, it will start imposing usage caps. Those who violate the usage terms of their agreements will get a warning and the opportunity to upgrade their accounts. Unlike some providers -- AT&T, for example -- CenturyLink won't start imposing fees on customers without first warning them of the overages.

How fast is too fast?
Verizon is trying not to kill the golden goose of high data rate plans. Yes, if a customer buys one of those plans, that's more money for the company, but it won't be too long before some customers will start regularly going over their plans' limits and begin choking on their monthly bills. To try to achieve a balance between high data usage and keeping customers, Verizon is working to optimize the relationship of video quality, data usage, and mobile device.

Have we reached a point where the quality of our mobile devices and the speed of our wireless networks have created something that is just too expensive? To paraphrase J.P. Morgan, if you have to ask the price of your data plan, maybe you can't afford it.

I hope you had a nice Thanksgiving. Until next week...

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At the time thisarticle was published Fool contributorDan Radovskyowns shares of AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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