This is a bit of a curious move. Why would AT&T voluntarily withdraw their application and possibly trigger the brake-up fee rather than waiting for the government's decision? The only explanation I can come up with is that they're going to re-file and withdrawing the application and re-filing will delay any decision (perhaps to a point where T-Mobile looks like it is declining and not providing competition or something).

Frankly, the $39B buy of T-Mobile was a deal seemingly too-good-to-be-true for T-Mobile. T-Mobile has struggled to put up customer additions in a market increasingly dominated by AT&T and Verizon. While T-Mobile has remained profitable, it's possible that they're starting down the path Sprint hit several years ago that left them unprofitable. T-Mobile was considering a merger with Sprint that probably would have left DT as a minority shareholder in an unprofitable, 3rd-place wireless carrier and then AT&T comes along and offers $39B. At the time of the offer, Sprint had a market-cap of about $13B, debt of about $14.5B and cash-on-hand of about $4B, valuing the business at about $23.5B. That makes the $39B offered for T-Mobile a lot more than a good purchase price for Sprint and Sprint is a larger wireless carrier.

With that said, it's genuinely possible that AT&T is stringing T-Mobile along. $39B is probably over T-Mobile's value (based on 2011 earnings, it would be about 44x earnings), but it might be worth it for AT&T to have nearly 140MHz in spectrum, plenty of new cell sites, and plenty of new customers. AT&T has a history of integrating purchased networks well (compared to, say, Sprint who still hasn't dealt with the two networks from its Nextel purchase). By contrast, getting a minority share in a new Sprint would probably be worth a lot less, might see the new carrier running four separate networks (CDMA/EV-DO, GSM/UMTS/HSPA, iDEN, and LTE), and might still see poor customer numbers and profits. It would also be an odd position to be in. Would the new Sprint sell CDMA as its flagship product or HSPA+? Would they try and maintain both networks for the next decade as they try to fit LTE in somewhere? AT&T's offer is that promise from a business partner that you're going to get a windfall if you just hang in there. "Yeah, we know we pulled the app from the FCC, but if you just hang in there and work with us, you'll get that windfall. C'mon, just a little longer."

While I don't like the prospect of having only three national wireless companies, I'm not sure T-Mobile staying is a lynchpin for competition. T-Mobile's customer numbers have gotten less rosy and the continued lack of an iPhone is only going to hurt them more. From my perspective, we need a cap on spectrum below 1GHz. Low-frequency spectrum travels significantly further in real-world conditions than high-frequency spectrum. For example, to cover 1,000sq mi can be done with one cell site with 700MHz spectrum. By contrast, at 1900MHz it would take 4 sites, and at 2.4GHz it would take 10. While cell networks need to split cells in urban areas as their customer base grows, low-frequency spectrum offers the broad coverage that customers demand as well as offering the ability to build out a network with decent coverage before one has many customers (somewhat solving the chicken and the egg problem of building a network).

Without low-frequency spectrum, new carriers face the daunting task of building considerably more cell sites when they don't even have customers yet. Likewise, limiting holdings below 1GHz would provide a guarantee of competition. If a carrier could only own 25MHz below 1GHz, we'd be guaranteed to have at least 4 carriers - and those carriers could be more genuinely competitive. Imagine if the 700MHz auction couldn't be participated in by Verizon or AT&T. T-Mobile might have picked up spectrum there, same for MetroPCS or Leap Wireless (or new entrants). We could have seen increased competition driven by ownership of spectrum that made rolling out a wireless network with decent coverage much easier.