Wireless users and wireless competitors alike are upset by the proposed acquisition, which would combine the second and fourth largest U.S. carriers, rocketing AT&T back into the top slot and giving it more than 40 percent of U.S. subscribers.
That combination inevitably would lead to fewer choices and higher prices for consumers and businesses that use mobile voice and data services. It would affect not only current T-Mobile customers, but customers of other carriers as well, who would find themselves with fewer alternative providers. It would harm AT&T’s competitors too, most of whom already incur higher device costs and operating expenses directly attributable to AT&T’s exclusionary conduct.
Most of the early press coverage and popular sentiment about the deal has recognized these obvious problems, all stemming from the simple fact that fewer competitors means less robust competition, hence less incentive and ability for wireless providers to lower prices and improve service quality to win customers.
As the FCC has recognized in its annual study of competition in the wireless market, the presence of competitors with a nationwide footprint rivaling AT&T’s has done something – not nearly enough, but something – to keep AT&T’s prices in check. Even with the downward pressure on pricing exerted by competitors like T-Mobile, the company that kept a stranglehold on the iPhone for so long was still able to charge a premium for its subpar service just because of the popularity of the phones AT&T can keep away from its rivals.
If AT&T buys up one of those rivals, and indeed the only large one that uses the same technical standards as AT&T in its 3G networks, fans of T-Mobile’s typically lower priced and higher quality service would lose that option – as would all wireless users.
The isolated voices cheering the deal, and some analysts handicapping its odds of success from the sidelines, have come up with a few curious arguments for approval. Some have noted that the wireless market, and especially the mobile broadband segment, is already dominated by two major players anyway. Yet, the answer to flawed policies that allowed this duopoly to arise cannot be complete abdication by federal agencies charged with protecting consumers, promoting competition, and preventing abusive practices by dominant players like AT&T.
Others supporting the deal argue it would spur broadband deployment and create jobs, while simultaneously lowering prices or improving service for AT&T customers. These contradictory claims fall apart when stacked next to one another, and deserve close scrutiny in the context of a transaction so likely to run afoul of antitrust law and public interest standards.
Merger “efficiencies” are a corporate euphemism for workforce contraction and job losses, not gains. Any efficiencies that the newer, bigger AT&T realizes would translate into higher profits – what AT&T’s press release announcing the deal glibly refers to as “value-enhancing” and “straightforward synergies” designed “to create substantial value for shareholders.”
So don’t hold your breath as you wait for your AT&T wireless bill to drop once the company has taken out one of its main rivals.
You might need to wait a while too for expanded broadband deployment and new jobs when AT&T promises its shareholders to reduce costs through “support savings, reduced churn, and avoided capital and spectrum expenditures.” Buying spectrum-constrained T-Mobile would not solve all the problems with AT&T’s woefully inadequate network, but it would keep those spectrum assets out of the hands of other providers potentially willing to challenge AT&T’s dominant position.
AT&T’s acquisition of T-Mobile would be a bad deal for American consumers, workers, and businesses in the telecom sector and outside of it. It’s time for federal agencies charged with protecting consumers and competition to rethink possible and do their duty in reviewing this deal.
Matt Wood is associate director of Media Access Project, a nonprofit, public interest law firm working to protect free expression, innovation, and economic growth by promoting low cost, universal access to media outlets and communications services.