News Analysis: The AT&T, T-Mobile merger is on life support, and it seems unlikely that it will ever win regulatory approval. This is good news for mobile services consumers across the U.S.
AT&T announced earlier this year that it wanted to acquire T-Mobile USA
from Deutsche Telekom for $39 billion, many spoke out against the move.
Lawmakers were especially outspoken, saying the deal would hurt competition and
potentially cause dramatic shifts in the wireless industry that could
eventually prove troublesome for consumers.
course, AT&T and T-Mobile USA saw it differently. The companies believed
that their merger would benefit the industry and consumers alike. Other
lawmakers supported this view and lauded AT&T's claims that the merger
would actually generate thousands of new jobs.
importantly, AT&T and T-Mobile argued that the deal could actually bring
prices down to some extent, since economies of scale and reduced expenses could
help the company pass its savings on to customers.
the U.S. Department of Justice and the Federal Communications Commission
disagree. The Justice Department has filed an antitrust suit to block the
merger, and an
FCC staff report came out against wireless license transfers
essential for the deal to go through. The FCC action prompted the wireless
carriers to withdraw the license transfer applications.
much as AT&T and T-Mobile would argue the point, the merger was bad news
from the beginning. And consumers should be more than happy that the deal is
close to a final collapse. Read on to find out why:
1. It would hurt competition
the AT&T, T-Mobile deal is approved by federal regulators
, it would
undoubtedly hurt competition. AT&T would have a dominant number of
subscribers on its service, and all other competitors would trail far behind.
Even worse, it would control all GSM networks in the United States. That alone
would be anti-competitive.
2. Prices could rise
AT&T and T-Mobile said prices would not rise if there is a merger, that
doesn't seem to ring true. The companies acknowledged in their filings with the
U.S. government that, at least in the short term, costs would rise. There's
also the issue of handling phone contracts, determining which cell towers to
keep in operation and more. Simply put, costs would skyrocket-and AT&T
would be hard-pressed to not eventually pass those additional costs on to
3. Too much power is a bad thing
noted, AT&T would be the most dominant wireless carrier the U.S. has ever
seen. The chances of the competition catching up would be nil. Over the years,
when has a single, dominant company been good for consumers? Too much
concentrated business power is a bad thing when it comes to business. It's good
to see the Justice Department and FCC stand up for robust competition in the
4. What happens to Sprint?
of the more disconcerting realities of a post AT&T, T-Mobile world is that
Sprint would be relegated to the margins of the wireless industry. At the end
of the last quarter, Sprint had a total of 53 million subscribers. AT&T, on
the other hand, had over 100 million. Add that figure to T-Mobile's 33.7
million customers, and it's clear Sprint would mean very little in the wireless
space if the merger happens.