ATandT-T-Mobile Merger Faces Long, Difficult Antitrust Review

 
 
By Wayne Rash  |  Posted 2011-03-29
 
 
 

ATandT-T-Mobile Merger Faces Long, Difficult Antitrust Review


When AT&T announced that it was buying T-Mobile a couple of weeks ago, it was presented as if the deal were a fait accompli. Deutsche Telekom gave the same impression when it made its own announcement. There was a reason for this apparent certainty. It's good for share prices. You'll note that the markets treated AT&T and DT favorably as a result. 

But the bravado of the announcement doesn't reflect reality. AT&T has already suggested that getting regulatory approval will take a year. The reason it will take a year isn't because the bureaucracy is slow. It's because AT&T correctly expects there will be significant opposition to the proposed merger. If you read the comments to my previous column on this topic, you'll see one source of that opposition, T-Mobile customers. 

But objections by outraged T-Mobile customers won't be the decisive factor that the FCC and the Department of Justice will be looking at when they consider the merger. The major issue they'll examine is how it will affect the future of competition in the wireless industry. If it looks like AT&T's proposed purchase of T-Mobile will concentrate too much power in one company, the government can refuse to allow it. The government can also require AT&T to divest large portions of T-Mobile before the deal can go forward. 

But this is not to say that outraged users don't have a voice. In fact they do. In addition to writing comments to columns like mine expressing why they're outraged, they also need to let the government know. As I've mentioned before, each of the agencies involved is required to hold public hearings and to receive public comments in regards to the merger. Anyone can provide input to the hearings and you don't have to attend. You can send comments to the FCC and the DoJ when they open the public comment period, and you can do it over the Internet. 

In addition, if you're opposed to the merger, as it appears that almost all of those who write to me are, you can take other steps. One is to provide support to Sprint's opposition to the merger. Sprint Nextel CEO Dan Hesse has already announced that Sprint will oppose the merger. Writing to let Hesse and Sprint know that you welcome their opposition will encourage them to continue. 

It's worth noting that Sprint is perhaps in the best position of any private interest to have an effect on the outcome. It's already a big company; Sprint has strong, positive name recognition; and it has a lot to lose if the merger goes through.  

Making Your Voice Heard


 

It will be one-third the size of the new AT&T, half the size of Verizon Wireless, and the merger will be a real threat to its continued existence. It's very easy to see how Sprint could easily become a take-over target itself if the AT&T-T-Mobile deal happens. 

And then, of course, we have a duopoly. I can't think of a single good thing about creating such an effective lock on the U.S. wireless business. Once such a duopoly happens, higher prices, worse service and poor coverage are a certainty. After all, choice will be effectively eliminated. This is probably what Sprint is going to talk about, but it's also what you should think about. 

There are other ways you can make your voice heard. If your state regulators are planning to look at the deal (as is the case in New York) you can try to provide comments to them. You can buy a share of stock in AT&T (it's selling for about 30 bucks a share these days) and go to the annual meeting and complain. As I've mentioned before, you can express your concerns about the threat to the competitive landscape, potential damage to consumers, or expected rise in prices to your representatives in Congress. You can assume that if your Congressman gets enough heat from constituents about the merger, they'll pay attention. 

The biggest problem for those who oppose the AT&T-T-Mobile merger, however, is the appearance of success. Both companies are doing their best to make the merger appear to be a done deal. It seems to be inevitable. But the fact is, it's not inevitable. In fact, the resulting company looks a lot like the Ma Bell of days of yore - the company that the Justice Department went to a lot of trouble to break up. With enough of the right opposition, it might not happen at all. 

But to be effective, opponents need to do more than write comments to me (although those are deeply appreciated) or express outrage in multiple Tweets. It will take a lot of work by people who stand to lose because of the merger to get their views known. It will take a lot of companies that stand to lose business-or even go out of business. 

It will take thousands of people who stand to lose their wireless service completely to get the regulators' attention. Remember, this isn't being done to help all of those iPhone users who caused AT&T's problems in the first place; those iPhones won't work on the former T-Mobile network's 3G frequencies. It's being done to consolidate control of half of the wireless service in the United States. It's Ma Bell on the rise again. 

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