Posted by Renee Schmidt

I recently posted about the U.S. government’s meddling in the merger between AT&T and T-Mobile by having filed an antitrust lawsuit to prevent the deal from going through.  

It’s clear that wireless will be the communication and computing technology of the future, as sales of smartphones and tablets/iPads surge.  Competition among mobile carriers, then, is clearly important to both consumers and the economy. The Obama administration has championed a speedy rollout of faster wireless service as a key foundation for innovation and future growth. AT&T had argued that adding T-Mobile would give it the extra network capability it needed to fairly quickly roll out the next generation of high-speed service — 4G — across the nation.  But the administration’s antitrust regulators believe there are other ways for AT&T to accomplish that without taking out a competitor (ex: the company could just invest the $39 billion purchase price into expanding its own network.)

A key consideration for the halt was the potential for bigger wireless bills for consumers if T-Mobile was acquired by AT&T.  T-Mobile offers voice and data plans that, in some markets, are cheaper than AT&T by 20% or more. Pricing is the most easily measured consumer benefit of competition, and in merger cases, the government typically regards price increases of 5 percent to 10 percent or more as significant.  I’m not sure I’m buying what the DOJ is selling, but this parody drives the point home and it’s pretty funny.  Happy Friday!

 
  • Wes M

    You must be out of your mind to think that the merger will benifit anybody except atnt stock holders. Those 5000 jobs you speak of are not “new” jobs. Actually all they are saying is we will take 5000 tmobile workers and bring them over to atnt to work. Completly is a bunch of BS they are feeding the pulic. Don’t fall for atnt’s tricks or the way they word what they say. There is no way the fcc or whoever let this happen since it mean atnt and verizon will control 80% of the industries customer base.

    • http://www.shebytes.com/ Renee Schmidt

      There are looming questions about the future of T-Mobile.  T-Mobile’s corporate parent, Deutsche Telekom, wants to get out of the United States.  T-Mobile is stuck in its biggest profit slump in almost a decade; with profit declines in four of the past five years, plus losing more than a half-million subscribers in 2011 alone.  The company needs to satiate shareholders and this merger would have accomplished that.  Can T-Mobile carry on as a standalone company? That’s unclear.

      So while T-Mobile’s parent will get over $6 billion from AT&T if the deal unravels, it may be forced to offer T-Mobile USA to another bidder for an estimated $12 billion less than its current agreement. That’s because no other buyers would offer to pay as much as AT&T because the two carriers use the same network to deliver service.  So the company is worth less to a rival with an incompatible network.  T-Mobile USA just isn’t worth as much to any buyer other than AT&T.

      Consider the job losses if T-Mobile goes under, among other things. Additionally, the merger would increase network capacity for AT&T right away, allowing it to roll out 4G nationally at a much more rapid and economic pace, which would spur innovation and growth in our economy –something the Obama administration is pushing for. Suffice it to say, there is a lot more at stake here than merely the potential for an increased phone bill.