Congress, companies and states chime in on the AT&T/T-Mobile merger

With the contentious AT&T/T-Mobile merger under review at both the Federal Communications Commission and the Department of Justice, opinionated voices in the U.S. Senate and the U.S. states are chiming in on the discussion.

The extra time has given both sides an opportunity to build their respective cases. One side is arguing for the economic and connectivity benefits of the merger; the other, against a business merger it says would create a telecommunications monopoly and hurt consumers in the long run.

Yesterday Louisiana became the second state to publicly support the merger. The state’s utility regulators announced that they voted in favor of the $39 billion merger, which would combine the nation’s second- and fourth-largest wireless carriers.

In addition, a bipartisan group of attorneys general in eleven states submitted a letter to the FCC to voice their support for the merger.

Speaking for the group, Arkansas Attorney General Dustin McDaniel suggested that the combined networks’ commitments to deploy high-speed wireless broadband in nearly 97% of the country was in the nation’s interest. “My primary concern,” he said, “is my hope that federal regulators do not require the divestiture of much-needed spectrum capacity.”

The companies and organizations supporting the merger range far beyond government officials with jurisdiction over the proposed combination: Tech companies such as Microsoft, Google and Facebook have thrown their support behind the combination, along with a large coalition of unions, minority groups, and rural organizations.

So far, the loudest voices against the merger have sprung from Democrats in Congress. Although Congress has no direct say in approving the merger, Congress exerts enough political power to influence the Obama administration and, by extension, the FCC and DOJ through the congressional confirmation process. (RELATED: Scripted opposition to wireless merger raises credibility questions)

On Wednesday Senator Al Franken, Minnesota Democrat, submitted a 24-page letter to the FCC in which he strongly urged Commission chairman Julius Genachowski to block the merger.

One of the most outspoken advocates of net neutrality in Congress, Franken argued that a merger could “undermine” competition, hindering consumers’ ability to access content online and through mobile devices. “If approved,” he wrote, “it would result in greatly reduced competition, the potential loss of thousands of jobs, higher consumer prices, and less innovation in technology.”

“The merger of AT&T and T-Mobile would be a major step towards the creation of an entrenched duopoly in the wireless industry. It would concentrate enormous power over the entire telecommunications sector in the hands of only two companies, and it would incentivize AT&T and Verizon to coordinate prices to the detriment of consumers.”

Franken’s letter came just days after Senator Herbert Kohl (D-WI), sent a letter to both the FCC and the Department of Justice voicing his own similar concerns about a possible violation of antitrust laws.  Kohl, who chairs the Senate Committee on Antitrust, Competition Policy and Consumer Rights, argued that T-Mobile’s consumer base of price-sensitive consumers would be eliminated from the market should the deal go through.

“It will likely tend to substantially less competition, higher prices, it will leave consumers with fewer choices, as well as lessen the R&D and innovation that has been the keystone of this industry in the last ten years,” he argued in the letter.

For now, the FCC will delay its review in light of new economic models that AT&T is using to defend the merger of the second and fourth-largest wireless carriers in the nation.   If approved, AT&T and T-Mobile would have the largest mobile network in the country, with 130 million subscribers and 43% of the nation’s wireless market.  Verizon Wireless, currently the largest carrier, has 100 million subscribers.

CORRECTION:  The original article stated that the AT&T/T-Mobile merger would give the company 80% of the wireless market.  The numbers have been updated to reflect their actual predicted market share.

  • T Moble sold us out.

    Both T Mobile and at&t are a big scam

  • T Moble sold us out.

    Yea is their a connection to the fact that AT&T paid off 70 Congress members? I thought that bribery was illegal.

  • jonathan galt

    Did I miss something? Where does our constitution prohibit a company from growing to control 45% of the market? Even if they try to use “duopoly” , which certainly is not prohibited, the two companies still only have 80% of the market. You might not like the service, their prices or the technology utilized, that does not give our government the right to restrict success. How successful is too successful? Should we restrict coke and pepsi? Reardon Metals?

    Do you think Franken is against the Screen Actors guild? They control 97% of actors in theater distributed movies last year and it would be 100% if you took out documentaries! He just spoke out against the cba for the teacher unions which was 100% mandatory in several states.

    Att is an American success story. Whitacre took the smallest baby bell and made it the largest. He bought Att which floundered in the free market. The guy started in the mail room.

    People have choices and will have choices, if verizon or Att screw up they will be open to competition.

    Have we gotten so far away from free markets that we can control companies that only have 45% of the market?

    • b1gdon

      Well, where in the Constitution does it prohibit a company from controlling a market in a pure monopoly? It doesn’t. By your comment, you seem to acknowledge that the regulation of markets to prevent true monopolies (complete control of a market) is a good thing. For years, we allowed monopolies to form…like old Ma Bell (i.e. ATT) and of course we all know how well that turned out. That is why we developed anti-trust law. The Constitution doesn’t apply except for the interstate commerce clause which clearly gives the Federal Government the authority to regulate this market, period. If you don’t think that a duopoly of ATT and Verizon will be able to set prices almost as well as a monopoly then you are pretty naive.

  • tinteardrop

    For those of us that use only unlocked GSM handsets so we can use different ones for different situations and have been able to play T-Mobile off AT&T and Vice Versa with no contract, this merger would hose our game up.

    I’m not oneto generally recommend keeping companies from doing this kind of stuff but in this case the monopoly is not from the consolidation of providers but the monopolization of a technical standard. Would hate to have to consider CDMA again. You’re basically a slave to the handset your phone is captive in.

  • Drahcir

    What you wanna bet that Verizon doesn’t want to loose their top spot.So they tell the Dems to put up a fuss.


    • Darryl B. Lawton

      How can Verizon lose their top spot? I just became one of their customers, even knowing that the price was higher. My reason? Because of the service and the network. I was a Nextel customer for 6 years, because I liked the walkie-talkie feature. The Nextel network sucks. The signal is terrible, and you can drop calls, even in the middle of town. Get out where I live, and you get service about half the time. Go to my in-laws house, and you might as well have a paperweight on your side. I gave up the walkie talkie feature, instead of going on Boost Mobile for 50 dollars a month, because Boost Mobile is still on Nextel’s network, which still sucks. Verizon offers the same deal, 50 dollars a month for unlimited talk, text, and web on the best network available.
      I also tried AT&T’s 3G internet. The signal sucked. It was slower than my dial-up service! We got on Verizon’s MiFi, and I have lightning fast 3G service. Hmm…. I guess there is a reason they have the top spot, huh?