The Daily Caller

The Daily Caller
A door is held open for a man entering the T-Mobile corporate headquarters Wednesday, Aug. 31, 2011, in Bellevue, Wash. The Justice Department filed suit Wednesday to block AT&T A door is held open for a man entering the T-Mobile corporate headquarters Wednesday, Aug. 31, 2011, in Bellevue, Wash. The Justice Department filed suit Wednesday to block AT&T's $39 billion deal to buy T-Mobile USA on grounds that it would raise prices for consumers. The government contends that the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition and that would lead to price increases. (AP Photo/Elaine Thompson)  

The government should let the AT&T merger go forward

Photo of Bruce Walker
Bruce Walker
Managing Editor, Infotech & Telecom News

Last week, the White House commanded the Department of Justice to scuttle a deal that would’ve combined two wireless carriers — fourth-place T-Mobile and second-place AT&T — and catapulted the merged companies into first place above Verizon. Washington, it seems, hates a winner. Or likes one that’s already winning. Or something.

The DOJ claims the merger would kill jobs, harm competition in the wireless industry and drive up costs for customers. The anti-business advocacy group Public Knowledge crowed in an email that the DOJ suit “is a huge step towards protecting consumers from higher prices, fewer choices, less innovation and the loss of more American Jobs [sic].”

Nothing could be further from the truth. For one, T-Mobile is hemorrhaging customers, and its owner — Deutsch Telecom — is eager to rid itself of the carrier before it goes under. Should T-Mobile go the way of the dodo as a result of President Obama blocking its merger with AT&T, the result would be one less wireless competitor and significantly more lost jobs in a country flirting with double-digit unemployment.

Second, the wireless market is fiercely competitive and will be so for the foreseeable future. Even the Federal Communications Commission, another bureaucracy with its knickers in a twist over the potential merger, reports that 89.6 percent of U.S. customers currently enjoy five or more wireless choices. Nobody knows what other competition is on the horizon, as the telecommunications industry is well-stocked with sharp innovators and entrepreneurs — as long as meddlesome government regulators stay out of their way.

Third, charges that the merger will stifle innovation are bogus. AT&T repeatedly has stated the merger would allow it to deploy more quickly a 4G LTE network that would reach 97 percent of its customers nationwide. This would enable AT&T to compete with current top dog Verizon, at present the only wireless carrier with the spectrum and cash reserves to provide LTE technology. The FCC has determined that LTE technology “has the best potential ‘to make mobile wireless service a more viable competitor’ to landline broadband services,” as reported in Forbes magazine.

Fourth, the claim customers will be forced to pay more for wireless service as the result of a perceived reduction of competition is absurd. If AT&T raised prices for existing customers, and those T-Mobile customers brought under their umbrella, they’d still be free to move to Skype, Verizon, MetroPCS, Leap or another carrier.

Finally, the jilted lover in this scenario is Sprint-Nextel, left standing at the altar in its attempt to marry its fortunes to T-Mobile before AT&T made the better offer. Sprint-Nextel has been as nearly hysterical — and far more hypocritical — in its hue and cry against the merger as the activist group Public Knowledge and Obama’s DOJ. In fact, opponents of the merger have persisted in disingenuously referring to the company by its previous name, Sprint, to deflect recognition that the company purchased Nextel in 2004 for approximately $35 billion.

Got that? The company most concerned about the merger reducing competition in the wireless marketplace ensured its own future competitiveness a few years ago by purchasing a competitor itself. Now it wants to change the rules of the game by lobbying (there’s that dreaded word again!) against the deal it failed to bring to fruition.

This, dear readers, is a classic example of a company seeking from the government what it fears it cannot or will not accomplish on its own.

If AT&T wants to risk $39 billion of its own money by buying T-Mobile, the government has no excuse for stopping them. Whether it’s a boon or a misstep should be determined by the customers who choose whether or not to remain with the new number one.

Bruce Edward Walker (bwalker@heartland.org) is managing editor of The Heartland Institute’s Infotech & Telecom News.

  • Anonymous

    The DC must be on the ATT payroll. ATT sux. I dont want their service to take over my T-Mobile phones. Here is why the merger is bad: The customers are against it and wrote in to the govt in large numbers to beg for mercy. How much of this authors income comes from ATT. I bet his media company is owned by ATT.

  • http://twitter.com/aemoreira81 Adam Moreira

    I completely disagree, and I don’t see anything that will dissuade my opinion that this should be rejected—an opinion based on the technological aspect of the merger. There is a very valid antitrust case that Bruce Walker is ignoring…and that is the effective monopoly that AT&T will have on the market for multinational companies (who must have GSM phones, as CDMA doesn’t work in Europe or Asia). AT&T and T-Mobile are the only national players in the GSM market; Verizon still has Sprint Nextel to contend with in CDMA.

    Blast the feds on many things—not this though.

    • rightactions

      Define the market narrowly enough and every business becomes a monopoly!

      It’s an old FTC/Justice Dept. Antitrust Division trick.

  • 16th amendment

    The government trying to block the merger is so hypocritical.  They want to prevent a new monopoly that will hurt consumers.  So then why not go after the biggest monopolistic corporation in the room — namely the government itself.  The USPS has a monopoly on first class mail, a monopoly on second-rate public education.  In some towns they even run businesses.  The government is so big that they even have a monopoly on charity.  The federal government alone wants to spend $3.8T this year, and they will surely ask for at least $500B more, and state and local governments can’t stop their monopoly over the people either.

  • 16th amendment

    The government trying to block the merger is so hypocritical.  They want to prevent a new monopoly that will hurt consumers.  So then why not go after the biggest monopolistic corporation in the room — namely the government itself.  The USPS has a monopoly on first class mail, a monopoly on second-rate public education.  In some towns they even run businesses.  The government is so big that they even have a monopoly on charity.  The federal government alone wants to spend $3.8T this year, and they will surely ask for at least $500B more, and state and local governments can’t stop their monopoly over the people either.

  • ManFromNowhere

    Your article is rife with errors. Every one of your points can be easily debunked via facts:

    1. This is the only point you are partially correct on. Deustch Telekom is looking to get rid of the US branch of T-Mobile, however there is no reason to believe that selling it to AT&T will result in fewer lost jobs than not selling it. They could just as easily spin it off into its own carrier or sell it to Sprint.

    2. 89.6 percent of customers may enjoy 5 or more carriers however most of those are local carriers whose service may not extend across state lines much less across the country. The vast majority of the country sees service from 2 or less national carriers.

    3. Patently false. Every “innovation” AT&T has put into place in the last few years has been spurred by competition from T-Mobile. AT&T is notorious for poor reception and customer service in the industry. Besides the fact there’s the leaked memo other posters have mentioned.

    4. As pointed out if people want a national carrier they may have no choice at all when it comes to service. In many parts of the country there few choices for carriers. The purchase of T-Mobile will not extend coverage for AT&T, it will only add bandwith in the metro areas where T-Mobile had service. (T-Mobile has little to no service in rural areas.)

    5. No one refers to Sprint as “Sprint-Nextel”. Even Sprint’s own ads say Sprint. Sprint is worried because if T-Mobile is gone, then they’re next which would effectively make national US cellphone service a duopoly.

    The cell phone industry is not like other industries. The expense of building and maintaining a network is such that it is difficult for local carriers to become national carriers. The national carriers know this and are trying to eliminate any competition that might poke their head up. Local carriers are dying. Of course the dirty little secret is that pre-paid carriers are growing rapidly and the post-paid business model is starting to die. AT&T is trying to squeeze every penny out of consumers before the paradigm shift occurs and the industry has to reset itself.

    Next time do some research or at least source your work so you don’t look so ignorant.

  • You don’t have a clue do you

    You are an idiot. Stop reading other blogs and then trying to come off as a professional journalist. Go back to writing fiction. It’s the only thing you seem to know.

  • TowerPro

    What a bunch of drivel.
    I can’t believe anyone actually buys into these ridiculous talking points. AT&T is relying on the believe that if you say something over and over again, no matter how big of a lie it is, eventually it becomes truth.

  • TowerPro

    What a bunch of drivel.
    I can’t believe anyone actually buys into these ridiculous talking points. AT&T is relying on the believe that if you say something over and over again, no matter how big of a lie it is, eventually it becomes truth.

  • TowerPro

    What a bunch of drivel.
    I can’t believe anyone actually buys into these ridiculous talking points. AT&T is relying on the believe that if you say something over and over again, no matter how big of a lie it is, eventually it becomes truth.