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

Tina Nguyen Contributor
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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.