Big deal for AT&T
It's hard to see how a merger that will take a spirited competitor
out of the U.S. wireless market will mean anything for consumers in the shortrun other than higher prices and less choice.
But it doesn't have to be that way.
With the announcement
that AT&T plans to take over fourth-place wireless carrier T-Mobile, consumer advocates were struggling to come up with
a list of the potential upsides.
So what if T-Mobile customers
might be able to switch to an iPhone? They could do that now, if they pay the going rate at either AT&T or Verizon Wireless,
the other major player in the wireless market.
point of being customers of the spunky fourth-place carrier was to avoid AT&T's contracts, which can be substantially
pricier than what T-Mobile charges for similar dial-tone and smart-phone services.
For anyone patient enough, of course, the merger might mean that AT&T is able to roll out next-generation
wireless services sooner. That's the case being made in favor of the merger by AT&T chief Randall Stephenson and other
According to Stephenson, the $39 billion
merger represents "a major investment and commitment by a U.S. company to advance U.S. leadership in mobile broadband."
Before federal regulators decide whether to approve this merger in any form,
though, they should be truly convinced that it would bring benefits to consumers in the here and now.
In a merger that will eliminate head-to-head competition, the stakes for consumers are about as high
as they get. Even as it played David to AT&T and Verizon's Goliath, T-Mobile attracted 34 million customers. Given that
a merger will mean less competition, when compared to the present landscape, Federal Communications Commission officials need
to be extremely careful about believing any purported consumer gains.
This merger also could have a knock-on effect that would be even more damaging to a competitive marketplace,
should it prompt Verizon to go courting at third-place Sprint Nextel Corp. That marriage would leave the U.S. market with
only two major wireless providers, in addition to much smaller firms such as Leap, MetroPCS, and U.S. Cellular, which resell
services carried by other networks.
It may be that federal
regulators could set terms for the T-Mobile takeover that would address competition concerns. Forcing the merged company to
sell off certain assets could create a more level playing field.
as it did with the recent Comcast Corp. acquisition of NBC Universal, the FCC also might find creative ways to strike the
right balance to make a wireless megadeal better for consumers. The Comcast deal includes provisions to help low-income customers
get online, promote diverse and local TV and Internet programming, and help preserve Internet access for all users.
With its smart-aleck ads poking fun at AT&T's purportedly slower network,
T-Mobile hasn't exactly prepared its customers for this proposed takeover. In fact, the I'm-a-Mac-style ads that portray an
AT&T guy groaning under the weight of another man on his back might even offer a fitting image for this proposed merger.