AT&T, T-Mobile deal: Good for company, not consumers
The proposed purchase of T-Mobile USA by AT&T might benefit company shareholders, but it would most likely harm mobile phone customers by reducing competition and leading to higher prices.
Nearly every analysis of the $39 billion deal suggests that allowing AT&T, the second- largest U.S. cellular service provider, to take over T-Mobile, the fourth-largest provider in the country, would create a duopoly, with Verizon and the new, larger AT&T controlling nearly 80 percent of the market.
Such market domination would stifle competition and innovation and result in prices going up. Given that probability, the proposed takeover deal should be rejected by federal regulators as anti-competitive.
Cell phones are a must-have convenience for 280 million Americans, and for many people a cell phone is their only phone; they choose not to have a traditional land-line phone in their home. Reduced competition among cellular providers would not be good for customers, though it would be good for corporate profits.
Looking at the partners in this proposed deal, there are other reasons for cellular phone customers to voice their opposition. AT&T is itself a product of a 1980s antitrust action that split up American Telephone and Telegraph, known then as Ma Bell, into eight smaller companies, the Baby Bells. As the second-largest cellular service provider behind Verizon, AT&T has consistently ranked near the bottom in terms of network quality and customer support.
T-Mobile USA, owned by Germany’s Deutsche Telekom, is known for less-expensive usage plans, innovative technology and solid customer service. Those features would likely vanish after the company is taken over by AT&T.
Federal regulators are expected to examine the proposed AT&T purchase of T-Mobile. Nearly all media commentary suggests it should not go forward. An article in the Economist magazine featured a headline that read “An audacious merger with a poor reception,” and the Washington Post’s headline said, “AT&T, T-Mobile merger blasted.”
Still, it’s worth remembering that AT&T gave many more millions of dollars to congressional election campaigns and employs many more lobbyists than the average cell phone user. So, despite the broadly negative reaction to the proposed buyout so far, officials in Washington could decide to let the deal go through, regardless of its anticompetitive implications.
