The proposed merger of AT&T and T-Mobile, two of the top four U.S. mobile carriers, could have a huge impact on businesses that rely on mobile connectivity in their day-to-day operations. Issues from cost to coverage to data availability and speed could be affected by the merger. The Smart Van will keep an eye on the merger, and the Department of Justice’s efforts to block it, as it moves forward. Republished with permission from Mobile Enterprise.
The U.S. government is taking action to block AT&T’s controversial $39-billion proposed merger with T-Mobile USA, which would create the country’s largest mobile carrier but increase prices, reduce competition, and decrease the quality of services for consumers.
Tthe U.S. Department of Justice (DOJ) filed a complaint on Aug. 31 with Washington’s U.S. District Court, citing T-Mobile significance in shaping competition in the wireless industry.
“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division in a statement. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”
Dan Shey, practice director, enterprise for ABI Research, was surprised by the move. “The challenge for the merger going through was the impact on the small business market,” he said. “I thought on the consumer side you could probably find justification for the merger going through. AT&T would then have to address concerns on the business side, but they’re a savvy group—they’d probably figure out how to do that.
“There must have been enough influence to say ‘This is not a good thing,’” he added.
“We were pleased that the DOJ didn’t bow to the political convenience of rubber-stamping this deal,” says Carl Howe, director for Yankee Group’s consumer research group. “If the DOJ were to approve this deal as-is, they would be claiming exception to the rules that they publish themselves, and they’re pretty transparent in their criteria for judging the merger.
“Most of the major geographies in the U.S. would move from being moderately to heavily concentrated,” Howe continues, indicating decreased wireless choices for consumers. Yankee Group’s research found that if the merger is approved, 17 of the top 27 most populous markets would be heavily concentrated—a significant jump from just one urban center with little competition.
“If the DOJ approves this merger, all they’d do is buy themselves another merger,” adds Howe, suggesting that Verizon Wireless likely would swallow up Sprint in what would be an even bigger takeover—larger by 20 million customers.
Howe expects the Justice Department to ask for some kind of modification to the proposed deal. “The DOJ’s basic conclusion was ‘Yes, we see all these benefits that AT&T is claiming but they’re not great enough to compensate for the removal of competition.’ AT&T can achieve those benefits without wiping out the fourth-largest carrier,” he says.
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