With AT&T's decision to snag T-Mobile for $39 billion come several questions. The most pressing for purposes of this forum, of course, are these: Will the Department of Justice and the Federal Communications Commission sign off on the deal? Or would the resulting telecom giant put too much power in one company's hands?
MarketWatch indicates the company has a tough road ahead to prove to regulators that this deal won't effectively create a duopoly in the wireless market. Verizon and AT&T have been widening the gap between themselves and the two remaining prominent providers, Sprint Nextel and T-Mobile, for some time now. The proposed acquisition would further increase that spread and decrease the number of major players in the space from four to three.
However, as Wall Street Journal writers Spencer Ante and Amy Schatz point out:
AT&T has plotted its strategy carefully....pushing for the industry to be looked at market by market-essentially city by city-where it argues the industry is for the most part fiercely competitive...The company says 18 of 20 major markets have at least five competitors each.
The political spin AT&T seems to be putting on the deal is even more interesting. The company says its acquisition of T-Mobile will further the Obama Administration's goal of increasing broadband access and "more efficiently use scarce spectrum."
As good as all those arguments sound, the fact remains that the AT&T-T-Mobile combo would have three times as many customers as Sprint Nextel, which is the next player in line. What's more, it will also deprive customers of more affordable T-Mobile pricing, CNET News' Marguerite Reardon noted.
Though it's unlikely that regulators would simply prohibit the merger, they will most certainly require strict conditions, one of which could be AT&T's divestiture of some of its spectrum.
Sen. John D. Rockefeller IV (D-W.V.) is among lawmakers who are already urging the FCC and the DoJ to take a very close look at the deal.