DoJ to AT&T on T-Mobile Merger: Not So Fast

Carl Weinschenk

The best case for the U.S. Department of Justice's lawsuit to stop the AT&T/T-Mobile merger is AT&T's reaction.

The statement, from Wayne Watts, AT&T's senior executive vice president and general counsel, was carried by many sites, including Engadget. According to two of the three bullet points presented by the statement, the merger will "help solve our nation's spectrum exhaust situation and improve wireless service for millions" and "allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population."

The statement presumably was aimed at pointing out why the merger is good for the U.S. and its cellular subscribers. It seems, upon even a cursory reading, that it is more about what is good for AT&T. How will combining the holdings of two companies "improve wireless service for millions?" Will the spectrum held by the two carriers be thrown into a big pot and magically create spectrum that didn't exist before?

On the second point, how is the expansion of AT&T 4G to 97 percent of the nation-if indeed that happens-by its very nature good for the U.S.? In other words, the statement doesn't suggest that AT&T and T-Mobile as a combined entity would cover more than AT&T and T-Mobile would separately.

Reactions to big mergers are prisms through which the attitude of the observer can best be seen. Some folks believe in market forces and are loathe for oversight of any sort. Others think that the government has a real and deep responsibility to represent those who may be impacted by mergers and other things routinely done by businesses.


I believe in the government as referee. AT&T actually was being very honest in its objection to the DoJ's move. Its fiduciary responsibility is to its owners and investors, not to citizens of the United States. To the extent that the two groups overlap, fine. But that is coincidental. There is nothing wrong with this-as long as everybody understands the ground rules. There also is nothing wrong with corporations suggesting that what is good for them is good for the nation. They are advocates, and to the extent that this position is accepted, it is to their advantage.

On the face of it, combining AT&T and T-Mobile is anti-competitive. It simply is hard to believe that reducing competition will lead to better services. The filing of the suit by the DoJ suggests that there is enough evidence to stop or drastically alter the deal. The Federal Communications Commission-which has had its own stop and go dealings with AT&T-also sees yellow lights. The deal is much further from completion today than it was at the beginning of the week.



Add Comment      Leave a comment on this blog post
Sep 3, 2011 5:55 AM Djinn Djinn  says:

SOCIALISM

Reply
Sep 7, 2011 1:29 AM Matt Matt  says: in response to Djinn

You don't even know the meaning of the word, socialism.

Reply
Sep 7, 2011 11:25 AM BillM BillM  says:

Letting two people, or corporations, who individually have to duplicate efforts and expenses, pool their networks, equipment, people, money, technology together is a Very Good idea.  Breaking it apart into little bitty pieces smack of what Judge Green did back in the 80's.  We had a huge recession in the 80's, and we have one now.  Why doesn't big Government back down and let this county get back to being a productive PowerHouse like we used to be before all their HELP?  Instead of having these two Corporations fight over their piece of the pie, and spread out their resources soooo thin, how about let them give us the best of what they as a Whole can provide?  Back Down DOJ - we don't need your HELP !

Reply
Sep 7, 2011 11:31 AM Carl Weinschenk Carl Weinschenk  says: in response to BillM

BillM, thanks for taking time to write. Respectfully, I am on the other side than you philosphically. First of all, breaking up the Bells had nothing to do with the recession in the 1980s. More to the point, I believe that "big government" is a myth, largely. The point of my post is that it is reasonable to question whether combining AT&T and T-Mobile will improve or worsen services to subscribers. I am doubtful that services will get better or even remain the same without oversight, and I believe that government has a legitimate role to play. Of course, it should be circumspect and encourage businesses. There is a balance, and just having the DoJ or FCC rubber stamp is no better than having them get too involved.

Reply

Post a comment

 

 

 

 


(Maximum characters: 1200). You have 1200 characters left.

 

null
null

 

Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.