Wednesday, April 6, 2011

AT&T & T-Mobile Merger?

Unless the Obama Administration objects (which, given their track record, won't happen) AT&T will purchase T-Mobile for $39 billion. While many of the headlines focused on the fact T-Mobile customers would now be able to get the iPhone, the stakes are even bigger. Number 2 celluar company AT&T has 95 million customers, and number four T-Mobile has 35 million: combined that is 130 million, more than 100 mil for current top dog Verizon. The only other major cell telecom would be Sprint, with 50 million. No word on what would happen to the really hot T-Mobile chick.

Credit to for making the strong case that this is a bad deal for customers, period, iPhone or no iPhone:

Let’s be clear. If the Obama administration fails to block this deal, it will be setting the lowest possible bar in approving mergers and buyouts. This buyout could not be more obviously bad for competition -- and therefore bad for customers -- and antitrust enforcement is designed precisely for protecting competition.

When I said there would be two major winners in this deal, I was referring to Verizon, the largest mobile carrier in the nation, as the other one. AT&T is currently second largest, with Sprint and T-Mobile trailing. A combined AT&T and T-Mobile would be a bit larger than Verizon, with Sprint in a very distant third place.

We’re talking about creating an effective duopoly, or something not too short of that. Business history shows no case in which a duopoly proved beneficial to competition, or to customers.

AT&T wants us to believe there's plenty of competition. This is sophistry. A few regional and tertiary players do exist, but they have none of the reach, and not nearly the same level of capabilities and service, that you can get from today’s Big 4. They would be utterly dwarfed by the Big 2 plus Sprint in the new world.

Consider the airline business. Today, we have three major carriers left: Delta, American and United-plus-Continental (the latter two are in a merger). A host of smaller carriers, including the increasingly beefy Southwest, keep the big ones mostly in line on price on most routes. But does anyone believe we’d be better off with just two mega-airlines, other than some industry executives and shareholders? This is plainly not a perfect analogy, but it gives you a sense of what’s at stake.

More important, T-Mobile has offered competitive service plans including my ability to bring my own phone and get a discounted monthly rate. All of the other carriers force customers to pay the same rate whether they buy a supposedly subsidized phone or bring their own -- an outrageous policy that, if we had actual regulation to ensure consumer fairness, would not be permitted. (We have no serious regulation in America, of course.)

T-Mobile’s customer service people are unfailingly polite and knowledgeable. That’s unique among U.S. carriers. It has by far the best privacy protection of any mobile data provider.

T-Mobile puts as much crapware -- unwanted applications that are difficult to remove -- on the phones it subsidizes as anyone else. But unlike AT&T (and the rest), it cheerfully unlocks its phones after a reasonable period. This is important mainly for people who travel abroad; we can buy local SIM cards (only works for GSM phones, and AT&T blocks this anyway by refusing to unlock the phones its customers have paid for) for lower-cost service in other countries.

AT&T is widely loathed by its customers. It’s lagged in deploying 3G bandwidth on its wireless network and has a history of collaborating with illegal government spying on its customers...

The biggest losers, of course, are all of us who want to see actual competition in an increasingly restrictive marketplace. This is not a good deal for anyone but AT&T and its shareholders, and it should be stopped in its tracks.

In The Race For More Spectrum, AT&T Is Acquiring T-Mobile For $39 Billion
MG Siegler
Mar 20, 2011

Why the AT&T -T-Mobile merger must be stopped
Dan Gillmor
Monday, Mar 21, 2011

1 comment:

Scott Rose said...

Great article, Robbie. Thanks for posting.