Wednesday, August 31, 2011

DOJ Sues To Block AT&T/T-Mobile Merger

To be honest I am completely shocked by this considering all the pro-merger hype and the rubber stamp big business seems to be wielding these days, but the Department of Justice announced this morning that they would be suing to block the proposed merger between AT&T and T-Mobile.
Right now, four nationwide providers account for more than 90 percent of the mobile wireless connections in America, and preserving competition among them is crucial. For instance, AT&T and T-Mobile currently compete head-to-head in 97 of the nation’s largest 100 cellular marketing areas. They also compete nationwide to attract business and government customers. Were the merger to proceed, there would only be three providers with 90 percent of the market, and competition among the remaining competitors on all dimensions—including price, quality, and innovation—would be diminished.

As can be seen in the Department’s complaint, AT&T felt competitive pressure from T-Mobile. One example cites an AT&T employee observing that “[T-Mobile] was first to have HSPA+ devices in their portfolio…we added them in reaction to potential loss of speed claims.”

So as you can see, a merged AT&T and T-Mobile would combine two of the four largest competitors in the marketplace, and would eliminate T-Mobile, an aggressive competitor, from the market.
As one would imagine given the seeming certainty that this was going to fly through the approval process, AT&T is livid.
We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.

We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.

At the end of the day, we believe facts will guide any final decision... We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.
Now barring a reversal by the DOJ, not only will Ma Bell not be allowed to swallow up a competitor, they will be on the hook to T-Mobile for $3 billion and all kinds of 3G roaming rights and US mobile customers will not lose one of a dwindling number of choices for cell service. So at least for now it seems that big business lost and customers won.

Can the Obama is anti-business meme be too far behind?

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