The second-biggest wireless carrier would get bigger and your choice for wireless service would get smaller should AT&T carry out its plan, announced Sunday afternoon, to buy T-Mobile USA.
The deal would vault AT&T past Verizon Wireless as the nation’s largest wireless carrier, adding T-Mobile’s 33.7 million customers to its own 95.5 million for a new total of 129.2 million customers--far more than Verizon’s 102.2 million. It would also reduce the number of nationwide wireless carriers from four to three.
AT&T’s press release says that it would pay $39 billion, $25 billion in cash and the rest in stock, for Deutsche Telekom’s U.S. subsidiary. A site created to advertise the merger, mobilizeeverything.com, advertises a variety of reasons for the government to support the deal, such as the continued presence of local or regional wireless carriers, the prospect of immediate upgrades to AT&T’s capacity in urban areas and a promise to extend high-speed LTE wireless broadband to cover 95 percent of Americans.
I don’t think the government should buy any of those arguments. Allowing the second-biggest company in a four-company market to buy up the fourth-largest rival looks bad enough in the abstract, but in this particular industry it would be even worse.
The third nationwide carrier after such a merger, Sprint, would be hard-pressed to compete with AT&T and Verizon. With 49.9 million customers and a complicated mobile-broadband situation, it would be in a lousy competitive position.
An AT&T-T-Mobile merger would also reduce the number of nationwide carriers using the GSM standard common in most of the rest of the world from two to one--and end T-Mobile’s far more liberal “unlocking” policies that let you use its phones on the carrier of your choice overseas instead of paying extortionate roaming rates.
You’d also see the end of such customer-friendly T-Mobile features as its cheaper, bring-your-own-phone Even More Plus plans and its more generous wireless-data plans. As for AT&T, consider its stewardship of the iPhone when it had a monopoly on Apple’s smartphone: It couldn’t provide reliable service in some major markets, implemented new features months after iPhone carriers overseas and capped customers’ data usage. Those factors may explain why the carrier ranked last in Consumer Reports’ most recent survey.
AT&T purchase of T-Mobile, contrary to what the two companies’ optimistic statements might suggest, is not a done deal. It has to pass antitrust approval by the government. And if this isn’t grounds for a refusal--instead of yet another weak-minded approval coupled with temporary conditions on the merged company’s conduct--I don’t know what is.
(You may not agree, of course. If so, what sort of wireless merger would be too much for you to stomach: Verizon buying Sprint? Verizon buying AT&T? Just where does it end?)
Would the Feds cave? A cynic might note that the Center for Responsive Politics’ OpenSecrets site lists AT&T as the largest single political contributor from 1989 to 2010, having handed out almost $50 million roughly split between Democratic and Republican candidates. (It’s right behind an organization called ActBlue, which aggregates numerous individual donations to Democratic campaigns.)
But I am a cynic in these matters. What’s your read on the merger’s merits and its odds of surviving regulalatory scrutiny?