The second-biggest wireless carrier would get bigger and your choice for wireless service would get smaller should AT&T carry out its plan to buy T-Mobile USA.
The deal, announced Sunday afternoon, would vault AT&T past Verizon Wireless as the nation’s largest wireless carrier, adding T-Mobile’s 33.7 million customers to its 95.5 million, for a 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.
A site advertising the merger, mobilizeeverything.com, lists reasons for the government to support the deal, such as the presence of local or regional wireless carriers, the prospect of upgrades to AT&T’s capacity in urban areas and a promise to extend high-speed LTE, or Long Term Evolution, wireless broadband to cover 95 percent of Americans.
The most important point for current AT&T customers is the addition of T-Mobile’s wireless spectrum. That could provide quick relief to users unable to complete calls or downloads over AT&T’s overloaded airwaves.
(It’s fair to ask why the company couldn’t invest the $25 billion in cash it proposes to spend for T-Mobile on upgrading its own network, in part by bidding on the coming spectrum auctions set out in the government’s National Broadband Plan.)
T-Mobile customers would also see improved coverage, but they wouldn’t get the iPhone any sooner.
But those aren’t the most important things for the government to evaluate in its antitrust review. There’s a larger market to consider.
Allowing the second-biggest company in a four-company market to buy the fourth-largest rival looks bad enough in the abstract. But in this particular industry, it would be even worse.
The third-largest nationwide carrier, Sprint, would be hard-pressed to compete with AT&T and Verizon after such a merger. With 49.9 million customers and a complicated mobile-broadband situation, it would fall into a lousy competitive position and might become an acquisition target for Verizon.
A merger of AT&T and T-Mobile would also reduce the number of nationwide carriers using the wireless technology favored by most of the rest of the world, the GSM standard, from two to one. In the bargain, AT&T probably would terminate T-Mobile’s far more liberal “unlocking” policies, which let customers use its phones on carriers of their choice overseas instead of paying exorbitant roaming rates.
People would also see the end of such customer-friendly features such as T-Mobile’s 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, refused to unlock iPhones for use on those services in other countries even after subscribers had completed their contracts, and capped customers’ data usage.
Then note its behavior with Android phones. AT&T had the worst record of all four carriers in shipping updates for Google’s operating system last year, and, alone among nationwide carriers, prohibits users from installing software downloaded outside Google’s Android Market.
Those factors may explain why AT&T ranked last in Consumer Reports’ latest survey.
AT&T’s purchase of T-Mobile, contrary to what the two companies’ optimistic statements suggest, is not a done deal. It must be approved by the Federal Communications Commission, the Federal Trade Commission and, possibly, the Department of Justice, too.
If the impending cut in competition 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.
Would the government 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 split almost evenly between Democratic and Republican candidates. (It’s right behind an organization called ActBlue, which aggregates individual donations to Democratic campaigns.)
I am a cynic in these matters. The government has approved almost every other telecom merger. Why not one more? It’s not like it hasn’t bought that sales pitch before.