Predictions and Prognostications: Will AT&T Summit Monopoly Mountain?

by Matt Klassen on April 11, 2011

Antitrust. Anti-competition. Monopoly. When we’re talking about mergers between large American companies, it’s inevitable that these words are part of the vocabulary, and it’s certainly no different when we’re discussing the proposed merger between AT&T and Deutsche Telkom’s T-Mobile. But let’s be honest here, we’ve heard all the same talk before and in the case of the larger, more publicized mergers at least, we have yet to see any of the deals get blocked outright.

The reality is, however, that not many deals of this magnitude in recent history have faced the sort of resistance and scepticism that AT&T is now confronted with, meaning that we could see history made if regulators, at any step in the year long approval process, choose to vote the merger down.

With that said, as the first of many Federal committees appointed with analyzing every minutia of this deal is set to meet on May 11th, officially starting AT&T’s uphill battle to get the acquisition approved, its time to lay some bets and  make some predictions: do you see the AT&T/T-Mobile deal going through?

There’s no question that this deal faces a stiff uphill climb, with Sprint CEO Dan Hesse decrying the deal (no surprise there), NY Attorney General Eric Schneiderman casting a sceptical eye in its direction, and even FCC Commissioner Michael Copps stating that such a merger would stifle competition and innovation.

In fact, if you would have told me a year ago that AT&T and T-Mobile were seeking a merger agreement, I would have laughed in your face. I would have told you that there’s no way Federal regulators, especially when so many of them already oppose the deal, would allow the second and fourth largest wireless providers to merge, as such a partnership would essentially limit consumer choice to two very large and very powerful companies; a duopoly that would quickly run Sprint and the other smaller fish out of the market.

But something happened this past year that opened my eyes as to how the Federal antitrust and anti-competition process works, the government approved the Comcast’s acquisition of NBC. What seemed like a banner ad for antitrust concerns, it seemed unfathomable to me that the government would allow Comcast to corner much of the streaming, small screen, and silver screen entertainment markets, and while the deal had more stipulations, provisos, and addendums than a Hollywood prenup, it still went through.

With that said, if I were a betting man, I would consider it a sure thing that this deal goes through, if for no other reason than the Federal regulators like the FCC don’t have the stones to overturn it. While the various panels, committees, and boards will discuss the myriad of anti-competition issues with this deal, it will nevertheless be approved, again with its own laundry list of stipulations.

I would expect the final decision to have a punitive ring to it, limiting how AT&T exercises its market dominance, dictating its pricing structure, and, as much as possible, allowing Sprint and the other smaller wireless players to still compete. But will the stipulations work?

If you’re wondering what this brave new wireless world will look like, look no further than your neighbours to the North, where a wireless triumvirate rules the Canadian market with a collective iron fist; a market where innovation happens slowly, competitors are quietly driven out of business, and where our newest phones are often the one’s Americans are already throwing in the garbage. Not much to look forward too, is it?

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

{ 1 comment… read it below or add one }

Rupert Marshall June 1, 2011 at 9:44 pm

I am imploring all of you to email ten of your closest friends and anyone you know at Comcast to lobby Comcast to purchase Sprint. I hate to say it but 3 telecoms is better than two.

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