Congress Weighs Possible Effects of the AT&T/T-Mobile Merger

by Matt Klassen on May 27, 2011

Is it just me, or does it seem that almost everyone opposes the proposed AT&T/T-Mobile merger—except of course the companies themselves? To that end, executives from both companies were hauled up to Capitol Hill for the second time since the regulatory decision making process began, with lawmakers demanding an explanation for how such a monumental merger could possibly be good for the American public.

While the lawmakers themselves don’t have any say whether the deal is approved—that responsibility is left to the Justice Department and the Federal Communication Commission (FCC)—as elected representatives of the American public, they demanded answers…of course, what they got was propaganda and evasive double talk, but this is America after all.

Needless to say, there were many on Capitol Hill that took the opportunity to voice their displeasure and outright opposition with the merger. That, coupled with the added opposition of many of the smaller wireless competitors, may lead many to think that this deal has no hope of going through, but as I just mentioned, this is America after all.

In a free market economy that prides itself on reduced governmental interference, this merger between AT&T and T-Mobile seems to lurk in the murky middle ground between capitalism and socialism. On the one hand you have the driving force behind capitalism, the freedom for businesses to pursue their destinies without fear of Federal regulatory control, while on the other hand you have anti-trust and anti-competition concerns, capitalism’s ugly step children.

If the deal is allowed to go through—and the more opposition I hear from government and the market the more I think the deal will be given the green light—I have little doubt that it will crush competition in the wireless market, forcing smaller players like Sprint, Cricket, MetroPCS and others to join forces or close up shop.

Of course this isn’t how AT&T or T-Mobile see things, as the former argued before Congress that this merger will only help the American consumer, allowing the merged company to offer better service, faster network speeds, and fewer dropped calls.

In regards to the latter, T-Mobile defended this merger by stating that its becoming increasingly difficult for mid-range wireless carriers to compete in the market, as spectrum becomes harder to come by. Of course if any Federal regulators were listening, it seems to me that T-Mobile has inadvertently made the case put forth by Sprint and Leap Wireless these past few weeks.

In the end, don’t be surprised if the merger goes through, don’t be surprised if it does indeed stifle the innovation of the mid-market players, and don’t be surprised if jobs are cut in an effort to reduce costs. Its how the system works…or rather doesn’t work.

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