Wednesday, December 21, 2011

Is Gov't Blocking The AT&T - T-Mobile Deal A Good Thing

When I re-tweeted this link to the SAI article, I received a number of comments that agreed with the DOJ decision to block this purchase. Good news for the consumer, more choice were cited. But is that really true? T-Mobile is the fourth and smallest of the major players; Verizon and AT&T already own at least two-thirds of the market. With Sprint in third place and with half the customers of AT&T. So did the government do us any favors blocking this merger?

Without T-Mobile, AT&T remains number two behind Verizon. T-Mobile, struggling already, has two alternatives, find another buyer or drop out. They may have gotten monies from AT&T from reneging on the deal, but they have a long way to go to build out and bulk up. They need help. Should that buyer be the number three carrier, Sprint, would the DOJ nix that deal as well? The argument of loss of major competitors still holds true, it just brings Sprint up closer to AT&T although it still would keep them third place. If competition is the concern, then the argument to nix this deal as well still holds.

And what if T-Mobile decides it can't remain in this mobile world without a partner? What if they simply drop out and break up to smaller competitors? Competition is still reduced and all the DOJ did was hasten the death of T-Mobile. So despite the comments of the government actually looking out for the consumer, the likelihood remains that we still lose T-Mobile. The only difference, AT&T doesn't capitalize on the assets of a purchase.

The author of this article makes another good point. "Of course, this is (basically) the same government that still grants monopoly licenses to cable and phone operators in most regions, thus giving massive companies MONOPOLY control over those markets. And given how much most people hate their cable and telephone companies, if the government wanted to protect us from any monopolistic communications-company abuses, they could have started there."

Communication exists both in the carrier space and broadband world. With wireless hotspots growing around the country, competition for spectrum still exists. Technological changes continue to find new competitors to the space. Let's not forget that Lightsquared is still out there seeking approval to compete as well.

So yes, I agree that with the author that the government's decision to block this merger was wrong; inconsistent given the monopolies that it has already allowed to flourish, and not likely to change the competitive landscape because it kept a fourth competitor from leaving us sooner rather than later. In the next couple of years, we will likely still see the big four become the big three carriers. DOJ simply slowed down the process of change.

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