AT&T’s T-Mobile Purchase Raises Fears of Fewer Choices and Higher Prices

In the largest worldwide acquisition in almost a year, AT&T has announced its purchase of T-Mobile USA for $39 billion.  Should the deal meet with regulatory approval, AT&T will become the biggest U.S. mobile-phone carrier by far―surpassing Verizon Wireless, its closest rival, and controlling a full 39 percent of the market.  Although the deal is a calculated move on AT&T’s part both to improve its reliability and prepare itself to handle the ensuing 4G era of wireless communication, many advocacy groups fear the impact on consumers will be detrimental.

For home-based and other small business and franchise owners in particular, the threat of fewer choices when it comes to service providers may result in even higher prices―a very real negative impact on any company’s bottom line.

Pre-empting any concerns by promoting the unequivocal merits of the proposed deal, AT&T’s CEO Randall Stephenson said in a release that, “This transaction represents a major commitment to strengthen and expand critical infrastructure of our nation’s future.”  He went on to assure that the merged company would bring wireless access to more rural and underserved areas of the country much more quickly than if both AT&T and T-Mobile remained apart.  More specifically, he promised that the new and larger AT&T would be able to provide 4G wireless services to 95 percent of the country via a greatly enhanced cell-tower infrastructure.

Gigi Sohn is the president of Public Knowledge, a Washington-based advocacy group, who labeled the proposal to combine the second-largest wireless carrier with the fourth-largest as “unthinkable” in her recent statement about the impending deal.  “We know the results of arrangements like this―higher prices, fewer choices, less innovation,” she asserted.  Her sentiment is echoed by many. 

As president of the American Antitrust Institute, Bert Foer states it this way, “We have to decide if we’re happy with the idea of going back to monopolistic treatment of the telecom industry.  (Once broken up), AT&T has come back to monopolistic power just like the Terminator.”

It’s just these kinds of concerns that will undoubtedly fuel not only ongoing speculation by consumer advocates and public interest groups, but what may very well be a year-long examination of the proposed deal by the U.S. Federal Communications Commission (FCC) as well.  In fact, AT&T is sure to face significant scrutiny as antitrust regulators debate the plusses and potential pitfalls of the acquisition.  However, AT&T’s Stephenson said the company had been in discussions about the move for a good three months and feels confident after significant review that the proposal will meet with regulatory approval in due time.