by: Brian K. White
It was recently announced that AT&T will buy rival T-Mobile from Deutsche Telekom for a cool $39 billion, roughly a third more than its current market value. While this may be a great move for T-Mobile investors and management, consumers seem to hold their own opinions, and ones held pretty strongly at that. Not to mention the anti-trust flags that are already waving. If approved, this means that 80% of the mobile market will be held by AT&T-Mobile and Verizon. Expect the FCC and the government to watch this acquisition closely.
The voices in opposition are saying that this would:
- Reduce competition…which it would, by its very nature.
- Diminish innovation…which is a typical side-effect of reduced competition.
- Increase prices…since AT&T charges more than underdog T-Mobile for otherwise comparable products.
- Lower data caps…since AT&T has a 2GB cap, whereas T-Mobile has a soft 5GB cap, which it calls “unlimited.”
There is already a Facebook page or two opposing the merger, as well as a grassroots effort to slow it down, if not stop it entirely. One site, StopThisMerger.com, has gone as far as to try to mobilize the base to, well, stop this merger. On that site, you can post your comments of opposition (or support) or make a donation to advance a physical letter-writing campaign.
In theory, costs could go down. AT&T already charges significantly higher rates than T-Mobile so they aren’t likely to risk losing T-Mobile customers by charging much more than the rates they are already enjoying.
Coverage will expand, but reciprocal agreements already allowed users in blackout areas to use the rival’s towers, so this is expected to be a small consolation, especially considering the 20-30% increase in rates for existing T-Mobile consumers.
Even thought there is a significant, unexpected backlash from consumers, there is little doubt that this merger will go through. AT&T has been in the quasi-antitrust business for a few decades now (see the breakup of Ma Bell), and they know better than anyone how to do it. Their lobbyists are well-placed, and they wouldn’t have endeavored to place such a massive financial stake without an internal certainty that it would go through.
Got a lobbyist? They can’t hear you now!
Brian K. White, known to 538 Refugees as 10kZebra, is a Seattle native who has worked for nine years as the editor of Glossy News, a humourous and satirical take on the news. He is a voracious consumer of news himself and splits his time between raising his clever kids and trying to find the elusive unicorn that is the honest politician.
- Deal spurs bigger questions (seattletimes.nwsource.com)
- AT&T’s T-Mobile Buyout: Customers Speak (pcworld.com)
- AT&T Faces Penalty If T-Mobile Deal Falls Through (phonescoop.com)