AT&T Takeover Deal Sounds Like A Lose-Lose For Innovation, Consumers

March 22, 2011

AT&T has proposed a lose-lose deal for consumers with its plans to grow even bigger with its proposed acquisition of T-Mobile for $39 billion. Consumers, industry and innovation will all lose if AT&T is allowed to amass even more power and control over our communications and Internet infrastructure.

The tremendous advances in technology and price constraint over recent decades have come because of competition following the original AT&T breakup. The market constriction that would result if the government were to allow such a merger would propel us backwards and adversely impact the type of diverse innovative players we need to grow jobs and economic expansion.

The proposed merger between AT&T and the 4th largest wireless carrier would leave the wireless market with two big carriers followed by Sprint. But a deeper look shows an even more dismal picture for the smaller regional wireless carriers, handset makers and ultimately consumers who would be paying higher prices and not seeing the innovation and improvements to their handsets and connection quality that they would get through more competition.

Subtracting a maverick, competitive wireless carrier, would leave the average consumer facing very limited choices for wireless service in a particular region.  Since there are only two competing technologies that all wireless carriers use, all the small regional carriers have to negotiate roaming deals with either Verizon or AT&T – if they want to offer full coverage to their customers. The deal would further entrench the playing field with one CDMA giant and one GSM giant and fair negotiations would be even harder.

For nearly 40 years, the Computer & Communications Industry Association has been a voice against anti-competitive behavior by dominant companies and an advocate for a more competitive marketplace. The following statement can be attributed to CCIA’s President and CEO Ed Black:

“This may be the most aggressive and anti consumer merger proposal in history with many antitrust issues to be unraveled in the coming months. The billions forfeited to T-Mobile if the deal fails is an indication that AT&T will use all its influence to try to overcome the substantial antitrust problems raised by this historic merger. Sadly it also shows AT&T believes it has enough power and control over the political branches of federal government to ram it through — in spite of its many anti-competitive aspects.”

“It may be that ultimately this will be less about the merits of AT&T acquiring a competitor, and more about whether AT&T’s huge lobbying team, expenditures and contributions have already virtually acquired the federal government.”

“Many are calling the far-fetched proposal among the riskiest ever to be announced. The DOJ and FTC issued new guidelines last year on horizontal mergers and how to define market share and competition, and it would be surprising if AT&T found a way to appear not to violate these pro-consumer rules.

“A deal like this, if not blocked on antitrust grounds, is of deep concern to all the innovative businesses that build everything from apps to handsets. It would be hypocritical for our nation to talk about unleashing innovation on one hand and then stand by as threats to innovation like this are proposed.

“T-Mobile has been a maverick in the wireless market designing its own handsets and offering lower prices to customers.  Sadly, even if the deal is blocked it may serve to help freeze the market and some innovation while it is pending.

“AT&T’s comments about spectrum miss the point:  the central goal of spectrum reform is to increase competition.  Eliminating a competitive, innovative company is totally contradictory to that goal.

“Eliminating yet another wireless competitor means higher prices for consumers, lower network quality and slower innovation on the phones themselves. It also decreases the potential for meaningful competition between wireline and wireless providers.

“Another idea to help achieve our nation’s goal of having high speed broadband access for 98 percent of Americans in five years would be for AT&T to instead use some of these billions to build out its coverage and stop blocking competition from independent carriers through monopoly mark-ups on special access rates and unreasonable delays on data roaming interconnection.”

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