Senator Kohl Asks DOJ, FCC To Deny AT&T’s Takeover Of T-Mobile

BY CCIA Staff
July 20, 2011

The Chairman of the Senate Subcommittee on Antitrust and Consumers’ Rights has sent a 7-page letter to the Justice Department and FCC asking them to block AT&T’s plans to take over the fourth largest wireless competitor.  In the letter, Sen. Herb Kohl, D-Wis., who recently held a hearing on the acquisition, said it would dramatically reduce competition, and the elimination of the lowest priced national carrier would lead to price increases for all mobile phone users.

Meanwhile, three of the most recognized experts on telecommunications and competition issues in the House, Reps. Ed Markey, D-Mass., Anna Eshoo, D-Calif., and John Conyers, D-Mich., have also written the DOJ and FCC saying that strict scrutiny of this proposal is needed.

The Computer & Communications Industry Association, which has advocated for 39 years for a competitive telecommunications market, said Kohl’s letter is an important signal of trouble for the deal.   Senator Kohl concluded in his letter that:

  • AT&T is proposing to take over a direct competitor and that will reduce competition from four to three national wireless carriers in a highly concentrated market
  • Prices will rise if this merger is allowed
  • Innovation that has been a keystone of this industry in the last decade will fade with this consolidation
  • T-Mobile is a low-cost maverick, and the removal of a maverick competitor in a highly concentrated market means prices will likely go up and innovation will go down
  • Kohl dismisses AT&T’s assertion that the competitive effects of the merger should be evaluated on a local basis, because the four major carriers have national networks and price nationally, and all smaller wireless carriers are already reliant on the largest two for critical wholesale inputs of roaming and special access.
  • Kohl did not accept AT&T’s claims that it will expand its service offerings to underserved rural and urban customers – noting they could do that now without the merger
  • AT&T’s purchase of T-Mobile may well result in mobile wireless duopoly
  • Kohl concludes that instead of using the $39 billion to purchase one of its few remaining competitors, AT&T could achieve its claimed efficiencies without the anticompetitive costs by investing in to upgrade its network.

The following statement can be attributed to CCIA President & CEO Ed Black:

“We could not agree more with Chairman Kohl’s articulate, well-documented assessment of the merger and its disastrous effects on competition and innovation.  This merger would harm consumers, slow economic growth and stifle innovation in the burgeoning wireless marketplace.  Senator Kohl’s lucid letter clearly expounds on many of these points in great detail.  He certainly gets it.”

“As the most experienced antitrust legislator on Capitol Hill, we are not surprised that the Senator and his staff were able to see through AT&T’s massive lobbying and PR blitzkrieg and analyze the facts on the ground, not the spin.  No matter how you dress it up, this merger is ugly.”

“AT&T has tried to argue that the deal should be evaluated according to local markets rather than the national wireless market. Sen. Kohl offers one of the best refutes to date to that argument. He said that unlike landline phones, mobile phones are mobile – meaning they travel with the consumer and that consumers need them to work wherever they are in the country.”

“Although specialized regulators should not be swayed by political pressure, Senator Kohl – as a longtime Chairman of the Senate Antitrust Subcommittee – is one of the most respected antitrust experts in the country and his opinion carries real weight.  We are confident that the authorities will reach a similar conclusion after reviewing the merits of the deal – that it should be blocked outright.”

“The costs to the public clearly outweigh the illusory benefits of the merger and we are glad that the Senator unambiguously points this out.”

“Four of the most experienced telecommunications competition and antitrust leaders in Congress have urged sober deliberation and application of the law and public interest standards to this reckless proposal for elimination of a very valuable innovative competitor in mobile phone service.”

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