(David Mansdoerfer) – Senator Herb Kohl (Wisconsin-D) has come out against the proposed $39 billion merger of AT&T and T-Mobile stating that, “this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers.” He went on to note in his letter to the Department of Justice and Federal Communication Commission that this deal, “would be contrary to antitrust law and not in the public interest.”
The problem with Senator Kohl’s thinking, however, is that by pretending to protect the American consumer via antitrust laws, he is continuing the traditional government stance of over-regulating the broadband/wireless industry. To date, the United States taxpayer has spent billions of dollars on increasing public access to broadband networks. With the AT&T / T-Mobile merger, AT&T will improve its broadband services to rural areas, and, more importantly, not use public sector funds to do this.
Senator Kohl’s argument that this merger would cause substantial harm to competition and consumers is also fundamentally flawed. By some estimates, if the AT&T / T-Mobile merger is successful, AT&T would control about 43% of the overall U.S. wireless market. While this number might give pause to someone who doesn’t understand the broadband market, it is actually quite normal for a wireless company to hold a significant market share throughout the world.
In the majority of countries in Europe, one company has a market share at or above 43%. Only in England is there no single wireless company that owns a market share that is greater than 35%.
Additionally, there are hundreds of wireless carriers operating in the United States today. A couple, Sprint and Verizon in particular, will still have a significant market share themselves and will continue to impact the wireless market.
But, when it comes to determining market price, innovation will still force AT&T to keep their prices low. Remember, less than five years ago everyone thought that the Razor was the greatest phone because it was so thin. Now, with the ability to video chat while reading your email and playing angry birds, today’s wireless phones make their predecessors look like tools from the dark ages.
The market is consistently flooded with the next great technology. AT&T is doing nothing more than hedging its bets that it will be able to consistently innovate and provide high-quality products. If anything, this merger will make them increase their effort to stay in the top spot after they take it over from Verizon by ensuring that they offer the consumer top of the line products.
The merger between AT&T and T-Mobile is in the best interest of the U.S. taxpayer and consumer. Senator Kohl should spend more time studying market trends and basic economics before he tries to ‘protect’ consumer interests and competition.
(Mr. Mansdoerfer is the Director of Federal Affairs for Citizen Outreach)
Facebook
Twitter
Pinterest
RSS