Quick Hits on AT&T/T-Mobile
Quick Hits on AT&T/T-Mobile
Quick Hits on AT&T/T-Mobile

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    There’s a lot more to say about the “unthinkable” merger between AT&T and T-Mobile. In the past few days, though, some items have stood out.

    * When Cingular bought AT&T Wireless, they were required to divest spectrum as a condition of having the deal approved. T-Mobile bought a lot of it:

    The overlapping mobile phone networks that Cingular and AT&T have in large parts of California have raised concerns among Justice Department officials about the combined companies’ market power in the state, according to sources familiar with the discussions. The deal with T-Mobile aims to ease those concerns and is contingent on Cingular closing its deal with AT&T Wireless.

    (Cingular was co-owned by SBC and BellSouth; when SBC bought BellSouth the new company was renamed AT&T.) It looks like if this merger goes through, AT&T will have to re-divest spectrum it had already divested—or it will get to keep spectrum the FCC already found would give it too much market power.

    * House Republicans have gone on the record calling for strong antitrust oversight of the telecommunications market, as an approach they prefer to regulation. Will they continue to press for enforcement of the antitrust laws when it comes to this merger? On its face, the transaction sounds serious antitrust alarm bells. In terms of market concentration, the deal would make the highly concentrated national market for wireless service much more concentrated—have a look at the FTC/DoJ Horizontal Merger Guidelines, and analyst Craig Moffett’s numbers. According to the Guidelines, mergers like this one “potentially raise significant competitive concerns and often warrant scrutiny.” This is magnified when you consider how difficult it is to enter the wireless market, since you need to wait for the FCC to free up spectrum. There’s little chance that some wireless upstart will come out of nowhere and steal AT&T’s lunch money.

    * On Monday, Seton Motley issued a press release claiming:

    AT&T. Verizon. Sprint. Boost. Cricket. Virgin. U.S. Cellular. MetroPCS. TracFone. Cellular South. CellularOne. Nextel. These are but a few of the options the public has in choosing wireless phone service.

    It’s telling that he had to list Sprint four times in order to give the impression of a competitive marketplace—Nextel, of course, was purchased by Sprint, and Boost and Virgin are just different brand names Sprint uses. Next he’ll be pointing to the vibrant competition between Saturn, Cadillac, GMC, and Chevrolet.

    * More generally, the repeated attempts to spin the wireless market as more competitive that it really is, by pointing to small and regional carriers, are laughable. Companies like Cellular South serve their customers very well. But T-Mobile by itself is bigger than every other small or regional carrier combined. AT&T and Verizon will compete with them in the same sense that Wal-Mart competes with a roadside fruit stand or somebody selling sunglasses off a blanket on the sidewalk.