"The AT&T/TMobile Deal"
Annie Lowrey says it’s bad for consumers:
Merging AT&T and T-Mobile would reduce competition further, creating a wireless behemoth with more than 125 million customers and nudging the existing oligopoly closer to a duopoly. The new company would have more customers than Verizon, and three times as many as Sprint Nextel. It would control about 42 percent of the U.S. cell-phone market. That means higher prices, full stop. The proposed deal is, in finance-speak, a “horizontal acquisition.” AT&T is not attempting to buy a company that makes software or runs network improvements or streamlines back-end systems. AT&T is buying a company that has the broadband it needs and cutting out a competitor to boot—a competitor that had, of late, pushed hard to compete on price. Perhaps it’s telling that AT&T has made no indications as of yet that it will keep T-Mobile’s lower rates.
What I learned one summer working at a company that did economic analysis of anti-trust issues is that there are always two sides to these stories. So to offer the optimistic take, what I would say is that in the current US cellphone Verizon is the market leader because it has the best network. AT&T had long been able to acquire a comparable strong position despite its inferior network thanks to a farsighted deal it signed with Apple years ago giving it exclusive access to the most popular phone. But the combination of Android entering the market and the iPhone going non-exclusive raised the prospect of a market in which Verizon utterly dominates on quality. Acquiring T-Mobile (“a company that has the broadband it needs”) isn’t so much about “cutting out a competitor” as it is about building a firm that’s capable of competing with Verizon.
To actually see which of those theories predominates would require a more in-depth analysis than I’m capable of doing, but these are the kind of issues the FCC and DOJ are going to have to look at. Meanwhile, as best I can tell the key issue in wireless policy in the United States continues to be our bad habit of giving valuable spectrum away for free to legacy broadcast television operators rather than putting it up for auction so it can be put to its best use. Only by freeing up more spectrum for wireless broadband can you really have more competition.