Even though AT&T has already been broken up once before by the United States government for monopolistic business practices, apparently, the company motto is "try, try again." The proposed T-Mobile acquisition serves as proof of AT&T's goals.
If the merger were to go ahead as planned, AT&T would have over 120 million subscribers under their restrictive umbrella, and that, apparently, is what led to the Department of Justice's attempt to squash the merger. A quote when their antitrust suit was brought to light demonstrates this quite nicely:
"T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network," said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."
Meanwhile, AT&T and those that support the merger insist it will, in fact, help innovation and will not affect the choices consumers have.
Who's right here?
As it stands, AT&T was apparently caught off-guard by the Department of Justice's antitrust suit, and has issued a response of their own:
We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.
We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.
At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:
- Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.
- Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population;
- Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.
We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.
Perhaps someone can explain why AT&T won't improve their infrastructure, therefore, reducing "spectrum exhaust" from within, but apparently, that's another discussion for another day. "Why build it when you can buy it?" is the apparent approach here.
Sprint also responded to the DoJ's actions with wild approval:
“The DOJ today delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first. Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”
But Sprint didn't stop there, either. One of the new selling points of the AT&T/T-Mobile merger is the jobs it will create in the United States. Sprint doubts that claim as well.
"EPI’s claim that the AT&T/T-Mobile merger would create jobs is completely unfounded," [professor of Economics and director of the Center for Economics and Public Policy at the University of California at Irvine, David] Neumark concludes. "It ignores potential reductions in capital expenditures that T-Mobile would have undertaken. Indeed, AT&T has told the federal government and its investors that the merger would lead to reduced capital expenditures – which by EPI’s own logic would lead to fewer jobs. And AT&T has acknowledged there would be other job reductions resulting from the merger.”
Clearly, not everyone is as excited about the potential merger as AT&T CEO Randall Stephenson is.
Your thoughts? Do you support the merger, one that would leave two companies, Verizon and AT&T, controlling 70-plus percent of the subscriber market? Does AT&T need to stop trying to merge with everyone and actually build their own 4G network? Let us know in the comments.