Block AT&T T-Mobile Merger Says Senate Antitrust Chief - InformationWeek

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7/20/2011
11:43 PM
Ed Hansberry
Ed Hansberry
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Block AT&T T-Mobile Merger Says Senate Antitrust Chief

Members of Congress blast the proposed deal as anti-competitive, but Verizon COO thinks it'll go through anyway, with restrictions.

There has been a lot of public debate, some right here on these very pages, over the merits of the AT&T merger with T-Mobile. Now Senator Herb Kohl, chairman of the Senate Subcommittee on Antitrust, has chimed in with opposition to the deal, and he is not the only elected official to do so.

The Consumerist has a copy of the letter Senator Kohl wrote to attorney general Eric Holder of the Department of Justice (DOJ) and Federal Communication Commission chairman Julius Genachowski. Kohl's basis for opposition is T-Mobile is the price leader and post merger, feels T-Mobile's price plans would vanish faster than T-Mobile's magenta color scheme.

Kohl wrote: "T-Mobile has been a price leader in the cellphone market, offering price and rate plans significantly less expensive than the other three national cell phone providers. According to recent price analysis survey of voice and data plans conducted by Consumer Reports, 'T-Mobile wireless plans typically cost $15 to $50 less than comparable plans from AT&T.'"

Removing this "maverick price competitor" substantially increases the likelihood that prices would go up after the merger from the remaining national carriers.

Representatives Edward J. Markey, John Conyers, Jr., and Anna G. Eshoo have written a similar letter to the FCC and DOJ claiming that the merger would be a "troubling step backward in federal policy" that retreats from two decades of promoting competition in the wireless marketplace.

Of all of the deals I have heard about in the past few years, I think this one has the highest chance of being blocked. Verizon COO Lowell McAdam, though, thinks otherwise. He thinks the deal will be allowed to close, though he worries the government could place restrictions on the new company that could impact Big Red as well. Given the government's propensity for handing out conditions along with spectrum, he is probably right on that last point.

Do you think the deal will close?

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