In one of the
strongest statements yet against AT&T's proposed acquisition of T-Mobile, Sen. Herb Kohl (D-Wisc.) called the deal "highly dangerous to competition and consumers" in a letter sent today to U.S.
Attorney General Eric Holder and FCC Chairman Julius Genachowski. He urged the agencies to block the planned $39 billion merger.
As chairman of the Senate Subcommittee on antitrust,
competition policy, and consumer rights, Kohl is also one of the biggest government heavyweights to weigh in on the AT&T/T-Mobile deal to date. He concluded the acquisition "will likely tend to
substantially lessen competition, lead to consumers paying high prices with fewer choices, as well as lessen the innovation that has been the keystone of this industry in the last decade."
Kohl
also wasn't buying the argument by AT&T and T-Mobile that the deal should be evaluated on a local market-by-market basis because of the nature of wireless technology. "Unlike landline phones, which
are fixed in one location, consumers purchase wireless phone service because the phones are mobile and travel with the consumer," he wrote. Carriers, therefore, have to provide service throughout the
U.S.
The senator's letter comes in the wake of a May hearing his subcommittee held on the deal, which seems to have helped crystallize his opposition. Kohl may have been the most influential
figure to sound off on the acquisition Wednesday, but he wasn't the only one. Representatives Edward J. Markey (D-Mass.), John Conyers, Jr. (D-Mich.), and Anna G. Eshoo (D-Calif.) jointly sent a
separate letter to the Justice Department and FCC asking them "to conduct a careful, comprehensive and expeditious review of the proposed AT&T - T-Mobile merger."
Though its language wasn't
nearly as forceful in attacking the deal, the letter stated, "We believe that AT&T's acquisition of T-Mobile would be a troubling backward step in federal public policy - a retrenchment from nearly
two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace."
As if to counter Kohl's condemnation of the deal, Mike Lee (R-Utah), another member
of the Senate antitrust subcommittee, issued a statement saying the merger "has the potential to provide significant network efficiencies that may help alleviate capacity constraints, enable enhanced
service quality, and facilitate expansion of a 4G LTE nationwide network, which would in turn create opportunities for handset innovation and continued development of data-rich applications."
In
the end, only the FCC and the Justice Department will directly decide whether to approve the deal. Neither agency has indicated whether they'll move to block it. The FCC took a neutral stance in its
annual wireless competition report, but said the industry was growing increasingly concentrated.
In his letter, Kohl also pointed to comments the Justice Department made in relation to the FCC's
national broadband plan. It said reducing the number of competitors from four to three could "significantly" harm consumers.
Not surprisingly, AT&T took issue with the senator's views. "We
respect Senator Kohl. However, we feel his view is inconsistent with antitrust law, is shared by few others, and ignores the many positive benefits and numerous supporters of the transaction," it said
in a statement, which also expressed confidence that the merger would be approved.
Sounds like things are just heating up in the merger debate, along with the weather.