Commentary

Kohl: AT&T/T-Mobile Merger 'Dangerous'

Sen.-Herb-Kohl

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.

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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.

1 comment about "Kohl: AT&T/T-Mobile Merger 'Dangerous'".
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  1. Richard Truesdell from Automotive Traveler, July 20, 2011 at 8 p.m.


    This proposed merger is bad for consumers on so many levels, that it must be stopped dead in its tracks by the FCC.

    First, it's anti-competitive in that it removes from the competitive mix one of the few elements, T-Mobile, that currently serves to moderating sky-high wireless rate plans.

    Second, it combines the wireless company with arguably the worst customer service reputation in the industry, AT&T, with the company with the highest customer service satisfaction scores in the wireless sector, T-Mobile. You can bet if the companies merge, that it will be AT&T's reputation for customer service that will prevail.

    Third, this will remove another competitive element that is keeping data plans affordable. With Verizon instituting data caps, this will only serve to further suppress competition in this important area.

    Fourth, if this merger is approved, with AT&T and T-Mobile both sharing the GSM wireless platform, it will almost force Sprint into the hands of Verizon as both use CDMA technology. This is the real threat to wireless competition mid- to long term.

    The one reason that we've enjoyed innovation in the telecom sector, which has driven down wireless costs over the last 25 years, is that there has been competition. If we end up with a duopoly of just two carriers, Verizon/Sprint and AT&T/T-Mobile, we can kiss competition goodbye. It begs the question, why was AT&T broken up in the first place?

    I'm a former AT&T customer (who is still being dogged by a collection agency for canceling AT&T service when they couldn't deliver on their promise of replacing my land line phone back in the early 2000s), who has been with T-Mobile since 2004 and is exceptionally happy with the customer service that T-Mobile provides with my “All I Can Eat” voice/text/data plan for $89/month. Their service now is so good that I've eliminated my land line phone and even with being speed-limited after I go over 4GB of month of data, my wireless line is faster download than the FiOS page I had previously. The service is so robust that I can tether my T-Mobile phone to my laptop and stream movies from Netflix.

    Richard Truesdell

    Editorial Director, AutomotiveTraveler.com, Automotive Traveler Magazine

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