DOJ's Attempt To Block AT&T/T-Mobile Deal Draws Praise

The Justice Department's attempt to stop AT&T's $39 billion merger with T-Mobile got some support today from the editorial board of The New York Times, which said the decision was "the right one for consumers and technology."

Among other reasons, T-Mobile offers lower-priced plans and has a history of innovation, such as when it offered the first Android smartphone.

While the Times didn't delve into all the details, the fact is AT&T hasn't done much this year to dispel fears that a merger would be bad for consumers. Consider, as recently as two weeks ago the company dropped a text messaging plan that offered 1,000 messages for $10, replacing it with a $20 per month unlimited plan.

As advocacy group Free Press pointed out at the time, the move demonstrated just how little competition there is in the wireless space. "This unilateral move to gouge customers, by raising prices on a service where it earns a nearly 100-percent profit margin, calls into question AT&T's claims that the wireless market is perfectly competitive," the group said, noting that consumers send an average of less than 700 texts per month. "In a truly competitive market, no carrier could get away with raising prices on a service where it already charges a 10-million-percent markup."

An AT&T merger with T-Mobile could also have been disastrous for neutrality. The Federal Communications Commission voted to impose neutrality rules on broadband providers, but those rules are relatively weak for wireless providers. The neutrality order only prohibits wireless providers from blocking competing apps and services, but appears to allow wireless companies to forge pay-for-play deals giving certain content providers preferential treatment.

A merger that would have left AT&T with control over an estimated 40% of the wireless market also would have set the stage for the company to craft deals that could have limited people's ability to access content on their smartphones.

That's one of the reasons why Sen. Al Franken (D-Minn.) -- probably the leading neutrality supporter in the Senate -- opposed the deal.

DOJ's decision to sue doesn't end the matter, however, given that AT&T has vowed to defend the deal in court.

Meanwhile, the FCC still must vote on what to do.

The FCC can't approve the deal if the DOJ wins in court, according to Harold Feld, legal director of advocacy group Public Knowledge. If the FCC is inclined to nix the deal, it has two options. The first is to refer the case for an administrative hearing. The second is to decide if the merger is "ungrantable as a matter of law" under a rarely invoked section of the Telecommunications Act dealing with international markets. Public Knowledge on Thursday sent a letter to the FCC asking it to rely on that provision to deny the merger immediately.

1 comment about "DOJ's Attempt To Block AT&T/T-Mobile Deal Draws Praise ".
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  1. Thomas Siebert from BENEVOLENT PROPAGANDA, September 2, 2011 at 6:44 p.m.

    A pleasant surprise. As a T-Mobile user, I don't want to see this go through. I suspect it will cause my agreeably low rates -- the lone thing that keeps me a customer -- to rise.

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