Yesterday, the Justice Department sued to block AT&T’s proposed $39 billion takeover of T-Mobile USA, saying that the deal would remove a major player – T-Mobile USA – from the mobile carrier market, hurting competition and likely raising prices in the process.
AT&T responded that it was “surprised and disappointed” by the suit and that it will “vigorously contest this matter in court.” Surprised and disappointed? Really?
Does anyone aside from AT&T think this merger is a good idea? Deutsche Telekom, parent company of T-Mobile USA, naturally shares AT&T’s point of view and echoes its disappointment in the pending suit. But what about everyone else?
From a consumer choice standpoint (including us business users), I think the merger would have been detrimental. It would have taken the mobile carrier market in the U.S. to just three major carriers, down from four. Additionally, most T-Mobile customers I knew would have switched carriers from AT&T is the merger had gone through (due to AT&T’s reputation for poor customer service), which means effectively they only would have had two carriers to choose from…and that’s just not enough.
On top of that, the merger likely would have also increased consumers’ wireless bills, which is never a good thing for wireless expense management.
From a mobile service provider standpoint, the merger would have been detrimental as well. Although there would be three “big” carriers, it’s clear that Sprint, being the smallest carrier, would have been squeezed out of the mix. (Of course that could change if Sprint gets the iPhone.) Sprint would be the little fish in the big pond with two giant fish that would just gobble it up. I am presently a happy Sprint customer, and I don’t know what I would do if that happened.
The only win for the merger would have been the creation of up to 96,000 new jobs. That’s a pretty significant number, and in this economy, new job creation is especially important. (Of course if the merger doesn’t go through, the economy is no more worse off that it is already.)
So while the AT&T-T-Mobile merger hasn’t been completely scuttled, its future isn’t looking bright. And to me, that’s a big win.
Martha is a freelance writer covering emerging technologies in the enterprise mobility space. Prior to her freelance career, Martha served as editor in chief of Mobile Enterprise Magazine and R&D Magazine. She holds a BS in Mathematics and a BS in Physics from Miami University, Oxford, Ohio, and an MS in Physics from the University of Alabama in Huntsville. You can connect with Martha here.