AT&T’s proposed acquisition of T-Mobile USA, the latest in a long history of wireless-carrier consolidations, is generating some old-school worries that don’t necessarily fit a dynamic industry that’s evolving at a lightning pace.
AT&T, the nation’s second-largest wireless carrier, announced
a deal in March to buy Bellevue-based T-Mobile, currently No. 4 nationally, from Germany’s Deutsche Telekom for $39 billion. The combination would eclipse Verizon Wireless as the nation’s No. 1 wireless provider, with 42 percent of the market. The expanded AT&T and Verizon would have a combined market share of about 73 percent.
That has some, particularly No. 3 carrier Sprint Nextel, crying foul. They’re pushing federal regulators to block the deal, arguing it would stifle competition and innovation, and lead to higher prices for consumers.
What that argument leaves out, though, is a history that has shown prices falling as the industry has gained efficiencies through consolidation, and a vision of future broadband access that spreads opportunity by connecting virtually every American to the digital age.
The latter is a key point in favor of the AT&T-T-Mobile merger. As cell phones have evolved in recent years into smartphones that access the internet, data volumes have skyrocketed. AT&T’s have increased 8,000 percent since 2007, and the company projects up to another tenfold increase over the next five years.
That’s created a spectrum crunch. Combining the spectrum available to AT&T and T-Mobile, along with an $8 billion investment promised by AT&T, will allow the expanded company to blanket 97 percent of the nation with state-of-the-art coverage.
That means higher speeds, which is essential to innovation that takes advantage not only of smartphones, but tablets and associated apps, offering more products for more uses. It means greater reliability, and the leveling of economic opportunity that comes from spreading mobile broadband to more rural areas.
The Federal Communications Commission and the Justice Department both must approve the merger, a process that likely will go into 2012. Blocking it almost certainly won’t keep T-Mobile in the market as a major player, because its German owner wants out. It’s focused on expanding in Europe, and has no interest in further investment here. Approving still leaves three major national competitors, none of which will have even half the market.
In weighing their decision, regulators should focus on the truly relevant question: whether AT&T is making this move so it can raise prices, or whether it’s about creating more network capacity, thus improving service and choice.
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