AT&T’s Proposed Merger with T-Mobile is Facing Government Intervention

Over the past year AT&T has been metaphorically “licking it’s chops” and getting ready to merge with T-Mobile, or in other words consume one of their most competitive rivals in the cell service industry.  For many years AT&T has made huge strides towards becoming the largest cell phone carrier in the United States and it seems none other than the US government happens to be contesting their latest method.  The Department of Justice has filed an anti-trust complaint that directly targets the merger between the second largest US carrier AT&T and the fourth largest, T-Mobile.  Clearly this is another bold move made by the same company who landed an exclusive deal for the iPhone just a few years ago, which was the first time this cellular conglomerate almost toppled the market… (Have people forgotten about that one yet?)

The Department of Justice has already released its exact filing of the complaint and to put it plainly, it has some strong wording which shows just how much of an impact the DOJ believes this merger will have on the national cell carriers.  One of the main points put forth by the DOJ is that T-Mobile has been not only an innovative and intuitive competitor when it comes to pricing and service, but they have also been the original creator of some policies which are seen throughout our country.  This, relatively small, company has fought its way into fourth place and has proven its own when it comes to advancements in technology; the government is not going to go down without a fight when it comes to this merger.  This excerpt shows just how strongly the DOJ feels about T-Mobile’s improvements in the cell-phone tech field.

“Due to the advantages arising from their scale and scope of coverage, each of the Big Four nationwide carriers is especially well-positioned to drive competition, at both a national and local level, in this industry. T-Mobile in particular – a company with a self-described “challenger brand,” that historically has been a value provider, and that even within the past few months had been developing and deploying “disruptive pricing” plans – places important competitive pressure on its three larger rivals, particularly in terms of pricing, a critically important aspect of competition. AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market. Additionally, T-Mobile’s investment in an advanced high-speed network and its innovation in technology and mobile wireless telecommunications services have provided, and continue to provide, consumers with significant value. Thus, unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger. Because AT&T’s acquisition of T-Mobile likely would substantially lessen competition in violation of Section 7 of the Clayton Act, 15 U.S.C. §18, the Court should permanently enjoin this acquisition.” Source

To summarize, the leading factors in the Department of Justice’s desire to stop the merger between AT&T and T-Mobile is because this will create a fundamental flaw in our “system.”  Our country runs on a capitalist system where the consumer benefits immensely from competition.  Without multiple companies or choices, the prices will be inflated beyond belief because of the nature behind supply and demand, therefore our government forces which are tasked with stopping these so-called trusts have stepped in and began to fight on the general publics behalf.

One other interesting part of this story is that AT&T may have had too much confidence behind their company and this merger because they allegedly offered T-Mobile the large sum of 3 billion dollars, plus other amenities, if the deal does not go through.  This begs the question “What is the best possible outcome for T-Mobile, and then the general public?” It is starting to seem like this merger only positively affects AT&T and stands to ruin a solidly working system we currently have in place.

Lastly, think about this… From a citizen’s viewpoint, who stands to benefit the most from this deal? Some names that pop into my mind right off the bat might be federal lobbyists and other national congressmen who have fought against public rights for many years now without any opposition.  Maybe the same government forces that have betrayed us are beginning to see the faults in their decisions.