Mobile Mugging: The AT&T/T-Mobile Merger
If AT&T is allowed to acquire T-Mobile, just two wireless giants will control nearly 80 percent of the nation's cellphone market.
A recent T-Mobile commercial depicts a cellphone customer being harassed by two thugs in business suits, his pockets emptied, his wallet turned inside out, and every last penny shaken out of him. The gist: He's being mugged by T-Mobile's competitors, which all charge higher prices for less service than T-Mobile.
Ironically, T-Mobile is now about to be bought up by one of those muggers. While the commercial is supposed to sell people on T-Mobile, it really gives us a preview of what we can expect if AT&T's planned $39-billion purchase of T-Mobile goes through. If the deal is approved, there's reason to believe T-Mobile's 33 million customers will have a lot in common with that mugged customer.
The deal would eliminate a competitor and leave two wireless giants — AT&T and Verizon — with unprecedented power. The two companies would control nearly 80 percent of the nation's cellphone market, spelling bad news for consumers across the board.
AT&T's service is consistently ranked among the worst of all cellphone providers, with a history of complaints about dropped calls, poor reception, and terrible customer service. Worse, it lures customers into long-term, high-cost contracts with exorbitant fees and exclusive deals with phone makers. And, as more of us use our phones to browse the Web or read email, AT&T no longer offers unlimited data plans. If T-Mobile customers who like their unlimited talk, text, and data plans want something like it from AT&T, they'll have to shell out $50 more every month, with costly penalties for breaching AT&T's arbitrary limits.
AT&T talks about the benefits of this merger, but for T-Mobile customers it would mean spending more and getting less.
T-Mobile has been able to compete in a market dominated by AT&T and Verizon by offering lower-price services and innovative new phones — all of it at risk with this merger. But AT&T has been using its deep pockets to lobby hard for approval of this takeover, arguing that buying T-Mobile will help it improve its network. But instead of investing its record profits to build a better network, the company has funneled them into its executives' bank accounts. This merger is about nothing more than eliminating a competitor.
T-Mobile is playing both sides. While its commercials warn about AT&T and Verizon mugging the American people, its lobbyists urge Congress to approve the company's merger with AT&T. On May 10, T-Mobile CEO Philipp Humm testified before a Senate subcommittee that this merger would increase competition and "lower prices for all customers." But you can't have more competition with fewer options. It just doesn't add up.
At a time when people need to control their spending, AT&T will force them to dig even deeper into their pockets to pad its profits.
The Federal Communications Commission and the Department of Justice are both tasked with reviewing the merger and its potential impact on public interest and competition in the wireless market. Eliminating a competitor from the marketplace certainly doesn't lead to more competition. Both agencies should recognize that this merger will ultimately lead to higher prices and fewer choices for all wireless customers.
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