I can’t decide whether or not I’m surprised by the US Justice Department’s decision to oppose the merger of AT&T and T-Mobile.
On the one hand, it truly is the Federal government’s job to protect consumers by opposing huge mergers/monopolies in communications companies that would limit consumer choice, stifle competition, and possibly result in higher prices. On the other hand, I haven’t really noticed that they’ve actually been doing this much lately.
So, maybe this is some kind of an anomaly – an anomaly that actually could work in favor of consumers who have to shell out gargantuan chunks of money every month for their mobile service.
However, as this is an issue that is going to take quite some time to resolve; it’s possible that it could drag on through the next election. If so, and we wind up with a more conservative President; the government’s position could change.
Now, here’s something to consider. I had a conversation with a high level T-Mobile executive not long ago, who told me that T-Mobile’s greatest challenge was getting enough cell coverage in parts of the country where they were weak. In order to do so, they were forced to ask AT&T to allow them to use their cell network. This is apparently a very common practice in the mobile industry.
However,T-Mobile’s problem was that AT&T wanted to charge them what they thought were exorbitant fees for the privilege. From AT&T’s point of view, that probably made a lot of sense.
From T-Mobile’s point of view, they were being unfairly blocked from being able to serve their customers, and the amount of money that AT&T wanted to charge them was way more than they could afford. In addition, there was no way that they could afford to actually build their own infrastructure in those areas, so they were stuck having to try to negotiate a decent rate with AT&T who had a monopoly on transmission facilities in the areas that they wanted to reach.
So, it probably makes a lot of sense that a merger was proposed. But from another angle, you could also look at it as a shotgun wedding. T-Mobile may have wanted to remain independent, but was forced to rely on the cooperation of AT&T, as in; “Sure, honey , I’ll help you out – but we gotta get hitched first!”
In the end, it’s up to the government to decide whether or not this forced marriage is in consumers’ best interests. I’ll be watching with great interest to see how the story develops in coming months.