The Department of Justice has filed papers to prevent the merger of AT&T and T-Mobile:
The US government is attempting to block the $39bn (£24bn) takeover of T-Mobile by AT&T on antitrust grounds.The department of justice (DoJ) filed court papers in Washington on Wednesday in an attempt to halt the merger, claiming that it would “lessen competition substantially” in the telecoms market and harm consumers. AT&T said it was “surprised and disappointed” by the intervention.“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the DOJ said in its filing, which was first reported by Bloomberg.
The multibillion-dollar merger, announced in March, would create the largest mobile provider in the US with 130 million customers, and reduce the number of players in the market to three.
This is not surprising, except perhaps to AT&T, who
greased a lot of palms lobbied extensively for support of this deal.
After all, not only is T-Mobile aggressively competing on price, but between it and AT&T, the two cmpanies control something like 90% of the GSM cell network in the US, which, unlike Sprint and Verizon’s competing CDMA, works everywhere in the world,* which means that if you wanted to use your phone internationally, then you would have only one choice.
The Death Star is saying that they will “Vigorously Contest” the filing, but considering the fact that on their own paperwork it was shown to be 10 times as expensive to buy T-Mobile as it would be to upgrade their network to 4G:
So just to recap what you’re reading here, if AT&T doesn’t buy T-Mobile and spends $3.8 billion instead of $39 billion then they will be able to cover 97% of Americans in 4 years less time. What’s the deal? AT&T continues to downplay this memo, hopefully it’s enough for some of the Attorney Generals on the fence to start asking the important questions.
Fundamentally the business plan for the incumbents is the same as it ever was, finding ways to leverage their natural monopolies to extract maximum rent from the general public.
Finally, as much as it pains me to say this, props to Obama and Holder for engaging in some real antitrust actions.
*God bless the international standards averse USA, where we use the English system of measurements, and CDMA, for no good reason at all.