AT&T and T-Mobile Marriage: Speak now of forever hold your peace…

March 29th, 2011

Do you take AT&T to be your lawfully wedded husband? Photo credit:

AT&T’s announcement that it will buy T-Mobile was perhaps one of the biggest shockers of this year. The $39 billion deal, if approved by the FCC would leapfrog the company ahead of the nation’s top competitor, Verizon. The recent news set social networks and news media a buzz. Commonly retweeted responses reveal that many consumers are more concerned about coverage and less about the outcome of this merge.

Perhaps, people can’t see the big picture in this situation. Sure, it’s great that AT&T and T-Mobile subscribers could possibly have more phone options, and better coverage, but at what cost? Less competition. Consumer advocates, said they can see the writing on the wall. The LA Times reports a consumer advocate warning which argues, “The consolidation of two key players will leave carriers better able to dictate more stringent terms to consumers, leaving them with little choice but to pay up.” If the deal passes FCC scrutiny, instead of four, there will only be three major wireless carriers in the United States: AT&T, Verizon and Sprint. Consumer advocates aren’t the only ones kicking up dust, Sprint has also formally opposed the deal, in fear that these wireless giants could create an unfair market place, soaking up the competition.

Consolidation is pretty common in the history of American business. Companies consolidate for several reasons, but mainly to prevent financial crisis or expand capabilities. Merging has saved and grown many companies but history proves that bigger doesn’t always mean better. Before the late 1940’s movie theaters were ran by an oligopoly, who owned movie studios as well as theaters. This system not only created an unfair market for competing movie companies, but it also stifled innovation and diversity within American movies. The 1948 Supreme court ruling, United States v. Paramount Pictures, forced Hollywood studios to divest and sell many of their theaters because it violated the U.S anti-trust laws.  AT&T perhaps should have learned a lesson from the 1974 ruling by the U.S. Department of Justice. The ruling forced the massive giant to divest and sell parts of their company because their dominance in the market.

Some critics fear remnants of Ma Bell in the possible merge of AT&T and T-Mobile. NPR reports said, “If the deal goes through, AT&T would dominate telecommunications in the U.S. It looks like we’re headed back to the future, or towards the past, to the days when Ma Bell had a monopoly over telecommunications.”  The possibility of two major networks dominating the wireless market is daunting. With the price of smart phone service hanging around the hundred dollar mark, it’s scary to think about the future of wireless rates, once its controlled by two mega conglomerates. AT&T has dealt with bad coverage issues for several years now. Business Week blames their coverage troubles on the iPhone, claiming “The iPhone has swamped AT&T’s data network and sparked a consumer rebellion.”  Bottom line — AT&T consumers have no complaints with their phone but detest AT&T’s service. Take a look a Business Week’s report on this issue.

AT&T’s solution to this challenge, swallow T-Mobile. The acquisition, if approved would create a giant, dwarfing Sprint and other future competition. The deal is still facing scrutiny. However an important message to “engaged” consumers:  Before getting excited and anxious about the “reception” understand the ramification of the AT&T and T-Mobile marriage.

6 Responses to “AT&T and T-Mobile Marriage: Speak now of forever hold your peace…”

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