Opposition to AT&T and T-Mobile merger

Yesterday, Minnesota Senator Al Franken voiced his opposition the proposed AT&T and T-Mobile merger. A statement issued by the Senator contended, "This transaction is not in the public interest. If approved, it would result in greatly reduced competition, the potential loss of thousands of jobs, higher consumer prices, and less innovation in technology. I urge the FCC and the DOJ to deny AT&T's application for approval of its acquisition of T-Mobile."

Mr. Franken further went on to state that the AT&T and T-Mobile merger would create a duopoly in the mobile industry where Verizon and AT&T would be the only two providers. Mr. Franken's rejection of the merger comes days after the head of the Senate's Anti-trust committee, Herb Kohl of Wisconsin called on his colleagues and the FCC to also block the merger. Mr. Franken's statement basically echoed most of Senator Kohl's objections.

The problem with Mr. Franken's duopoly argument is that it simply does not hold water. We can only assume the Senator forgot about Sprint, though that would seem hard to do. Sprint is also publicly opposing the merger. In a statement issued yesterday, Vonya B. McCann, senior vice president of Government Affairs for Sprint stated the following.

"AT&T's 'do-over' submission is a last-ditch attempt to distract regulators, politicians and consumers from the fact that it has failed to provide any evidence that its proposed takeover of T-Mobile yields meaningful benefits. Its latest model, clearly constructed with predetermined results in mind, does nothing to change the negative consequences of the takeover for consumers in the form of higher prices, reduced innovation and decreased investment. The facts do not justify allowing that to happen, and we believe the ongoing investigations by the Department of Justice, the Federal Communications Commission and 11 state attorneys general and various state regulatory commissions will reach the same conclusions."

Sprint's reaction is understandable to some degree, given that Sprint was also courting T-Mobile before before AT&T won the prize. We can only assume that if the AT&T and T-Mobile merger is blocked, Sprint would be at T-Mobile's doorstep with a bouquet of flowers, and another offer.

There are also other carrier choices for consumers that the honorable Senators are ignoring. In addition to Sprint, there is also Cricket, the no contract carrier, that offers the same data plans and mobile functionality of Verizon, AT&T, and Sprint, as well as regional carrier U.S. Cellular. There are also a number of pay-as-you-go carriers, one of which, Virgin Mobile is associated with Sprint.

Not quite sure where Mr. Franken's duopoly argument came from, but he should demand better research from his staffers before inserting his foot into his mouth. There is also Mr. Franken's assertion that the AT&T and T-Mobile merger will cost jobs. We understand that the Communication Workers of America(CWA) union is not particularly enamored with Sprint's worker or outsourcing practices, but does anyone really think they would support legislation that would cause mass lay-offs? Of course not. So why is the CWA in favor of the merger?

As the CWA stated on their website, "Deutsche Telekom indicated multiple times that it was simply no longer willing to commit new capital to T-Mobile."

And Philip Humm, T-Mobile USA's CEO testified before the Senate in May of this year that, "T-Mobile’s parent Deutsche Telekom is not in a position to finance the necessary large scale investments in the U.S. for T-Mobile to remain competitive ."

The bottom line is this; T-Mobile is going away. Period. Nada. End of story. The jobs Mr. Franken claims would be lost by an AT&T and T-Mobile merger would be multiplied if T-Mobile simply closes up shop. None of those workers would be folded into AT&T. And what about T-Mobile's subscribers who would suddenly find themselves cut off from a carrier service?

It could happen. All the evidence points to T-Mobile leaving the market. There are many fights that need to be waged in Washington, and this is not one of them. Expending resources to block the AT&T and T-Mobile merger is a waste of time and money. Isn't there enough of that in Washington already?