COMMENTARY | The U.S. Department of Justice filed an antitrust lawsuit Wednesday to keep AT&T from merging with wireless carrier T-Mobile. The combination of AT&T’s 98 million subscribers and the 34 million T-Mobile brings to the table would make the new company the largest wireless provider in the country.
According to CNNMoney, the Justice Department was concerned the merger would lead to a situation in which only two companies, AT&T and Verizon Wireless, would control over two-thirds of wireless subscribers and 78 percent of industry revenues. James Cole, the deputy attorney general, said “We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services” at a press conference Wednesday.
Other wireless companies see T-Mobile’s cut-rate service as an integral part of the wireless landscape, and it is universally believed that the merger will harm competition and raise prices. I agree that competition is an important component of the wireless market at the moment, but I am not sure I agree that AT&T and T-Mobile shouldn’t be allowed to merge. At the moment Verizon is the largest wireless carrier nationwide, and it has gained that position largely with the quality of its customer service and wireless devices. All of the major carriers are roughly equal on their plans at the moment, and everyone is offering the same thing. The government may be going about involvement in the wrong way.
The wireless industry is taxed heavily by the federal government. Our dependence on smartphones has even turned cell service into a sort of commodity that is going to exist no matter what the price. I think it is about time we put the wireless industry, and possibly the broadband Internet industry, under the control of state public advocates. If the Public Service Commission regulated the profits of wireless companies, we would no doubt see our prices cut in half with major carriers.
The benefits of having T-Mobile and AT&T combined would come in the form of a vastly improved network. Each company could still sell its services at different price points, but they would share network development and maintenance. With nationwide 4G LTE scheduled to replace 3G and WiMAX, it looks like the infrastructure may need to be updated nearly as frequently as the devices now.
So while antitrust lawsuits worked well to keep Standard Oil from buying its own Congress, the technologically fueled age we are in now requires large amounts of capital and big investments to make innovative strides. The Justice Department should be asking, “Can AT&T or T-Mobile be counted on to bring better infrastructure to our country if we allow this merger?” The Public Service Commission at the state level should be controlling the price of service anyway.