SALON

Monday, Mar 21, 2011 6:22 PM UTC

Why the AT&T -T-Mobile merger must be stopped

If the wireless deal is allowed to go ahead, it will be very bad news for competition -- and customers

By

Topics: Business,

Why the AT&T -T-Mobile merger must be stopped

The announcement Sunday that the company calling itself AT&T has reached a deal to buy T-Mobile’s U.S. arm was a no-brainer. Rather than building out its own network, it covets the network — and more — of a competitor that offers lower prices and better customer service. It’s a great deal for AT&T, and barring a sudden awakening of the Obama administration to the benefits of competition in telecommunications, this buyout will go forward — to the huge benefit of two telecom giants and the detriment of everyone else.

Let’s be clear. If the Obama administration fails to block this deal, it will be setting the lowest possible bar in approving mergers and buyouts. This buyout could not be more obviously bad for competition — and therefore bad for customers — and antitrust enforcement is designed precisely for protecting competition.

When I said there would be two major winners in this deal, I was referring to Verizon, the largest mobile carrier in the nation, as the other one. AT&T is currently second largest, with Sprint and T-Mobile trailing. A combined AT&T and T-Mobile would be a bit larger than Verizon, with Sprint in a very distant third place.

We’re talking about creating an effective duopoly, or something not too short of that. Business history shows no case in which a duopoly proved beneficial to competition, or to customers.

AT&T wants us to believe there’s plenty of competition. This is sophistry. A few regional and tertiary players do exist, but they have none of the reach, and not nearly the same level of capabilities and service, that you can get from today’s Big 4. They would be utterly dwarfed by the Big 2 plus Sprint in the new world.

Consider the airline business. Today, we have three major carriers left: Delta, American and United-plus-Continental (the latter two are in a merger). A host of smaller carriers, including the increasingly beefy Southwest, keep the big ones mostly in line on price on most routes. But does anyone believe we’d be better off with just two mega-airlines, other than some industry executives and shareholders? This is plainly not a perfect analogy, but it gives you a sense of what’s at stake.

More important, T-Mobile has offered competitive service plans including my ability to bring my own phone and get a discounted monthly rate. All of the other carriers force customers to pay the same rate whether they buy a supposedly subsidized phone or bring their own — an outrageous policy that, if we had actual regulation to ensure consumer fairness, would not be permitted. (We have no serious regulation in America, of course.)

T-Mobile’s customer service people are unfailingly polite and knowledgeable. That’s unique among U.S. carriers. It has by far the best privacy protection of any mobile data provider.

T-Mobile puts as much crapware — unwanted applications that are difficult to remove — on the phones it subsidizes as anyone else. But unlike AT&T (and the rest), it cheerfully unlocks its phones after a reasonable period. This is important mainly for people who travel abroad; we can buy local SIM cards (only works for GSM phones, and AT&T blocks this anyway by refusing to unlock the phones its customers have paid for) for lower-cost service in other countries.

AT&T is widely loathed by its customers. It’s lagged in deploying 3G bandwidth on its wireless network and has a history of collaborating with illegal government spying on its customers.

Om Malik makes a persuasive case that Google is a major loser in this deal. He writes: 

In T-Mobile, it has a great partner for its Android OS-based devices. Now the company will be beholden to two massive phone companies — Verizon and AT&T — who are going to try to hijack Android to serve their own ends.

Don’t be surprised if you see AT&T impose its own will on what apps and service are put on its Android smartphones. I wouldn’t be surprised to see the worst phone company in the U.S. (according to Consumer Reports) tries to create its own app store and force everyone to buy apps through it.

The biggest losers, of course, are all of us who want to see actual competition in an increasingly restrictive marketplace. This is not a good deal for anyone but AT&T and its shareholders, and it should be stopped in its tracks.

 

A longtime participant in the tech and media worlds, Dan Gillmor is director of the Knight Center for Digital Media Entrepreneurship at Arizona State University's Walter Cronkite School of Journalism & Mass Communication. Follow Dan on Twitter: @dangillmor. More about Dan here. More Dan Gillmor.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 24 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Journalists file suit against Manning's trial secrecy: Plaintiffs including Glenn Greenwald and Julian Assange demand press, public access to trial and documents
147 points148 points | comment
vote
Kaitlyn Hunt refuses plea offer, will go to court over high school relationship - The 18-year-old rejected a deal that would have labeled her a sex offender and placed her under house arrest
134 points135 points | 91 comments
vote
Report: Nearly a quarter of Americans struggle to afford food
129 points130 points | 12 comments
vote
Kaitlyn Hunt refuses plea offer, will go to court over high school relationship - The 18-year-old rejected a deal that would have labeled her a sex offender and placed her under house arrest
117 points118 points | 34 comments
vote
Ted Cruz against the world - How the Junior Senator is igniting the GOP civil war
79 points80 points | 19 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: Chekhov's story mirrors Russia's own

Recommendations