The FINANCIAL — More news about the AT&T and T-Mobile merger, and two anti-trust lawsuits. Now it seems that both the US Justice department and Sprint are trying to stop the merger using the legal system.
Ken Thurber, author of Big Wave Surfing: Extreme Technology Development, Management and Marketing, thinks they will lose. As he says: "While the Justice Department will try hard to stop the merger, corporate interests will be served in the end. The real hope is that constraints will be placed on the merged company that will allow consumers not to be hurt.
He goes on to say "The regulatory agencies need to stop the merger of AT&T and T-Mobile! Having broken up AT&T once (and it could be argued sent the US into a 25 year dominance in technology), it is ridiculous to allow AT&T to merge its way into market dominance! Allowing market dominance in the only space where future growth appears to be rapid is ridiculous. Wireless data is the key new technology and this merger would effectively leave AT&T in charge of the space."
Thurber notes – "Looking at the players in the merger, it is clear that some workers, suppliers and the consumer are going to be hurt. The alleged benefits of reducing the wireless telecommunication supplier base from four competitors to three are ridiculous. There are no consumer benefits. There is no way that this merger should be allowed. Costs are going to increase, the merged company is going to invest less and service will not improve."
Thurber says you need to follow the money. He maintains, "the real issue is not coverage area or connection speed. The real issue is economics. The reason AT&T and T-Mobile really want to merge is that the growth in the telecommunications market is in the wireless data sector and they want to control this sector as wireless data devices become ubiquitous. In such a market where lots of highly skilled and motivated people exist, you should expect that even if the merger happens there will be other players entering the fray. As an example, maybe Virgin Mobile will gain a better foothold with their voice and data options in the US. Maybe, Sprint can take advantage to up their market share. But, both of these scenarios are long shots in view of the market dominance that AT&T should have after the merger.
According to Thurber it's about time that the regulatory agencies take an aggressive look at the potential merger of AT&T and T-Mobile. "When partisans begin pushing issues such as rural broadband coverage instead of economic arguments you know they're stretching the envelope to justify a merger. Customers will lose! The new company will dominate the wireless market. The new company will get rid of unlimited data plans. Currently, unless you are grandfathered in, AT&T is not selling unlimited plans and expects to start throttling back big customers in the future when they use too much data. T-Mobile currently uses a throttling strategy to control high volume data users. If the merger goes through, you should expect that costs to the consumer are going up. The only hope is that Sprint or Verizon steps into the fray and lowers prices. However, with the merged company having massive financial capability relative to Sprint or Verizon, cutting prices as a market strategy c ould be a quick way to the bottom".
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