Last Sunday, the eve of the wireless industry's largest trade show in Orlando, AT&T announced his plan to buy rival mobile service provider T-Mobile United States to $ 39bn. This merger was allowed to proceed, AT&T would control more than 40% of all U.S. wireless subscribers. (By comparison, combined T-Mobile UK and Orange want to check the 37% of the UK mobile market.) Together, AT&T and Verizon Wireless would be an effective wireless duopoly, check the almost 80% of the market.
The importance of this type of consolidation can hardly be overstated: in a society where politicians prefer to rely on competition – rather than regulation – to protect consumers, AT&T's proposed merger with T-Mobile can have serious implications for users of mobile phones. Consumers ' pocketbooks will probably be the hardest hit. T-Mobile, according to the more price sensitive customers; with its affordable monthly plans out of the image AT&T and Verizon will feel less pressure to compete on price with the much smaller Sprint, a company that the Wall Street Journal noted would be "a marginal nr 3 plays".
And this concentration can lead to even greater price increases for visitors to the United States from abroad and the Americans who travel often. Since T-Mobile and AT&T are the only major U.S. airlines, which uses the GSM standard – the most popular portable standard world-wide – could AT&T soon find himself with almost no competition for these two categories of users. Overall, can mobile phone users expect higher bills, longer contracts and more hidden and confusing fees, if this merger comes to pass.
But harms consumers would not just be monetary. In addition to its lower prices, T-Mobile is also known for its more user friendly Data policies. Unlike AT&T, which caps monthly data usage, offers T-Mobile unlimited data plans for its users. What is more, plans for AT&T's most generous data, which allows 4 GB using a month (ca. 12-24-hour streaming video), will cost you one-and-a-half-times what T-Mobile unlimited plan will. And while the T-Mobile has never prevented its users from access to sites and services of their choice via its network, AT&T, is blocking access to Skype, Slingbox, and Google voice at different points during the last few years.
This last point could prove especially damaging given the current state of the net neutrality in the United States. The term "net neutrality" refers to the idea that all internet traffic should be treated equally and that service providers should not be able to block, slow or impair the traffic based on its type, origin or destination. Even though net neutrality has many vocal supporters in the United States, including Minnesota Senator Al "Al" Franken, so far, have political solutions that would write the principle of net neutrality in the legislation excluded mobile data providers from the rules. Lack of competition in the wireless marketplace, combined with a lack of strong net neutrality rules could allow the AT&T block of popular, high-bandwidth services like Netflix.
Still, even as AT&T works to cultivate an air of urgency around this proposed merger, the company's acquisition of T-Mobile is anything other than a fait accompli. In contrast to the last great communications merger in the United States, of Comcast and NBC Universalwould AT&T's merger with T-Mobile as a "horizontal" mergers – that is to say, a merger between two companies that compete to provide the same types of services. The New York Times and the Washington Post has already expressed scepticism about the merger and the Economist – a publication known for its market-friendly views – advocates that it be blocked. Historically, it is horizontal mergers, which has attracted most of the control from the Federal Government.
It is still visible on the Department of Justice, the Federal Communications Commission and the Obama administration has the political will to reject this merger, but if they are to keep wireless consumers best interests in mind, so they should.
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