AT&T's plan to take over T-Mobile has set the stage for Washington's high-tech policy battle of 2011.
But that's not all that's at stake. This proposed deal paints a dark scenario for the future of all communications -- a future that looks increasingly like a bygone era of monopoly control.
If AT&T succeeds it will form a communications colossus to rival Ma Bell. Two companies, AT&T and Verizon, would control close to 80 percent of the mobile marketplace in America -- a figure that could exceed 90 percent, if, as many anticipate, Verizon buys Sprint.
For the hundreds of millions of American people who rely on handheld phones and wireless Internet devices this equation spells disaster.
Ma Bell Muscle
As more and more people are turning to handheld devices to go online they face fewer options in a marketplace dominated by massive, vertically and horizontally integrated companies. The net result for consumers is higher prices for fewer choices. Competitors trying to innovate in this space with open networks and devices will face formidable obstacles to entry put in place by a duopoly that sees openness as anathema to profits.
AT&T is poised to exert its full political might to get this merger done, and the communications giant is accustomed to getting its way in Washington.
Its lobbyists have their own hall pass at the FCC, where they've visited more than any other corporation. It has spent more on congressional campaigns than any other corporation in documented history. And AT&T even has the ear of the president -- in the person of telecom-lobbyist-cum-White-House-Chief-of-Staff William Daley.
Merger Myths
AT&T's PR machine is spinning like crazy to convince Americans that they've got our best interests at heart... and that their friends at the Department of Justice and FCC should rubber-stamp this merger.
AT&T executives and flacks now say the "synergies" of the deal will lower prices and improve "quality of service for customers," and that it will "expand America's workforce" providing thousands of new jobs for our economy.
But when was the last time a merger actually created jobs for Americans and not more pink slips? This merger is no different. It puts the jobs of nearly 40,000 U.S. T-Mobile employees at risk. Many of the jobs at retail stores and call centers will be eliminated, and there will be more jobs lost as the cost-cutting effects of this merger ripple through the broader economy.
They say the T-Mobile takeover "strengthens and expands U.S. mobile broadband infrastructure," and that it helps us "achieve policymaker goals of deploying broadband to 95 percent of the country, including smaller, rural communities."
But according to recent Commerce Department data, wireless services are already available to 95 percent of Americans. If this merger goes through, industry analysts speculate that AT&T will decommission as many as 40,000 wireless towers, reducing the quality of coverage for hundreds of thousands of Americans.
They say the merger "enables the next era of American innovation and continued growth of U.S. high tech industry."
But the merger would allow AT&T to exert even greater gatekeeper control over what happens on the wireless Web. In the past, the company has been caught blocking competing services -- like Skype, Google Voice and Slingbox. AT&T's expanded control over the handset market would stifle innovation in devices. Look no further than AT&T's own record of "crippling" handheld phones - like the Motorola Backflip -- that can do more than what the company wants.
They say the overall average price-per-minute for wireless services has declined 50 percent since 1999, "during a period which saw five major wireless mergers."
But that figure is highly misleading. While the cost to consumers for voice services has dropped, the sum total of charges on mobile phone bills has steadily increased, according to J.D. Power and Associates. Added costs include spiraling rates for texting and data services as well as hidden handset subsidies. With less competition among carriers, we can expect AT&T to charge you even more.
(Those who will feel this worst are the 34 million T-Mobile customers who pay on average 20 percent less for mobile service than AT&T customers. Even if AT&T agrees to honor existing T-Mobile contracts for their remaining length, these customers will surely see higher prices when those contracts expire.)
There is nothing about having less competition that will benefit the new generation of smart phone users. Before rushing to sign off on yet another mega-merger, the FCC and the Justice Department should confront the very real problems of runaway consolidation in the wireless market.
The Obama administration, which is keenly aware of this deal, has yet to say no to a massive corporate merger ... despite a June 2008 pledge by then-candidate Obama to act "against the excessive concentration of [media] power in the hands of any one corporation, interest or small group."
But the negatives of AT&T's takeover of T-Mobile are too large for even this president to ignore.
As more people learn about -- and speak up against -- this raw deal, politics as usual may take a back seat to the public interest. At last.
Follow Timothy Karr on Twitter: www.twitter.com/TimKarr
Yes, the role of government in the free market is to ensure there is a level playing field and to encourage competition within an industry. Hopefully they will block this merger/acquisition and open up more bandwidth in more markets.
And I'm a supporter of net neutrality as well. I don't trust ATT or the cable company to prioritize which sites get better and faster access to my computer because I know it won't have ANYTHING to do with what I want and everything to do with their bottom line. I want everyone treated equal so I can decide which sites I want to visit. And don't give me the rhetoric of "you have choices" because I only have 2 choices where I live: ATT and Charter Communication - neither one of them is worth a $hit.
The bottom line is that Congress needs to reform the industry. They need to require all phone makers to offer their phones for sale unlocked. They also need to allow customers to unlock their phones legally once their contract is up. Lastly, they need to regulate the fees and extras charged by the companies. Every company should be required to publish their prices including all fees, this will let the consumer make a qualified, informed decision.
I has an Droid phone for a day and took it back. I made 2 short calls and the battery was dead by 2:00 pm. The sales guy said, "you just need to learn how to manage the battery better." I said, "Its a smart phone, it should manage its own battery."
I've had the iPhone 1 and 3G with ATT. I left and went to T-Mob because ATT didn't have any signal at my house and I could go month to month on T-Mob. Got home and still no signal. Also, the Nokia phone I got made me miss the droid phone. Anyway, I got the Verizon iPhone the day it came out and been in phone heaven. Its much cheaper than ATT was also.
I agree with your other phone comments. I hate contracts - I want a company to work to keep me, and I want to be able to use my phone on whatever network I want.
Anyway, good luck with T-Mob and the ATT thing. Hope it works out well for you.
Again.