Consumers may be losers in an AT&T merger with T-Mobile
An AT&T takeover of T-Mobile could reduce competition and choice and raise prices.
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The Obama administration has already allowed a couple of large mergers. Online ticket service Ticketmaster bought out Live Nation Inc., a concert promoter, related businesses to be sure, but not direct competitors.Skip to next paragraph
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The administration also allowed Comcast, the nation’s largest cable TV company, to absorb NBC-Universal, the TV network. Again, the businesses were closely related – one creates content and the other distributes it – but they weren’t principally direct competitors, such as AT&T and T-Mobile now are.
Google’s innovative Android operating system could be a loser, too. T-Mobile has an open approach to app development and availability, meaning that it is easier for an app developer to offer its product directly to consumers without being approved by the carrier. Fewer carriers could make it easier for Verizon and a bigger AT&T to control apps.
AT&T argues that prices for mobile customers have been dropping in recent years, proof that plenty of competition exists. It also says that with the merger, service to rural areas will improve and the upgrade to the next level of technology – 4G – will come faster.
Those claims should be thoroughly vetted. Meanwhile, the era of low prices may be ending. AT&T has already eliminated “all you can eat” data plans that allow unlimited data usage. It has installed tiers with pricing caps on its data plans, making phone ownership more expensive for heavy users.
Verizon has said it’s likely to follow this year. More expensive data could mean less use of the burgeoning abilities of smart phones and a general slowing of innovation in the whole industry.
Influential tech analyst Om Malik has summed up the effect on consumers if the merger goes through: “[T]he freewheeling culture of downloading apps that helps spawn the new mobile Internet revolution would come to an end,” he writes in his blog. “Bluntly put, AT&T is carbon monoxide for this blossoming ecosystem.”
Decades ago the federal government broke up a telephone monopoly and brought in an era of unprecedented innovation, choice, and price competition for consumers.
Now government may need to step in again to make sure that the heat stays on in the innovative hothouse that was created.