AT&T has the urge to merge with T-Mobile…and it’s just about the worst potential marriage of 2 companies that I can recall in my lifetime. In fact, it’s bad on so many counts that it’s hard to know where to start!
There are inflection points in our country’s history when we have to decide whether our nation will be about greatness or something else. This is a time when we face a challenge: Should crony capitalism win out or should the politicians in Washington stand up and do what’s right for America?
If AT&T is allowed to take over T-Mobile, it will take us back to the mid 1990s. If you know your wireless history, Congress made a terrible decision in the 1980s that allowed a duopoly for cell phone service in America. Each community had 2 wireless providers and there was no innovation and no price competition. Only the wealthy had cell phones for very sparing use.
Congress eventually realized the error of its ways and the opened the market to new players. The innovation and price competition has never stopped since then. In fact, the innovation generated big exports of big dollar technology around the world to make us more globally competitive.
The problem with the AT&T merger is that it would leave us with 2 monopoly local phone companies — Verizon being the other one — controlling nearly three quarters of all cell service in the United States. It will create another shared monopoly. And monopolies don’t want unlimited use of data. Monopolies want to regulate scarcity, with no thought to innovate or create more of what we seek.
This marriage would put us in a lousy position versus the rest of the world. If you look at Internet service, our connectivity is already a shadow of what’s available elsewhere in the world in terms of speed. It’s like the rest of the world is turbo-charged and we’re still riding around in Model T Fords. That’s the problem when monopolies take over an industry.
The AT&T/T-Mobile merger is yet to be approved. So this situation calls for real spine from the politicians. But I’m very concerned becaused AT&T has huge lobbying muscle. They can buy off the politicians and bring great harm to our country and our competitive position in the world.
Let’s move from the big picture to what this merger would mean to you as a customer. AT&T has received abysmal marks from Consumer Reports in the magazine’s January 2011 survey of the wireless industry. Prior to that, the company received the lowest score of the Big 4 wireless providers in May 2010’s American Customer Satisfaction Index.
If you think about this urge to merge as a Monopoly metaphor (as in the board game,) this is all about AT&T getting Park Place. And in this instance, Park Place is spectrum. So AT&T wants to buy T-Mobile to steal our public asset (the spectrum) and put it to work for itself. The merger will not create any new spectrum, it will only rearrange the game so they end up with all the chips. Spectrum is a public asset and it’s completely wrong that AT&T has any chance at cornering it.
This is rotten all around.
T-Mobile has historically had a decent rating on customer service and decent prices. Yet AT&T is at the other end in terms of pricing, just as they are in customer service. So a merger will mean T-Mobile’s 39 million will likely have their wallets chewed to shreds and get shoddy service to boot.
If the merger goes through, the only other big boy in the industry would be Sprint and they’d really be dwarfed by AT&T and Verizon. Sprint has just a hair over 10% of the market and won’t really be able to compete. Nor will the even smaller players be able to compete, short of rolling out new technology that gains them more market share.
(As you can tell, I have absolutely no opinion whatsoever on this possible merger! Keep leaving your comment below so I can know what you’re thinking.)