Federal Government Must Walk Tightrope on Pending Wireless MergerYou might not have realized it as a kid, but when you landed on Park Place for the umpteenth time, Parker Brothers was giving you a lesson in antitrust law. In the board game Monopoly, killing off your rivals is a good thing. Antitrust laws are the government's check from that happening in U.S. industries. Those laws will be tested in coming months as various federal agencies consider one of the highest-priced corporate mergers ever proposed in America. Telecommunications giant AT&T has offered $39 billion to buy competitor T-Mobile from German conglomerate Deutsche Telekom. The merger creates substantial risk of duopoly control in the telecom market. Think of a multiple-player Monopoly game in which two of the players own most of the board. The federal government traditionally has treated such merger proposals with disdain, as two dominant players dividing up one market can create many of the same anti-competitive effects as a monopoly. If its plans go through, AT&T and Verizon would control nearly 80 percent of the U.S. wireless phone market. Not surprisingly, the next largest competitor, Sprint, has opposed the deal. For consumers, the math is simple. If this merger goes through, there will be at least one fewer choice when you next purchase a cell phone plan. The result could be higher prices for consumers, though that's not necessarily the case. Prices have dropped in the wireless industry, despite several recent mergers. Congress has held hearings on the AT&T merger, and this is worthwhile. While the bar should be set high for regulators to scuttle such mergers, the government should exercise its responsibility to mitigate pitfalls. In the case of this high-profile merger, regulators should require some divestiture of assets to maintain competitive markets. Conditional approval of the proposed merger should follow the cases outlined below. Big users of data from various wireless plans already get "throttled," a process by which wireless companies dial down the speed at which data can move.
So the major wireless companies, except for Sprint, have begun to throttle back. If you are a large user of data, once you've reached a pre-set limit of monthly use, your provider will limit your ability to quickly get information. These limits are the reality of today's market and AT&T's strongest argument in favor of its merger. The number-one outcome that consumers should see quickly in a merger of two of the top four wireless providers would be an increase in available spectrum, as AT&T works to merge the two systems. Combined with AT&T's separate purchase of spectrum from Qualcomm, consumers in cities should see more reliable coverage (meaning fewer dropped calls), and those in rural areas should have access to fast speeds that now aren't offered. Technology is changing so quickly in the telecommunications market that competition comes from a variety of sources. Some of the biggest companies in the world — Google, Apple and AT&T — are both competitors and partners in the ever-changing world of wireless service. The only constant is that consumers demand more and faster data. Google's plan, announced this week, to pay a 63-percent premium to purchase Motorola Mobility Inc. for $12.5 billion is but the latest example of how far companies will go to meet the demand. On balance, the increase in wireless spectrum that can be made available quickly to consumers mitigates potential concerns on future pricing in the AT&T merger with T-Mobile. The FCC's challenge will be to ensure that AT&T doesn't control too much spectrum in any individual market to serve as a barrier of entry into the market by Sprint, Cricket or other yet-unseen competitors. REPRINTED FROM THE ST. LOUIS POST-DISPATCH DISTRIBUTED BY CREATORS.COM
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