Posted by Renee Schmidt

I recently posted about the U.S. government’s meddling in the merger between AT&T and T-Mobile by having filed an antitrust lawsuit to prevent the deal from going through.  

It’s clear that wireless will be the communication and computing technology of the future, as sales of smartphones and tablets/iPads surge.  Competition among mobile carriers, then, is clearly important to both consumers and the economy. The Obama administration has championed a speedy rollout of faster wireless service as a key foundation for innovation and future growth. AT&T had argued that adding T-Mobile would give it the extra network capability it needed to fairly quickly roll out the next generation of high-speed service — 4G — across the nation.  But the administration’s antitrust regulators believe there are other ways for AT&T to accomplish that without taking out a competitor (ex: the company could just invest the $39 billion purchase price into expanding its own network.)

A key consideration for the halt was the potential for bigger wireless bills for consumers if T-Mobile was acquired by AT&T.  T-Mobile offers voice and data plans that, in some markets, are cheaper than AT&T by 20% or more. Pricing is the most easily measured consumer benefit of competition, and in merger cases, the government typically regards price increases of 5 percent to 10 percent or more as significant.  I’m not sure I’m buying what the DOJ is selling, but this parody drives the point home and it’s pretty funny.  Happy Friday!