Oh AT&T and TMO.. what are we going to do with you?

Antitrust Committee Chairman: AT&T, T-Mobile Merger "Contrary To Antitrust Law" "Should Be Blocked"

from The Consumerist by Meg Marco

 Senator Herb Kohl (D-WI), chairman of the Senate Subcommittee on Antitrust, called on the FCC and the Department of Justice to block the proposed merger of AT&T and T-Mobile, saying the deal would "likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies."
The Senator's letter, which cites research by our parent company, concludes that T-Mobile is a price leader in the cell phone market, offering prices and rate plans significantly less expensive than the three other national cell phone providers.
According to the Consumer Reports research cited in the letter, T-Mobile wireless plans typically cost $15-$50 per month less than comparable plans from AT&T.
Further, the top four competitors currently control 90% of the cellphone market by revenue. If this merger is allowed to go through, Kohl writes, AT&T and Verizon will control nearly 80% of the market. He feels this is a violation of Section 7 of the Clayton Antitrust Act.
He goes on to address the arguments in favor of the merger that are being made by AT&T and T-Mobile, and says that "all are without merit."
Of particular concern is the not-sexy-but-critical issue of roaming and access to landlines.
When a customer of a local or regional carrier (such as U.S. Cellular, Cricket or Metro PCS) leaves the local service area of that carrier, the company must "roam" on the network of another carrier, usually a national carrier like AT&T or T-Mobile. The company then must pay substantial fees to that carrier.
According to Senator Kohl, "The bottom line is that the smaller local and regional cellphone carriers will be paying their national competitors large sums of money in order to provide their customers nationwide cellphone service."
Consumerist, in partnership with Consumers Union, supports the blocking of this merger.
Parul P. Desai, policy counsel for Consumers Union, said, "Chairman Kohl's letter spells out precisely how this merger could hurt consumers and why regulators should block it. The letter clearly shows how the deal would harm competition, and it confirms that AT&T's claim that it needs this merger to serve rural areas doesn't hold water. This is a powerful rebuttal to AT&T's arguments, and we hope regulators will pay close attention and ultimately reject this deal."
Although the public comment period is now over, we are still attempting to collect 25,000 signatures for a petition that we will share with the FCC. If you'd like to help us with this goal, please click here.
Download the Full Letter (PDF)
UPDATE: Representatives Edward J. Markey (D-Mass.), John Conyers, Jr. (D-Mich.), and Anna G. Eshoo (D-Calif.) have now written a similar letter to both the Department of Justice and the Federal Communications Commission.
"We believe that AT&T's acquisition of T-Mobile would be a troubling backward step in federal public policy - a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace," the letter reads.
Markey, Conyers, Eshoo Letter (PDF)