AT&T/T-Mobile Merger 'Not In the Public Interest' 190
jfruhlinger writes "AT&T's plan to merge with T-Mobile just hit a pretty big snag. The FCC declared the merger would be anti-competitive and not in the public interest."
According to the NY Times, the FCC seeks to hold a hearing before an administrative law judge in which the burden would be upon AT&T to prove the deal isn't anti-competitive.
Re:So let me get this straight. (Score:5, Interesting)
They let the market sort it out. I might not have been the best approach from a technical point of view, but from a capitalistic point of view it was fine. Given that the carriers practically give away phones every time you sign a contract, having to wait a year or two to jump carriers is not the end of the world. It would be great if you could take your phone with you, but that would be unAmerican. I would rather that the carriers get to decide what technologies they want to use. Expecting the government to make educated decisions when it comes to technology is unrealistic.
for those not in the know: (Score:5, Interesting)
The reason why allowing att to buy tmobile is "epically, boneheadedly bad for the public interest" is as follows:
The FCC licensed both tmobiles and atts GSM spectrum as exclusive licenses.
This means that if you want to use a gsm technology device on internaltionally standardized frequencies in the us, you either use att, or tmobile. (Or one of their downstream sublicensed local carriers.)
Allowing tmobile and att to merge (given the lopsided nature of such a process though, "buyout" seems more applicable..) would create a single, exclusively licensed "super carrier" that owns the whole standard gsm band, creating a natural monopoly. Historically, natural monopolies have never been in the public's best interest. (See standard oil, bell telephone, etc.)
Add to that the leaked inside documents showing that the cost of aquisition of tmobile exceeds by a large sum the estimated costs of builing out comparable capacity on att's existing network infrastructure, and also the fact that once att owns tmobile's spectrum license, it can choose to revoke any downstream sublicensing agreements with local gsm carriers that are currently contracted with tmobile.
The potential for upheval in the already low-diversity market for gsm carriers, the potential for massive job destruction from having licenses pulled, and the omnipresent risk of abusive monopoly pricing with no free market alternative (CDMA is not a valid alternative if you require international operation) is simply and demonstrably unacceptable.
Re:The SEC matters, not the FCC... (Score:5, Interesting)
The merger would most certainly require FCC approval, and would not be able to be completed without it.
You're right that the FCC's input to the SEC is unimportant, because the FCC does not need to explain itself. It can simply say "no" and that would be that.
Don't make the same mistake as Canada! (Score:5, Interesting)
This CDMA vs GSM debate is totally off topic. WRT the merger question, the FCC is totally right. Like AT&T want to do, Rogers did acquire FIDO because this pesky little competitor in the GSM space (Bell and Telus have CDMA networks) dared come out with a very competitive "unlimited" plan (CityFido for those that remember). Friends of mine that were lawyers in this field were shocked that the CRTC allowed this merger to happen. At very least, they thought the CRTC would have used their regulatory authority to impose some undertakings, for example, you must grandfather not only CityFido subscribers, but continue to offer this plan for X number of years. They didn't and the first thing that Rogers did was essentially eliminate the CityFido plans as they had existed.
Now Canada has among the lowest rates of smartphone/cellphone usage and subcriber base in the world and surprise, among the highest smartphone/cellphone pricing in the world. Just google it and you will see. A survey I saw not long ago put Canada around Peru for cellphone subscription rates. What an embarassment.
It was a huge battle to bring in a competitor (Wind Mobile) because of the narrow interpretation of the legislation the CRTC used to the benefit of the incumbents. The Canadian market desperately needed new competitors to shake up the market because the incumbents were clearly operating as oligopolists and the regulator was letting it happen unabashed. It took an act of Cabinet to overrule the regulator and though rates have dropped 30% overnight, Wind is not having an easy go at it. The Egyptian financial backer actually regrets jumping into the market. Just google Wind Mobile in the news and you can see for yourself.
In this case, Canada is not living up to that mythical socialist ideal that so many Americans think we are. In the wireless space we are where the US incumbents want to be if they could buy off the politicians and the regulators. Less competition, more profits!!!! The Canadian wireless market is a textbook example of how certain industries NEED regulators to keep anticompetitive behaviour under control in order to encourage growth and advancement.
As a Canadian, I used to look longingly at the rapid pace of innovation and the menu of options you have in the US. Mega-mergers like this will take you along the path to where we are in Canada.
Good luck to you!
Re:The SEC matters, not the FCC... (Score:5, Interesting)
Have you seen the current Republican field? I wouldn't hold your breath, though the major cell carriers certainly should.