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Senate antitrust head: AT&T T-Mobile deal 'highly dangerous'

updated 02:40 pm EDT, Wed July 20, 2011

Senate antitrust lead wants ATT T-Mobile blocked

US Senate Antitrust Subcommittee head Herb Kohl on Wednesday called for the Department of Justice and FCC to block the AT&T buyout of T-Mobile. Letters to the two agencies from the senator warned that the deal would be "highly dangerous to competition" and would run against antitrust laws. Since cellphones are so vital to the U.S., "full and vibrant" competition was essential so that they got the most choices and better prices.

AT&T tried to spin the statements for the National Journal, claiming that "few others" opposed the deal. The claim has largely been proven false. Critics have noted that many of the organizations endorsing the deal have received large contributions from AT&T. GLAAD, for example, effectively forced its previous leader out, retracted its earlier endorsement of AT&T, and made a statement in favor of net neutrality after its members objected to trying to please a corporate donor with political favors.

Kohl's message isn't a guarantee that the DOJ or FCC will rule against the merger or impose conditions that would satisfy his demands. However, they serve as an important influence in the final decision and may dictate how fellow Democratic senators and congresspeople act.

The FCC is required to be largely secretive around its decision-making process for the merger and hasn't hinted where it might lean. Public advocacy groups and other critics have been concerned that the FCC may follow a recent pattern of refusing to significantly challenge telecom giants and rule out blocking the deal even if it didn't believe a compromise would be effective.

by MacNN Staff



  1. LenE

    Joined: Dec 1969


    I'm confused

    What does a g** rights group have to do with a senate committee chairman on antitrust issues or the pending AT&T and T-Mobile merger?

    -- Len

  1. Flying Meat

    Joined: Dec 1969


    It is, perhaps unusually,

    provided as an example of organizations receiving cash from AT&T "and" endorsing the merger.

    I agree that an actual telecom industry example might have been a bit more on point, but...

  1. testudo

    Joined: Dec 1969


    Re: I'm confused

    The chairman sent letters to two agencies. ATT is trying to spin it as being "a few dissenters, but most people love the idea." Reporter then points out that this has been proven mostly false, that many of the organizations giving their approval also receive money from said company. And then an example of how such an event transpired at an organization.

    I don't know, it seemed clear to me.

    What I don't understand is how they can deny this. It is obvious that the only way for ATT to survive in the US is to get larger. Otherwise, their costs will soon overburden the company and force them to raise rates by at least 50%. This would drive customers away and flock to the competition.

    So, in order for ATT to survive, it needs to get bigger. (See reason for Exxon/Mobil merger). Only then will we have competition in the mobile space. And once it happens, look for all the cost savings (from dumping salaries of T-Mobile people who duplicate tasks at ATT). The savings will drive prices down into the range of $15 for phone, $10 for unlimited data.

    You can count on it. It's ATT. They're not some evil, greedy corporation looking to maximize even more profit.

  1. ferdchet

    Joined: Dec 1969


    Vibrant? And proofread much?

    I guess Verizon and Sprint are poor little babies who can't compete? I would be interested to see which of the mobile carriers have donated to Herb Kohl.

    Yeah, that's right. His last name is Kohl, not Kolk. He's from Wisconsin. And he's part of the Antitrust Subcommittee, not the Sucommittee. Good Lord, it's not like you were scooping another outlet. Get it right!

  1. aristotles

    Joined: Dec 1969


    If Sprint and Verizon cared about competition

    They would have followed the upgrade path to LTE taken by CDMA carriers in Canada, Australia and other countries which switched to HSPA+ before going to LTE because they knew that CDMA was a dead end and LTE was going to take a while to finalize.

    Instead of trying to promote open competition, VZW and Sprint decided instead to milk CDMA for all it was worth and try to fragment 4G with LTE+CDMA Voice and CDMA+Wimax..

  1. Tjp

    Joined: Dec 1969


    Merger is good

    Sprint for one needs a kick in the head ... They dominated the cell phone industry nationwide. Then they allowed Cingular and ATT Wireless / McCaw Cellular to eat their lunch. Verizon similarly followed ATT just not as aggressively. Without motivation then they will just slack off. SPRINT OWNED THE MARKET and fell apart. They re-orged and failed to complete so many projects they are now a poor 4th place. At least with the merger they will be #3 ...
    And Verizon has the money to pour into more development. So don't cry for them.
    Nothing we do can cause a "vibrant" environment as the barrier to entry cost burden is way to high for new companies to start up a nationwide service.
    ATT and T-Mob joining for one gets American cell dollars kept more or less in America (T-Mob send a lot overseas to the fatherland) and I for one could use the better coverage after the merger.
    I currently am one of those ripped off (err ... paying monthly) to ATT and I SUPPORT the merger.
    What I'd like is that the government impose a few rules to allow the merger to take place.
    All off contract phones are to be unlocked if technically possible at no charge to the phones owner by the original subsidized carrier or the phones manufacturer, with the only allowable charge being limited to $10 to recover any manufacturers cost in unlocking the device. In the future when a phone is off contract it is electronically unlocked without human intervention if technically possible. (iPhone and Android phones can do this now, most smart-phones should be able to do this, and non-smartphones may actually require a code from a human ...) The rates for SMS, MMS and data services needs to reflect actual cost (hint SMS becomes free, it is part of the normal tower to phone protocol, just overloaded for the message) The only real charges become international gateway fees. MMS and data become much cheaper. If the cable company can give me $14 a month unlimited data, so can the cell companies. Especially considering the bandwidth is less on the cell phones currently. And as in the merger case they are getting more towers out of the deal, the congestion arguments fade as well. I know its an apples to oranges comparison, but closer to Granny Smiths compared to Yellow Delicious.

  1. facebook_Terrin

    Via Facebook

    Joined: Jul 2011


    The buy out hurts

    Any consumer who doesn't own shares in AT&T who supports the merger is an idiot. It creates a monopoly on the GSM network. So, as an iPhone user on T-Mobile who owns my phone out right and without contract, I have no easy options if I dislike the changes in policy that will occur after a buyout. For instance, T-Mobile has two million iPhones user all off of contract. T-Mobile has cheaper data plans, and doesn't require a data plan at all for iPhone users. AT&T requires a data plan for all iPhone users even those off of contract who own the phone free and clear. So, if the buy out goes through, I have no options other then to ditch the GSM network. That means my expensive phone is worthless. I will even have a hard time selling it because most people buy used iPhones know to use on T-Mobile. That doesn't benefit consumers at all.

    Further, the economy will take another blow. AT&T will fire thousands of people. It will close stores. That means the tax payers will be paying unemployment benefits for the next year. Those employees will not have enough money to contribute to the economy. The loss of taxes from the stores will hurt local governments already struggling because of the economy.

    Hardware manufacturers like Apple will hurt because of the buyout. This is because AT&T will have more power to dictate terms thereby killing innovations. The iPhone never would have come out as we know it today if AT&T had a monopoly on GSM. That means no Android as we know it today either.

    Finally, T-Mobile keeps AT&T somewhat honest. It has superior plan options.

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