By Laura Backes
Well, that didn’t go well. Being slapped with a Department of Justice lawsuit was a shock, and not one that the planned merger is likely to recover from. When AT&T first implemented its plan to buy T-Mobile, customers were incensed. AT&T’s history of price gouging and raising rates sat bitterly with the T-Mobile customers, accustomed to the slow but steady business model. T-Mobile’s current owner, Deutsche Telekom, has been looking to exit the U.S. market for more than a year now in order to focus on its European business. T-Mobile’s ability to keep up with rivals’ expensive 4G networks is fading, and they’re not implementing much to make up for that loss, so AT&T’s offer sounded like a miracle to Deutsche Telekom. But, like they say, if it’s too good to be true…
Okay, so the DOJ is blocking the deal. But what else has gone wrong? Well, Sprint is also suing to stop the merger, claiming anti-trust laws are being broken. Sprint announced that there are considerable competitive and consumer harms which would emerge from such a merger, and outlined their views in a press release.
Reportedly, the merger would:
- Harm retail consumers and corporate customers by causing higher prices and less innovation.
- Entrench the duopoly control of AT&T and Verizon, the two “Ma Bell” descendants, of the almost one-quarter of a trillion dollar wireless market. As a result of the transaction, AT&T and Verizon would control more than three-quarters of that market and 90 percent of the profits.
- Harm Sprint and the other independent wireless carriers. If the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability to use its control over backhaul, roaming and spectrum, and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition.
Also, the ‘default payment’ that AT&T supposedly had to pay if the deal fell through- remember that? Well, apparently, that’s not as iron-clad as T-Mobile thought it was. There are limits, and you can bet that AT&T will exploit them if the combined DOJ/Sprint lawsuit continues. Did you know that no deal has ever gone through after the DOJ came against it? Well, now you do. So, it doesn’t look good for T-Mobile.
It’s even been said that T-Mobile might be broken up. Companies such as MetroPCS, Leap Wireless, and U.S. Cellular are said to have significant interest in picking up new markets. It has even been hinted that Sprint might buy up T-Mobile, but since their technology is incompatible and Sprint is already hurting, that’s doubtful. Google is another buyer that is thrown out. It’s already struggling to go through with the purchase of Motorola. Adding T-Mobile would just pour fuel on the fire.
So there poor T-Mobile sits: the proverbial last guy to be picked for the team. With even the coach against them, T-Mobile may want to stay on the bench for the rest of the season.
This is a guest post from Laura Backes, she enjoys writing about all kinds of subjects and also topics related to internet service in my area. You can reach her at: laurabackes8 @ gmail.com.