Heartland Institute Reacts to Obama Administration Suit to Stop AT&T/T-Mobile Merger

Published August 31, 2011

The U.S. Department of Justice filed suit in federal court Wednesday to stop the proposed $39 billion merger of AT&T and T-Mobile, saying the deal would significantly reduce competition in the wireless industry and harm consumers.

The following statements from technology and legal experts at The Heartland Institute may be used for attribution. For more comments, refer to the contact information below.

“The U.S. government has been creeping further away from the original intent of antitrust laws with each court decision. Today’s move to block the merger of AT&T and T-Mobile signals they’ve forgotten the intent of the law altogether. The Obama administration must be careful to remember that antitrust law doesn’t exist to protect companies from their competition, but rather to protect consumers from the effects of a competition-less market.

“The merger would have represented a huge net gain for consumers, many of whom would now have the benefit of faster wireless Internet service and the potential for quicker infrastructure improvements. Since mobile technology is the primary access point to the Internet for minorities and the impoverished, any move to better the service would seem one in alignment with the president’s own goals to improve Internet access for those communities.

“It is high time that regulators and bureaucrats ask themselves what is in the best interest of the consumer. Had they done so to begin with we could have avoided a multi-million-dollar interest-group PR campaign that, when all is said and done, will only increase access costs for those consumers in the greatest need.”

Marc Oestreich
Legislative Specialist for Technology Policy
The Heartland Institute
[email protected]

“Apparently, the word ‘competitive’ means whatever the current administration wishes. By the Federal Communications Commission’s own estimations, 89.6 percent of the U.S. population has access to five or more mobile carriers.

“Peer-reviewed economic analysis has further shown there is little-to-no impact on prices beyond three providers – whether it’s low-cost carriers such as Leap, middle-range carriers such as MetroPCS, or regional providers such as U.S. Cellular and Atlantic Tele-Network. And this is before LightSquared rolls out its new 4G network, Dish Network determines whether it wishes to enter the fray, and who knows what other developments are on the immediate horizon.

“Nope, no competition here, folks – only President Obama myopically marshaling his troops to drive up the costs of doing business for the wireless industry, reducing consumers’ choices among wireless carriers best suited to their individual needs and preferences, and redefining ‘competition’ to reflect an alternate universe where the United States doesn’t possess the most intensely competitive mobile-services market while boasting among the lowest prices and highest quality on the planet.”

Bruce Edward Walker
Managing Editor, InfoTech & Telecom News
The Heartland Institute
[email protected]

“So let me get this straight. T-Mobile has been trying to compete in the nationwide telecom market in the United States against other larger carriers based on its status as a feisty market underdog, but says it can’t do so without further capital, which its parent is unwilling to invest. So the merger was pursued.

“DOJ has sued to block the merger, wishing to maintain T-Mobile as a competitor to AT&T. T-Mobile and its German parent, Deutsche Telekom AG, believe further cash investment in T-Mobile would be futile. By filing its suit, DOJ is essentially saying T-Mobile has a future as an AT&T competitor. Thus, DOJ is substituting its business judgment for that of T-Mobile and its parent.

“The purpose of antitrust law is to preserve competition and help consumers. By dooming a competitor, DOJ is doing nothing to advance this purpose.

“It should also be noted that defining the relevant markets (in which antitrust merger laws measure competitive impacts) will be extremely complex. DOJ identifies consumers in two separate circumstances – individuals (usually local) and nationwide commercial and government consumers requiring nationwide service. Without belaboring the differing impacts here, suffice it to say this case will take years to resolve.

“AT&T has every reason to fight on – it faces a hefty financial penalty. And T-Mobile will have no incentive to fight hard to compete while the suit is pending. I’d like to know how this advances competition.”

Maureen Martin
Senior Fellow for Legal Affairs
The Heartland Institute
[email protected]
920/ 295-6032

“The proposed merger would not eliminate T-Mobile as a rival. It would make the failing wireless firm a real competitor by combining its consumer benefits with those of AT&T. The Obama administration’s antitrust action will actually reduce competition and hike consumer prices further. The only people who will benefit from this entirely unjustified action are the shareholders of the other industry competitors to AT&T and T-Mobile.”

S.T. Karnick
Research Director
The Heartland Institute
[email protected]

The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.