The FTC is asleep at the master switch
20 Mar 2011Thanks to Tim Wu for the title inspiration.
AT&T announced on Sunday that it agreed to buy T-Mobile USA from Deutsche Telekom, in a $39 billion deal that will reshape the cellular telephone industry.
So says the NYT, confining their interest in the effects this deal will have on consumers to the following paragraph:
Already, some critics say the deal will result in higher prices for consumers. T-Mobile had offered some of the lowest rates in the county. While AT&T is expected to honor current T-Mobile contracts, it is likely that once those contracts expire, T-Mobile customers would be expected to pay AT&Ts higher rates.
…followed by:
Even so, AT&Ts bid will solve the problem facing T-Mobile USA, the smallest of the countrys four major cellphone service providers. Both companies operate on the same wireless standard, GSM. Through the deal, T-Mobile will finally gain a path for the next generation of cellphone data, known as 4G, by using AT&Ts forthcoming LTE standard.
Arguably, the reason that smaller providers like T-Mobile are having a hard time getting access to 4G infrastructure is because there’s so little meaningful competition in the wireless market to begin with (from my perspective, most of the competition is in marketing, not actual services provided). This deal promises to make all that worse, not better.
The deal will also drive enormous cost savings. The combined company is expected to shutter retail outlets in areas where they overlap as well eliminate overlapping back office, technical and call center staff. Marketing costs could also be cut. Cellular carriers have been one of the biggest advertising spenders in the nation.
I wouldn’t hang around on the edge of my seat for AT&T to pass those savings on to customers. Also, it would be nice if the NYT considered these “cost savings” from a perspective other than AT&T’s bottom line. Consolidating retail, office, technical, and support staff = job losses.
Yet one more piece of evidence that what’s good for industry isn’t always good for the country.