Editor’s Note: The following article is reprinted from Network World.
The Senate Judiciary Committee will hold hearings on the proposed merger between AT&T and T-Mobile next month to examine the deal’s potential impact on the telecom market.
The hearing will be held by the Senate Judiciary antitrust subcommittee on May 11 and will be headed by Wisconsin Democrat Herb Kohl. According to the hearing notice on the Judiciary Committee website, the hearing will ask whether the proposed merger would be the equivalent of “Humpty Dumpty being put back together again,” a clear allusion to fears that a merger would signal the reconstitution of the old “Ma Bell” AT&T monopoly that the government formally broke up in 1982. The committee has not announced any scheduled speakers or witnesses for the hearing at this time.
Many critics have contended that an AT&T-T-Mobile merger would at the very least lead to the emergence of a duopolistic
wireless telecom market controlled largely by Verizon and AT&T. Opposition to the proposed merger has united both consumer advocacy groups such as the Consumers Union and rival wireless carriers such as Sprint. Sprint CEO Dan Hesse argued that the newly merged wireless company would have “tremendous” power over the wireless market and would be bad for consumers.
“If you take a look at the market power of the big two, in postpaid, which is contracts, the way most users think of the business, in 2005 the big two had 52 percent market share,” Hesse told CNBC’s Jim Cramer. “They’ve expanded that now with acquisitions in the last few years, up to 67 percent. If this transaction goes through you’re talking 79 percent, or roughly 80 percent of the market controlled by two companies. I think that’s a little too much — too much concentration.
If AT&T’s T-Mobile acquisition gets approved, it will be the fourth major wireless carrier merger in eight years, following AT&T-Cingular in 2004, Sprint-Nextel in 2005, and Verizon-Alltel in 2008. AT&T would also become by far the largest wireless carrier in the United States with more than 130 million subscribers.