AT&T made an announcement in March of plans to merge with T-Mobile for $39 billion. Since this announcement was made, there has been legitimate concern whether the merger is unlawful and should be permitted. There has also been some scrutiny over the motive for these actions. Considering it is a violation of the anti-trust laws, they should not be allowed to continue this merger.
AT&T has a history of being unable to keep up with growing data usage. It grew by 8,000 percent in 2007 and is expected to be eight to 10 times what it was in 2010 by 2015. Since AT&T is already having trouble supporting the customers it currently services, it is obvious they will be unable to support the vast increase without making a change.
The problem lies in AT&T’s growing network combined with its inability to gain enough spectrum, or government controlled airwaves a company must license in order to transmit wireless signals. Without enough wireless spectrum, AT&T’s subscribers will experience forced dropped calls and slow internet service. There are two ways in which the cellular company might be able to acquire wireless spectrum: the first is to build cell towers. The second would be to buy already existing towers from another company.
If AT&T were to build towers, it could take months or perhaps even years. They would first have to search out the properties for the large quantities of towers they need. Then, they would have to go through the Federal Communications Commission to get authorization as opposed to simply buying a tower and getting an immediate resolution to the problem. Of course, they’ve opted to buy towers. But they’re not just looking to buy towers from other companies, they want to buy out T-Mobile’s entire network.
T-Mobile’s infrastructure is viewed as a huge asset by AT&T. Their utilization of a technology known as GSM (Global System for Mobile Communication), as opposed to CDMA (Code Division Multiple Access), will allow them to immediately move a large majority of AT&T’s network strain onto T-Mobile.
However, the same infrastructure that would allow them to transition all that build up easily and effectively is also an infrastructure completely differently to that of AT&T’s. For instance, T-Mobile doesn’t have LTE (Long Term Evolution) technology and therefore it cannot support LTE 4G. It can only support its own version of 4G which runs on HSPA (High Speed Packet Access) technology. It is for this reason there is speculation as to why AT&T is trying to buy them out. They don’t have enough spectrum for the short-term issue and need immediate relief. But T-Mobile’s infrastructure is going to need intense renovations in order to support the technology AT&T employs.
The Department of Justice has stepped in on the situation and is taking AT&T to court over the matter. While AT&T states the merger will be more beneficial, providing an extra 5,000 jobs to the economy as well as a higher quality of phone service, the Department of Justice argues the merger is anti-competitive and would increase prices for consumers.
They are relying solely on the anti-trust laws, which ban “unfair methods of competition” and prohibits mergers and acquisitions that may be used to substantially lessen competition.
This is a very true statement and justified concern. Not only will AT&T’s merger with T-Mobile boost AT&T into the number one spot by leaps and bounds, they’ll also be eliminating an aggressive competitor. T-Mobile implements some of the industry’s most popular technologies and for cheaper prices. To buy out this company would be a dramatic decrease in competition and an increase in prices. They shouldn’t be allowed to succeed in this endeavor. TAS