Hypothetical Doomsday Declarations Don’t Justify Merger Regulations

When AT&T and T-Mobile announced their $39 billion merger late last month, it didn’t take long for knee-jerk opposition from media reform groups.  They declared it “unthinkable,” claiming it would bring “less competition” to the mobile market.  But there are many reasons to show the merger could actually benefit consumers and incent competition.

First, the AT&T/T-Mobile merger makes technological sense.  Both companies utilize the same broadband technologies and will be able to easily integrate their networks. By pooling the two companies’ spectrum, cell towers, and other infrastructure, consumers will likely benefit from better coverage and reception – both in rural areas where build-out is lower and in urban areas where broadband demand often exceeds capacity.

This is where declarations that there will be less competition are laughable. Competition for radical media reform groups means the pure number of market players. It’s a position rooted in hatred of fewer or larger private enterprises, not one that reflects how competition actually plays out in the market or impacts services.  For example, using T-Mobile’s HSPA+ broadband technology, AT&T would be able to enhance current 3G services.  At the same time, it frees up resources to allow a merged company to speed up deployment of future 4G LTE infrastructure.  This creates better competition for wireless broadband speeds with Verizon, who is currently the largest carrier and is well into their LTE launch. And all of this benefits consumers.

Media groups have also claimed it will raise prices.  This ignores the fact that the fact that wireless prices have dropped by 50 percent over the past decade and there is nothing to show this would change that trend.  It also ignores that mergers can bring better economies of scale and efficiencies that free up resources to either improve service or lower prices.

Nevertheless, look for the perpetually incorrect doomsday predictors at Free Press, Public Knowledge, and Media Access Project to use their dire projections to demand regulations completely unrelated to the acquisition.  They cloak their regulatory preferences in establishing “consumer protections,” without knowing or justifying whether any harm to consumers will result.

Government rules only incapacitate companies from adequately responding to consumer demand.  Placing extraneous conditions on mergers forces companies to forgo providing services consumers want by limiting what companies may do or mandating that they spend finite resources on projects that regulation-hungry groups demand.  It also puts the regulated company at a disadvantage with its competitors that are not.

Only the free-market is truly pro-consumer, as business decisions are driven by appeasing customers, and not government bureaucrats or special interest groups with regulatory demands.  As Grover Norquist, president of Americans for Tax Reform said, “Companies know better than government what consumers’ wants and needs are. Lobbing regulations into a merger for political gain only restricts companies from offering what their customers demand.”

No one is 100% certain what the AT&T/T-Mobile merger will bring.  But there is no excuse for exploiting this uncertainty by pushing hypothetical doomsday scenarios in the name of greater regulation.