AT&T, T-Mobile Merger Bad News for Consumers

The consensus: 'Ma Bell is back'
By Evann Gastaldo,  Newser Staff
Posted Mar 21, 2011 6:29 AM CDT
AT&T, T-Mobile Merger Reactions: Not Good for Consumers
This photo combination shows logos for AT&T, left, and Deutsche Telekom AG.   (AP Photo)

Reactions to the surprise AT&T-T-mobile merger are pouring in, and, not surprisingly, most conclude this isn't a good thing for consumers:

  • The Bell telephone system—"aka AT&T"—was broken up in 1984 to increase competition, and the US telecommunications market was deregulated in 1996, again to increase competition. But this merger "effectively restores Ma Bell to her former girth yet allows the company to operate in a looser regulatory environment," writes David Lazarus in the Los Angeles Times. "Consumers might wonder if they've been played. ... Ma Bell is back," and the only thing left for federal regulators to do is instill "new rules that address the shortcomings of our failed experiment in deregulation."

  • The merger could leave the US market "with just two dominant providers—and the prospect of higher rates and fewer choices for consumers," write David Sarno and Alex Pham in the Chicago Tribune. Adds one consultant, "This move by AT&T is likely to start a chain reaction of consolidations," like Sprint grabbing US Cellular. Of course, one bright spot for T-Mobile customers is that they may now be able to snag an iPhone.
  • Sprint, which "has struggled to find its niche for years," now finds itself even worse off. It was the first US operator to offer 4G, but its expensive WiMAX network has not paid off, and Verizon and AT&T have both committed to the competing LTE technology. This merger puts "more pressure" on Sprint to switch to LTE, writes Michal Lev-Ram in Fortune.
  • Regardless of the impact on consumers, it's obvious why AT&T made this move, writes Ben Parr on Mashable. Its network is strained "to unacceptable levels," and even though the company is upgrading, "it takes years to get the approval to build new towers ... so if you can’t build towers fast enough, what’s the next best way to get them? That’s right: You acquire them. ... Today’s acquisition is all about bolstering AT&T’s network and beginning the process of repairing its reputation."
(More AT&T stories.)

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