AT&T, T-Mobile chief executives pitch merger to skeptical antitrust panel
Senate subcommittee chairman says carriers must convince regulators of deal's benefits
So much of what we see in Washington is political theater, especially in cases where members of Congress have to pretend they're standing up for consumers against the corporations that finance their campaigns.
But as long as everyone plays their roles -- the earnest, chastened CEO, the no-nonsense subcommittee chairman, etc. -- all parties end up getting what they want out of the performance.
The approval process for AT&T's proposed $39 billion acquisition of rival wireless carrier T-Mobile USA, however, threatens to go beyond play-acting.
On Wednesday the chief executives of both companies testified before a Senate antitrust panel asking questions about the impact of the deal on consumers and competition in the wireless phone market. (Pertinent note: Congress has no authority to approve or kill the deal. That decision is up to the Justice Department. See "political theater" reference above.)
And there are legitimate questions to be asked. AT&T currently is the No. 1 U.S. wireless carrier with 95.5 million subscribers, just ahead of Verizon Wireless, which has 94.1 million subscribers.
Add T-Mobile's 33.7 million subscribers to AT&T's, and that's 47 percent of the U.S. wireless market -- and just three carriers remaining. However, Sprint, currently ahead of No. 4 T-Mobile USA, would be left as a weak No. 3 wireless carrier with maybe 16 percent of the market. Which means it would only be a matter of time before the market consolidated into just two national wireless phone service providers.
According to the Los Angeles Times, Senate antitrust subcommittee Chairman Herb Kohl, a Wisconsin Democrat, got right to the heart of the matter at Wednesday's hearing:
"The more providers of cellphone service, the lower the price, the better the quality of service and the more innovation that results. ... So the burden will squarely be on AT&T and T-Mobile to convince us why this merger is desirable, how it will benefit consumers, and to put aside our concerns that it may very well harm competition. ...
"If we go from four to three and then from three to two, that’s pretty serious."
For their parts, the wireless CEOs unsurprisingly saw the merger as good for consumers because it would result in lower prices, continued wireless innovation and, the LAT reports, "would help expand high-speed wireless Internet access, a major goal of the Obama administration." (Honestly, talk about pandering!)
"It’s a very basic concept that in any industry, greater capacity is a fundamental driver of competition,” [AT&T CEO Randall] Stephenson said. “Over the last decade, U.S. wireless prices have steadily come down and this transaction will allow that to continue."
He sounds so sincere. That's the Strasberg Method for you.