AT&T Must Be Stopped
When I saw the news break this weekend about AT&T and T-Mobile merging I immediately thought “there’s no way this is going to get approved by the FTC”. Today I opened up my RSS reader and there were dozens of articles about what a bad thing this will be for customers. It’s hard to disagree, and I’m famous for my ability to do so.
This will be particularly disastrous for mobile networks because, since they operate via radio waves, it requires a potential upstart to acquire large amounts of spectrum to compete, and in this day in age there isn’t much left to go around. It would be ok to let automobile manufacturers merge down to two because there are always foreign ones to compete with, and anyone with a decent chunk of capital can start their own. (See Tesla). But there’s a very real limit on how much spectrum can be used for mobile devices and we’re pretty much at it. There’s going to come a point, in fact we might actually be there, where you simply can’t start a carrier for any amount of money.
Also the FTC could not possibly approve any other mergers in the space. This particular one will leave three national networks, and the FTC will never let a market that previously had a half dozen competitors consolidate all the way down to two. If this merger goes through, AT&T will have about 1.5x the users and spectrum Verizon does, and Verizon will have no way to catch up.
And what happens if Sprint Nextel fails? They’re having some serious troubles, and while I’m a fan of their service and optimistic that they can turn it around, if they don’t we’re once again stuck with a duopoly. At least then Verizon could possibly pick up their spectrum, but still, that’s not good.
Spectrum is the new gold rush. I’m concerned that if this merger goes through the effects will be both disastrous and irreversible.