Please Regulate My Rival

It’s no secret that  most business is opposed to most government regulation – unless, of course, the regulation happens to curtail a specific aspect of one’s competitor’s practices. It will be interesting to watch the upcoming governmental review process for AT&T’s intended acquisition of T-Mobile USA. Reaction from almost everyone that I’ve heard is that this deal will be bad for consumers, bad for rivals, certainly bad for the many employees that will be laid off, and bad for innovation in the mobile market – but good for executive and shareholders.

FCC Commissioner Meredith Baker recently stated her intention to focus more on improving the FCC’s role in regulating mergers. Expressing support for Business, she acknowledged that the very long review cycles (often a year or more) create uncertainty which affects deals and has even been known to push interest in deals overseas, to countries where things might be done more efficiently [somehow I doubt that happens too often]. 

Baker challenged whether telecomm mergers should be subject to FCC and Dept of Justice reviews and statutory challenges – while in theory this sounds arduous, when I think as a consumer about the potential for abuse that comes with market domination, well, I’m not so sure this is a bad thing. 

Baker also stated that how the FCC imposes merger conditions, which can extend to public interest, should be transaction specific – that policies should be applied equally to all parties – which unfortunately is often not the case. Competitors or other interested 3rd parties often lobby for ‘conditions’ that get attached to merger terms, which can significantly delay ultimate consumation of the relationship. These can center on speculation on future harm, rather than assessing actual violations and true public interest harm. It will be interesting to see what conditions Sprint [scorned in the TMobile acquisition] or other major mobile providers might present as this case is arbited.

Will AT&T-TMobile be the test case for Baker’s new friendlier approach to M&A? One wonders if she knew at the time of her remarks that this announcement was imminent. Washington certainly has has lots of room to cut bureaucratic process and make transactions of this nature more efficient.  However, prudent, thoughtful and informed examination of deals such as this one, with such big potential to affect consumers and the mobile marketplace, must still take place. Lest we forget, AT&T has a history and a character that previously caused it to be broken up by regulators.

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