Digital Deja Vu

Big headline today that the US DOJ has filed an anti-trust suit to block AT&T’s acquisition of T-Mobile. Haven’t we been here before with AT&T? Wasn’t this company busted up by the government in the not-that-distant past for the same anti-trust issue?

Apparently AT&T has claimed that it needs the acquisition to compete with Verizon’s 4G network.  Wait a minute!  Didn’t Verizon have the foresight and wherewithall to build its own?  Was AT&T just asleep while its biggest competitor noticed this market opportunity and actually did something about it?  AT&T has for some time gotten hammered for its inadequate mobile coverage and dropped calls. The need to expand and upgrade couldn’t have been a surprise.  The DOJ’s position is that the company could deploy next-generation technology ‘by simply investing in its own network.’

Since this intended deal was announced last March, it has widely been seen as anti-competitive – just not good for other carriers or for consumers. In my March 25 post, I pondered this merger as a test case for the FCC’s new kinder, gentler, business friendly demeanor regarding mergers. FCC Commissioner Baker had  even challenged whether telecomm mergers should be subject to FCC and Dept of Justice reviews at all, noting that imposed merger conditions, which could extend to public interest, should be equally applied to all parties and not subject to competitive lobbying influence. Clearly the DOJ does not align with most of her position, although, it does seem that the Department’s study of this merger’s market environment was done fairly quickly by government standards – 5 months – and speeding up the review process was one of the FCC’s key goals.  Interestingly, Sprint, not Verizon, is seen as the major plaintiff. With no other acquisitions of this nature in the offing (at least publicly), there is no application of equal conditions in the field.

It’s not that I’m advocating for Verizon. They are another monolithic company, and as one of their customers, I can certainly see their shortcomings. BUT … I give them credit for taking the initiative to grab 4G by the horns and build a next generation business.  If we’re going to believe in free markets, then let free markets prevail – those who build a better mouse trap should earn the spoils.  My association with AT&T has been that of a customer as well as a vendor. I have seen no evidence of cutting edge innovation in that organization in decades. Maybe today’s development will be a wake-up call.  Let’s see how the counter-suit plays out.

3 Responses to “Digital Deja Vu”

  1. 1 David DuRant
    August 31, 2011 at 1:20 pm

    So if Microsoft wants to buy Sage Software to improve it’s position in the contact management market it should be prohibited from doing so? It should instead be forced to develop it’s own contact manager?

  2. 2 Kathy
    August 31, 2011 at 1:24 pm

    If it would give them overwhelming market share, then yes

  3. 3 David DuRant
    August 31, 2011 at 1:35 pm

    It would give them a 43.7% market share compared to 21.5% for Verizon and 17.3% for Sprint. But that’s not the basis of your argument. You’re arguing that companies should not be allowed to improve their product offerings by acquisition. If T-Mobile had a 5% market share would you feel differently?

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