Tag Archives: at&t t-mobile merger

CEI Podcast for September 1, 2011: The Blocked AT&T-T-Mobile Merger

Have a listen here.

The Department of Justice sued this week to stop the proposed AT&T-T-Mobile merger. Associate Director of Technology Studies Ryan Radia thinks this is a mistake. The evidence that the merger would make the wireless market less competitive is unconvincing. Nobody knows if the merger will succeed or not. Either way, consumer harm is unlikely.

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AT&T-T-Mobile Merger Delayed

A few months ago, the FCC said it would hand down a decision on whether to allow AT&T and T-Mobile to merge within 180 days. August 26 was day 83. The FCC decided to reset the clock to zero. So now it will be as long as another 6 months before the FCC announces its verdict.

There’s a comment to made here about regulatory uncertainty. There’s another one to make about the value of the FCC keeping its word. But instead I’ll concentrate on Sen. Al Franken’s recent remarks. “I am very suspicious of consolidation of power,” he told MinnPost.com.

“Big is bad” is an old argument. Age has not given it wisdom, however. Suppose a super-size phone company like a merged AT&T-T-Mobile is so big, clunky, and inefficient that it has to charge higher prices. What a golden opportunity for smaller, leaner competitors like Verizon and Sprint to swoop in and gain market share.

Now suppose instead that the merger gives AT&T and T-Mobile better economies of scale and a faster, more reliable network. Consumers flee their previous networks to join a better, cheaper one. This is hardly consumer harm – which after all, is the usual rationale for antitrust regulations.

Nobody knows if the proposed merger will work or not. But a company’s size doesn’t have much to do with whether a merger should be allowed. If a merger gives diseconomies of scale, consumers will punish it. If it improves service and prices, consumers will reward it.

Unlike the FCC, markets are impartial. Consumers are the proper arbiters of this proposed merger. Let them hand down the verdict.

Competitors: Stop That Merger!

The proposed AT&T/T-Mobile merger is drawing the usual antitrust scrutiny. Fearful competitors say the $39 billion deal will make the market less competitive. Or so they say. Over at the Daily Caller, I point out that actions speak louder than words:

[I]f Sprint is willing to devote resources to fighting the AT&T/T-Mobile merger, then it probably thinks the new post-merger company will be more competitive, not less. That cuts directly against their main argument – that the merger reduces competition.

Put yourself in Sprint’s shoes for a minute. If your competitors are making what you think is a foolish business decision, you’re not going to try to stop them. If anything, you’ll actively encourage them.

Instead, Sprint’s opposition is proof positive that it thinks the competition is about to get more formidable, not less.

Antitrust authorities, blind to that obvious fact, stand a real risk of stunting the competitive process. They should ignore competitors’ pleas for special government favors and let the merger succeed — or fail — on its own terms. Real competition happens in the market. Not in Washington.

Read the whole article here.

We Need Regulators, Not Interveners

The Constitution’s Commerce Clause gives Congress the power to regulate commerce. What does that mean, exactly? Over at the Daily Caller, my colleague Jacque Otto and I explain that regulation is about making commerce regular: no barriers to entry or trade, clear, understandable, and consistent rules, and so on.

Most of what people call regulation doesn’t have anything to with regular commerce. These kinds of rules are more accurately called interventions.

These interventions didn’t appear out of thin air, either:

One important reason regulators intervene is that many businesses want them to — businesses spend considerable effort and resources lobbying Washington to that end. For the most part, American companies compete on quality, price, or other consumer preferences. But on too many occasions, some companies try to use regulatory interventions to dispatch the competition. Sprint’s efforts to squander AT&T’s proposed purchase of T-Mobile are emblematic of this troubling trend.

Lessons abound for antitrust regulators — sorry, interveners.

Regulation Roundup

The latest happenings in the world of regulation:

A new Senate bill amending copyright law would make lip-synching to other people’s music a jailable offense. The legislation has bipartisan support.

Two women were arrested in New York for eating donuts in a park while unaccompanied by minors. Strangely specific!

A church in Charlotte, North Carolina was fined $4,000 for violating the city’s tree-pruning regulations. The penalty is $100 per branch incorrectly cut.

-Another bill winding its way through the Senate would allow states to tax companies that have no physical presence inside their borders. I’ve written on similar state-level proposals before. It’s a bad idea.

A new Mercatus Center study ranks the 50 states by economic freedom and regulatory burden. New York scored the worst. New Hampshire and South Dakota did best. You can read the study here.

-Wayne Crews has a good article in Forbes about why antitrust regulators should back off the proposed AT&T/T-Mobile merger.

Los Angeles would like to pass regulations for what colors BB guns can be.