From a consumer standpoint, it’s hard to see much of anything to like about AT&T’s proposed purchase of T-Mobile. The $39 billion mega merger would create the country’s largest wireless company, which along with Verizon – the other big national player in wireless – would control nearly 80 percent of the U.S. marketplace.
Consumers Union opposes the merger on the grounds it would reduce competition in a market that is already less-than-competitive, reducing the number of true national wireless players from four to three.
Here are some other facts on how the deal could affect consumers:
- The deal would mean fewer choices for consumers and reduce incentives for the two dominant companies to provide better products and services.
- T-Mobile is a scrappy competitor, offering plans similar to the other three national wireless companies at lower prices. Without T-Mobile in the market, customers will lose that cheaper option and the remaining national wireless companies are able to raise prices without a low cost competitor.
- The big four wireless companies already engage in highly anti-consumer practices, such as locking customers into long-term contracts with steep early termination penalties should they choose to switch to another carrier. Competition and the free market only truly work well when consumers have the ability to easily take their business elsewhere, and this proposed merger would leave consumers with one less option in a market that is already too small .
- The deal will bring together two companies with less-than-stellar records on customer satisfaction. In the January 2011 issue of Consumer Reports, AT&T’s wireless service ranked the lowest in consumer satisfaction, and in almost all cases T-Mobile ranked the second lowest, leaving few reasons to believe this combination will improve the consumer experience.
- Some cell phone providers – including T-Mobile – have sought reforms to help ensure a marketplace that allows for more competition. For example, the FCC has pending proceedings on competition issues, such as data roaming and access to infrastructure that is generally controlled by AT&T and Verizon. By working to improve conditions to boost competition and ensure fair access for competitors, rather than allowing mergers, consumers would benefit from more choices and, ultimately, lower prices.
- The deal could increase the likelihood that Sprint, the lone remaining competitor to AT&T and Verizon should the deal go through, would either have to merge or go out of business. Either option would likely reduce competition in the wireless market even more.