Thursday, May 12, 2011
Don't Fear the Reaper—Just Give Money to His Competitor
As AT&T’s CEO Randall Stephenson jokes with T-Mobile CEO Philipp Humm during Senate briefings, the rest of the room sits with silent anxiety. Almost everyone in attendance is skeptical of the motive behind the enormous acquisition of the latter, and the apparent rise of the former to communicative dominance like a telecom phoenix. It would seem that apprehension is nearly universal.
After all, it was just thirty years ago that AT&T was broken up into smaller pieces in the country’s most famous antitrust hearing, and now the same company is here again, testifying, pleading their case before the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights.
T-Mobile customers, myself included, are the most directly affected; our decent coverage and relatively rare dropped calls and outages reflect a stable infrastructure carefully maintained by a company that never grew too big, too fast. The Mr. Hyde in this merger is the hulking, awkward leviathan opening its dirty maw to swallow my mobile phone provider, antennae and all.
AT&T’s main problem is that they’ve got too much going on. Between cell service, phone, television, and everything else they do, there’s bound to be problems. They’ve cannibalized their own severed limbs such as Bellsouth in order to gain sustenance and grow again. Then they followed suit by chomping off the head of the Cingular mascot. In the process, their systems have become overwhelmed at times, revealing spotty, sometimes severely flawed service.
Meanwhile, T-Mobile has been chugging away over the years, rising to prominence in the three most heavily connected continents, portraying a fun, friendly outward appearance, maintaining themselves well, and providing reasonably-priced service that eclipses AT&T.
So the leviathan, unable to pt up the money for upgrades to their aging, slow cell towers, proposes a plan to absorb the younger, more stable company. Though it means likely worse service for T-Mobile users, it means potentially more reliable service for AT&T users.
The skeptics raise what they believe is a valid point: The company is violating fair competition laws. The proposed Superbeast and Verizon Wireless would control 80% of the U.S. cell market. This would stifle innovation, lead to runaway price gouging, and leave the company unaccountable for horrific service. They might be correct. I’ve been the victim of AT&T’s insatiable hunger for acquisition several times already, and I know what happens.
However, innovations will be driven by the hardware manufacturers, and the service providers will need to keep up with consumer demand. The price gouging and horrific service will result in lost subscribers, who will turn to that other 20% even if the service isn’t as fast or as versatile. In short, rather than having an icy black hand of death over their subscribers, AT&T-Mobile will need to be responsible for their actions.
In this area alone, there’s plenty of competition. There’s Verizon Wireless of course, Sprint PCS, Boost Mobile, and MetroPCS; and though most Atlantans just threw up in their mouth a little bit after I said MetroPCS, it’s an option, and a cheap one at that. There will come a time when AT&T is such a ripoff or provides such horrible service that we’ll be willing to do a backflip off a 100-foot cliff into a dirty bucket filled with MetroPCS coverage.
I don’t think the merger will be denied, and I don’t think it should be. We live in a country of free trade, and we should respect that right. Sometimes companies get too big, and sometimes they suffer the consequences (see AOL-Time-Warner.) They’ll be held accountable for what they do, and if they do wrong, it’ll come to their attention swiftly. Follow @torqtorq
Posted by torq at 1:11 PM