The Justice Department has finally seen what everyone has seen for a while now – the AT&T merger with T-mobile would "substantially lessen competition", and it would be in the detriment of the consumer, which is why they are starting an anti-trust lawsuit against AT&T.
"AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction's substantial adverse impact on competition and consumers," the department said in the statement. "AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor."Advertisement
What DoJ is saying is basically that AT&T does not need to pay $39 billion on T-mobile to remain competitive against Verizon and Sprint, and they can achieve that for a lot less. AT&T has been trying to gather support for the merger, while in the same time complaining about how this merger is the only way they can stay competitive. But it was also revealed last week that AT&T would only need to spend about 10% of that to cover most of country with LTE antennas.
If the deal falls through, not only does AT&T lose T-mobile and their 4G spectrum, but they also lose $7 billion in break-up fees, 3 of which being in cash, and 4 in benefits. The only one who loses here seems to be AT&T. If T-Mobile receives this break-up fee, it might actually be what they need to recover, while AT&T would become a little weaker than before, although in no real danger. They would still be the nation's 2nd largest carrier.
Another option for T-mobile would be to merge with Sprint, which is something Sprint has been wanting for while. That would still create only 3 carriers instead of 4, but at least they'd be more similar in size and number of subscribers.
Ideally, though, T-mobile would be bought either by a cable provider, or even better, and outside carrier. It makes a lot of sense for the TV cable providers to want to grab T-mobile, because the future is all about wireless connectivity, and once LTE is spread across the whole country and becomes cheap enough, people might start switching to that. Plus, the carriers have already started offering TV services, which should at least worry them about what would happen down the road.
The AT&T-T-mobile merger hasn't been completely stopped yet, but for the consumer's sake, and for the sake of healthy competition and lower price, I hope it will be.