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  • DOJ and FCC: Making the Wrong Call on Wireless Deal

    It’s rather remarkable, really, how willing federal bureaucrats are to block business deals that they speculate will cause price hikes and yet give nary a thought to foisting more than a trillion dollars annually in regulatory costs on the public.

    That’s one takeaway from the news that AT&T has scrapped its proposed $39 billion acquisition of struggling T-Mobile USA (from Deutsche Telekom AG) after a bruising nine-month battle with the U.S. Justice Department and the Federal Communications Commission. Bureaucrats at both agencies concluded that the deal could (maybe, perhaps) hurt competition and (possibly, imaginably) lead to higher prices. The likely benefits—including improved service quality, network investment, and job creation—appear to have been ignored.

    But given the state of the economy, should Washington really be dictating business decisions in telecommunications, one of the few healthy sectors out there?

    Now AT&T must pay $3 billion to Deutsche Telekom (along with some spectrum) for failing to convince the government that the wireless market would remain competitive once the deal was consummated. We’re talking about a market that’s been growing exponentially in recent years, from little more than 5 million subscribers two decades ago to more than 300 million today—with no change in average prices for nearly 10 years.

    But it is the growth of this market that prompted the deal to begin with. Faced with surging demand for a wealth of new services, AT&T hoped to gain additional spectrum. Short on cash and unable to compete effectively, T-Mobile was at risk of failing. Combining the two firms’ frequencies into a larger pool could improve service for millions of wireless customers and provide a larger network platform in which AT&T would invest.

    Alas, no amount of concessions by AT&T, including divestiture of some assets, could convince the government that the acquisition would be beneficial. Evidently, the feds somehow believe they do a better job than consumers of ruling the marketplace. Why else would thousands of new regulations pour forth from government agencies year upon year? And the evidence of their competence abounds, right?

    Posted in Featured [slideshow_deploy]

    6 Responses to DOJ and FCC: Making the Wrong Call on Wireless Deal

    1. Bobbie says:

      9 months of unnecessary intrusion! please get the government out of private business. they weren't called upon for need and even if the line of constitutionality doesn't permit the federal government to intrude in ANY private business matters WHICH HOLDS GOVERNMENT SUSPECT WHEN BUSINESS meets expectations of governing their own. There's too much hard earned money going into wasted costs of government where government doesn't belong! those working in the arms of government overreach can join the private sector instead of analyzing to corrupt it. Government power, control and authority crossing the line is becoming more noticeable by average Americans who are also growing more concerned for their livelihoods because of this notice!

    2. GLS says:

      Let it be known that Verizon's CEO is big time donor to the Obama White House. He is a frequent visitor there. Check out the visitor logs and his donations

    3. TimAZ says:

      Most likely AT&T's competition was able to present the politicians and bureaucrats with a more convincing guarantee of much higher gains through insider trading. Had enough yet?

    4. The Obama Administration's malice toward American business is on the verge of treasonous; empirically weakening our energy independence, IRLB's battle against Boeing 787 production in South Carolina, this absurd decision against the ATT buyout of T Mobile and almost an uncounted number of Legislative and administrative attacks on the Rule of Law, property Rights and Capitalism… as we know it.
      Leadership in the telecom and internet industry is ESSENTIAL to our country's safety! Obama is not only acting in our defense, he is actually acting against our interests.

    5. Mark says:

      I could not disagree more, I am conservative but this was a bad deal for the American consumer. Tell me when you consolidate companies you don't also consolidate employees (Loss of jobs) and the rural communities would suffer most as they already due in the wireless world.

    6. Chuck says:

      The only constitutional responsibility the government has is insuring that there is no hindrance to interstate commerce created by this merger. There is no monopoly and no effect on interstate or intrastate commerce for that matter. This would not suppress the market, drive any other carrier out of business or restrict any other carrier's ability to do business. As always, the fed steps way out of bounds in their appointed constitutional duties.

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