Good Consolidation Coverage for a Change on AT&T Deal

[Commentary] I've been critical of the light touch the business press tends to give roll-up consolidation by companies trying to corner markets and raise prices on consumers. But it does a pretty good job covering this news today and emphasizing the bold consolidation it would entail. We're getting a very distinct impression that this deal could be bad news for consumers and is a bold test of just how weak antitrust enforcement has really gotten in the US.

How bold a test? AT&T will have to pay T-Mobile $3 billion and give it a chunk of valuable wireless spectrum if the deal gets blocked. It must be pretty confident about its regulators. What we’re talking about is the consolidation of a duopoly that dominates cellphone market in the U.S. If regulators let the deal go through -- and based on past behavior, you have to bet they will -- AT&T (42 percent) and Verizon (31 percent) would control 73 percent of the nation’s cellphone market. Sprint, which lost $3.5 billion last year, would be a distant third place with about 16 percent (there are minor players like U.S. Cellular that have less than 2.5 percent market share). But it’s hard to think of beleaguered Sprint as much of a competitor. Here are it’s annual losses for the last four years: $3.5 billion, $2.4 billion, $2.8 billion, $29.4 billion, with losses of $3.5 billion last year. Its revenue has tumbled 20 percent from four years ago and its stock is down 84 percent from 2006. Effectively, you'll now have a two-company market, plus one waiting to be sold off for its assets. It’s hard to imagine that that won't result in higher prices for consumers. It will be even more problematic if Sprint disappears. The press is off to a good start with its skepticism of this deal. This one deserves much more of it in the coming weeks and months.