AT&T/T-Mobile Is the Tipping Point for a Broadband Duopoly

[Commentary] At a Senate Judiciary subcommittee hearing on AT&T’s proposed purchase of T-Mobile, it was hard to find anything but tepid support for the merger of the nation’s second- and fourth-largest wireless providers.

And whatever support there was for the deal was associated with merger conditions that would put the Federal Communications Commission in charge of regulating prices, speeds and perhaps even access to devices. That’s not a market that most in the technology industry would condone since it requires the government to become more involved in the wireless industry. The CEOs of AT&T and T-Mobile appeared to weasel out of attempts to get them to discuss confusing statements or get them to swear prices would go down for consumers as a result of this deal. When pressed on the topic, AT&T CEO Randall Stephenson said the history of previous mergers has resulted in dropped prices for voice and data (on a per-megabyte basis). He’s not wrong, but his history ignores the existence of T-Mobile and Sprint as competitors while AT&T and Verizon gobbled up smaller players. It was also fun to watch T-Mobile CEO Phillipp Humm and Stephenson squirm around definitions of the words competitor and “nationwide network.”

However, the most compelling issue — and the one that strikes deepest — is the direct link between AT&T’s and Verizon’s landline networks and the benefits those accrue from the large wireless carriers having access to those networks. As Sprint has so elegantly pointed out before, smaller carriers such as Sprint and T-Mobile pay fees to AT&T and Verizon in order to connect their towers to the Internet, leaving the industry’s smallest players to help boost their competitor’s bottom line. Yet, still T-Mobile and Sprint offer customers cheaper plans.