Preserving Wireless Competition

[Commentary] Most Americans have a choice of just four national cellphone companies -- Verizon, AT&T, Sprint and T-Mobile -- compared with six in 2003. The Federal Communications Commission recently described the industry as “highly concentrated” based on an index used by regulators to measure how competitive a market is. In 2011, the Department of Justice used a similar analysis to effectively block AT&T from acquiring T-Mobile. The main issue is whether consumers would benefit from the acquisition, and the evidence suggests they would not. The most recent overture by Sprint, the third-biggest cellphone company in the country after Verizon and AT&T, to acquire T-Mobile would reduce competition in an important industry that already has too little of it. As you would expect in a competitive environment, companies like AT&T have been forced to respond to T-Mobile’s price cuts and streamlining policy changes with similar moves. It is hard to imagine that any cellphone company would have been as aggressive as T-Mobile if the administration had allowed AT&T to buy the company. The logic that the government used to step in still holds today, and antitrust regulators should look closely at any proposal that would reduce competition in the wireless business.

[Jan 1]