Protecting Innovation and Competition

[Commentary] After a decade-long merger spree in which AT&T and Verizon amassed more than 60 percent of the nation’s cellphone subscribers, the Justice Department was right to call a halt to the consolidation process, filing an antitrust suit to block AT&T’s $39 billion attempt to buy the nation’s fourth-largest carrier, T-Mobile.

The merger poses a clear anticompetitive threat. Not only would it give AT&T more than 40 percent of the market, it would take out a scrappy and innovative rival that competed profitably by offering cheaper service plans and took risks others would not. For instance, it introduced the first smartphone based on Google’s Android, which today is the leading mobile phone operating system. The Justice Department’s antitrust division rightly concluded that T-Mobile’s cheaper service would be one of the first victims of a merger. And allowing the number of national service providers to shrink to three posed too great a risk to development of wireless computing, slowing innovation on the frontier of information technology. Blocking the merger entails some costs. Buying T-Mobile would allow AT&T to expand more quickly. It would also reduce some costs. But the benefits to subscribers are more doubtful. The Justice Department’s decision was the right one for consumers and technology.