How AT&T Miscalculated

[Commentary] If Team Obama couldn't bring itself to approve the Keystone pipeline, with the thousands of jobs it would create, a merger of the second and fourth largest mobile phone companies wasn't going to be blessed over the panic-mongering of the usual "consumer" groups.

A midterm deal foundered as midterm concerns were giving away to election-year concerns. Nowhere is this clearer than in AT&T's collision with the spectrum issue. The Federal Communications Commission was just reaching a crescendo in its effort to frame a looming "spectrum crisis" as a result of too many iPhones chasing too little mobile broadband capacity. AT&T pitched its deal directly at these concerns, but the policy sun was already setting, the politics sun rising. The FCC, seeing the Justice Department antitrust division moving quickly to scuttle the deal, mainly embarrassed itself by trying to get in on the kill, never mind its spectrum shortage guff. The truth is, the spectrum argument was never as strong as AT&T thought, and it needlessly played into the hands of competitors such as Sprint, who turned the alleged scarcity into a reason the deal must be stopped, because it would let two players, AT&T and Verizon, lock up too much of a fixed and irreplaceable resource.

AT&T's political strategy was to appeal to regulators on their own level, understandably so, hence the spectrum-shortage memo. But the killer was the false and pessimistic impression that we've reached the end of wireless innovation and competition because we're at the end of spectrum. Neither principle is true and neither are they related. All along, the rational response of regulators to the AT&T and T-Mobile deal should have been a relaxed, "Have at it, boys." In some ways dwindling confidence in America's future may be justified, but this isn't one. Wireless competition and innovation, far from reaching "maturity," are just beginning.