DOJ Antitrust Lawsuit Subverts Free Enterprise, Job Creation

Washington, D.C., August 31, 2011 – This morning, the U.S. Department of Justice filed an antitrust lawsuit seeking to block the proposed acquisition of T-Mobile by AT&T. Telecommunications analysts at the Competitive Enterprise Institute blasted the suit, arguing that it will negatively impact consumers, innovation, and the economy.

Statement of Ryan Radia, CEI Associate Director of Technology Studies:

The Department of Justice’s lawsuit amounts to a subversion of the evolution of free enterprise and economic progress. Federal regulators and their arbitrary “merger guidelines” are woefully ill-equipped to judge the merits of proposed business deals, particularly in dynamic modern markets such as the wireless sector. To be sure, no business deal is ever guaranteed to benefit consumers or the economy. But market participants, including upstream suppliers, customers, potential entrants, and capital markets, stand ready to check detrimental concentration in telecommunications if it arises.

The suit is also further evidence of this administration’s antipathy toward the job-creating sector. AT&T’s acquisition of T-Mobile has the potential to create hundreds of thousands of new jobs by accelerating the rollout of advanced wireless networks nationwide. Indeed, 4G mobile broadband is expected to generate tens of billions of dollars in economic growth in coming years, as a new Deloitte report concluded.

Statement of Luke Pelican, CEI Policy Fellow:

Contrary to the Justice Department’s assertions, competition would likely thrive as a result of the proposed deal. A more robust AT&T would increase pressure on Sprint and Verizon Wireless to compete against the combined company, while allowing competitors to cull dissatisfied customers from AT&T should the company increase prices. On the other hand, the cell towers and spectrum AT&T will gain as a result of the deal will bring greater coverage for its customers, especially in dense urban areas. AT&T’s move to LTE-based technology would also benefit T-Mobile users who are currently served by that company’s HSPA+ network.

As it stands today, T-Mobile is in a compromised position, as it lacks a viable path forward in the competitive wireless market. Deutsche Telekom has emphatically stated its intention not to invest in overhauling T-Mobile’s network to offer LTE technology. Should the Justice Department succeed in blocking the deal, it will leave millions of consumers with obsolete technology and inferior service. Together, AT&T and T-Mobile will provide consumers with greater benefits than the two firms will if they go it alone.

The federal government’s chronic inability to bring additional spectrum to the market makes this deal all the more important. With emerging mobile applications and growing wireless broadband usage, efficient spectrum utilization is crucial. By denying AT&T access to T-Mobile’s spectrum, the DOJ’s lawsuit will harm consumers and industry by forcing them to wait for Congress and the FCC to liberalize more spectrum – a process that could take over a decade.

>>For more, see CEI’s Comments on the AT&T — T-Mobile Merger Before the Federal Communications Commission