When the news came across Twitter of the $39 billion AT&T and T-Mobile deal, it created a bit of a buzz among my tech friends. We immediately hit our favorite websites to get the latest updates via our Android smartphones and iPhones, but ironically, no T-mobile devices were used in our intelligence gathering frenzy. Get used to it. I have no doubt the merger will be approved and AT&T will be one step closer to returning to its former monopolistic tendencies. As for Sprint, the soon to be distant third player; well, it’ll be looking over its shoulder watching for that knockout blow.
I’m old enough to remember the days of AT&T, then affectionately known as “Ma Bell,” as the one and only choice for national phone service in the U.S. No bells or whistles—just phone service and those lovely beige and avocado-green phones for your home.
Then in 1984, the government broke up Ma Bell, forcing it to divest into several “baby bells.” Each child went off on its own—true capitalism in action—to succeed or fail on its own merits (with special lobbyist-bought concessions, consumer taxes, etc.). It also allowed for the creation of AT&T Computer Systems, which begot Bell Labs, which became Lucent and so on. These side businesses did not quite pan out, and AT&T was left still holding its original phone business.
However, it’s important to note the divesture of AT&T into regional corporations was largely responsible for introducing competition into the phone industry that eventually led to the innovation and subsequent explosion of the wireless phone markets in the U.S. New competitors such as MCI and Cellular One entered the business and the race was on. This begs the question: Why kill the hope of any real competition now?
With T-Mobile, the only larger cell provider that competes on price out of the mix, we’ll be left with AT&T, Verizon and Sprint as the top three providers in the U.S. The first two are not known for their competitive rates and Sprint, a far and distant third, has little hope to survive on its own against the forming duopoly that will control just under 80% of the U.S. market.
Plus, the mobile providers are still exempt from the government’s weak Net Neutrality rules, a gift to the industry’s highly profitable smartphone market segment. That’s where the big money is—and clearly where providers can influence legislation highly favorable to their bottom line.
I’m sure each of you can point to a favorite provider engulfed by a larger player. For my landline and Internet it was the 2006 buyout of Bellsouth. The moment AT&T took over, prices went up while service plunged. I experienced ongoing billing errors, constant network crashes, equipment issues and so on. I jumped ship and ended up in the arms of another of my least favorite services: cable. Much too expensive, but I have few good options.
And that’s the point. Much like the government has let cable run roughshod over consumers through mega-mergers, AT&T appears to be following the same playbook. And if you look to how they handled their former monopoly on the Apple iPhone, you get a pretty accurate picture of the service awaiting T-Mobile customers.
The government will grant AT&T and T-Mobile a virtual free pass on this deal with a few concessions “for the public good” after a good display of concern for consumers. However, corporations are sitting on more cash than they ever have in history and appear to be running the show right now. Lobbyists are pouring money into their favorite officials on both sides of the legislative aisle, and god forbid if you question the sanctity of unbridled capitalism as our one and only way out of this recession.
Hold onto your wallets.
Written by Steve Frazier – A 20yr+ copywriter jedi