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Here is Gigi's testimony as a PDF.
Oral Statement of Gigi B. Sohn, President Public Knowledge
Before the U.S. Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights
Hearing On: “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?”
May 11, 2011
Chairman Kohl, Ranking Member Lee, members of the Subcommittee,
Thank you for the opportunity to appear before you this morning. I'd like to set the tone for my remarks with a brief video:
That commercial illustrates the situation we have today -- a vibrant national market in which four companies feel free to sell consumers high-tech services while making fun of their competitors.
However, if the merger of AT&T and T-Mobile comes to pass, the wireless market will be transformed into something quite different. (Bring out object). We will go back to the days when this phone was in use. Only two companies ruled the cellular phone market, resulting in high prices for consumers and little innovation. In 1993, a year after this phone came to market, Congress created the wireless market we now enjoy by empowering the FCC to auction spectrum and create more competition.
That policy worked. Prices dropped. Innovation exploded. Consumers benefitted. Over the years, industry consolidation has gradually eroded that competition. But if this deal goes through, that era of competition and innovation will come to an end.
Consumers know this already. Almost 5,000 individuals have written to the FCC in their own words to object to the combination of the number two and number four wireless carriers. T-Mobile customers are irate. A poll on T-Mo News, a blog for T-Mobile customers shows that 77%, or about 7,300 consumers, are opposed to the deal after just a couple of days. After the deal was announced, people emailed and called Public Knowledge unsolicited, asking what they can do to stop the transaction from going through. More than 1,000 people have signed our petition. These are not Astroturf campaigns, but real Americans seeking to preserve competition and a lower priced competitor that rates far higher than AT&T in customer satisfaction.
If this merger is approved, two vertically integrated companies will control nearly 80 percent of the market. Sprint will have just 16 percent and will instantly become a takeover target. We should not go Back to the Future... Back To Duopoly.
Worse than duopoly is monopoly, which is what would happen to GSM-based wireless services in the U.S. post-merger. GSM Handset manufacturers would be forced to negotiate with one national company – the new AT&T&T. Applications developers would also be subject to a limited, non-competitive market. Remember that while T-Mobile was the first carrier to sell devices using the open Android operating system, AT&T has a history of blocking innovative applications.
I cannot stress enough that each of the supposed benefits of this merger could be accomplished without removing a low-cost, innovative competitor. If AT&T is concerned about its spectrum capacity, it could stop operating three different types of networks, an inefficient system which, according to one analyst, results in 70 to 90 percent of its spectrum being underused. Completely unused is one third of its spectrum in the top 21 markets. Allowing AT&T to buy T-Mobile for the purpose of improving its inefficient networks and upgrading to 4G services would reward AT&T for failing to invest wisely.
If AT&T wants to bring service to rural areas, it is free to do so now without any constraint. There are no spectrum shortages in rural America. AT&T is planning to spend $39 billion on this merger -- money that could instead be spent investing in its network and bringing better service to more Americans.
If AT&T wants to create jobs, it can do so without buying out a competitor. One would be hard pressed to find a merger that resulted in job growth, and this one will be no different as thousands of workers in retail stories, call centers and sales staff will be let go.
This transaction is a pivotal moment in U.S. antitrust law. If that law means anything, this classic merger of one company buying out a smaller competitor in the same business must be denied. There are no conditions or divestitures that can make this deal acceptable. This merger is unfixable.
I urge the members of the Subcommittee to oppose this merger after reviewing the facts. Thank you and I look forward to your questions.
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