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Yale School of Management’s Case Study on AT&T/T-Mobile: Lessons for Today

June 10, 2019 , , , ,

In 2011, Public Knowledge fought hard against the AT&T/T-Mobile merger, until it was finally called off just nine months after its announcement. The merger, which would have led to higher prices and fewer choices for consumers, faced tremendous opposition. Today, we see many of the same industry talking points for the T-Mobile/Sprint proposed merger: false claims about deployment of next-generation networks, market concentration, pricing, and rural broadband access. So we were glad to see that the Yale School of Management added a section on the AT&T/T-Mobile proposed merger as a case study to its Antitrust Enforcement Data project. The project, featuring a wide range of data, serves as a resource for information and economic analyses on antitrust enforcement.

Highlighting the data reviewed by the Department of Justice and the Federal Communications Commission during their examination of the abandoned AT&T/T-Mobile merger is a valuable tool for antitrust enforcers, telecom regulators, policymakers, and anyone interested in a clear view of the consolidation plaguing the U.S. wireless market. Less than nine months after the announcement of the deal, the DOJ and the FCC had seen enough to determine that the wireless market was already highly concentrated, and that allowing the market to consolidate from four national carriers to only three would likely lead to higher prices for consumers, less innovation, and lower quality service, without any significant verifiable merger-specific benefits.

A reexamination of the lessons learned from the proposed AT&T/T-Mobile merger is especially timely now in light of the DOJ's ongoing review of the proposed T-Mobile/Sprint transaction. Today, the wireless market is even more concentrated, and the likely harms from additional consolidation, and the lack of benefits, are well-understood. Especially telling is the fact that after the AT&T/T-Mobile merger failed, T-Mobile moved aggressively to reinvigorate competition by cutting prices, eliminating two year contracts, and introducing new customer-friendly service plans, and dramatically expanding its network — forcing its competitors to follow suit. Today's enforcers and regulators should heed these lessons and block the proposed T-Mobile/Sprint merger.

Check out the Antitrust Enforcement Data project’s “Merger Example: The AT&T/ T-Mobile Case” here.

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