The news that AT&T had announced their plans to acquire T-Mobile sent shockwaves through the internet. Such a move would make them the largest cellular provider in the United States. This would also make them the only carrier with a GSM network. That is a cause for concern among consumers and has raised some flags with the FCC.
Let's take a look at why this merger, if approved, would not be good news for consumers:
1) The Old AT&T is slowly regrouping
Up to the 1980s, AT&T was a goliath company that practically controlled the communications industry. A landmark antitrust case brought against AT&T (United States v. AT&T), ended in the company splitting into what were called "The Baby Bells." They were Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis, Southwestern Bell and U.S. West.
Four of those have since re-acquired by AT&T over the years. Somehow, AT&T has managed to slowly regroup itself, putting them in a powerful position and they will be in a similar position to what they were in the 80s.
2) Less Options for Consumers
The problem with a merger of this scale is that it leaves less options for consumers. Now instead of four major carriers you'd have three. Luckily, the FCC plans to make this difficult for the merger to happen due to antitrust concerns. Those who liked consumer-friendly prices carried by T-Mobile will be at AT&T's mercy unless they hop on board with Verizon or Sprint. Still, one less choice is a huge cutback when only four major carriers exist.
3) Less Competition
When there's less competition, companies can do what they like. If AT&T has enough clout, they can keep their prices wherever they want for their GSM network. After all, who are consumers going to run to? They'd have full power of that GSM market.
4) Would Verizon Scoop up Sprint?
We've read at least one report that said Verizon is not interested in taking Sprint. However, it's hard to know exactly what their plans are or what they would end up doing to combat the giant that AT&T would become if the merger were allowed to happen. This would be a worst-case scenario (and we aren't just trying to cause panic, as many have already considered the possibility) but this would make only two major wireless carriers in the US: AT&T and Verizon.
Will the FCC Do Something?
We don't know. We are sure that they are going to do what they can, as one official from the FCC recently told the Wall Street Journal that "There's no way the [FCC] chairman's office rubber-stamps this transaction. It will be a steep climb to say the least."
Still, if this becomes a reality, it's going to be interesting to see what comes of it. Will it affect the other carriers? How will it affect consumers in the long run? It's early to say, but we can't imagine it will be good.