AT&T merger on examination table
AT&T wants to expand and improve its wireless communications service in Illinois, but it needs the federal government's approval.
Ten years ago, people marveled at the benefits and ease in use of the basic cell phone. Now the ground-breaking technological marvels of that era are considered prehistoric, having given ways to new devices that allow access to the Internet including smart phones, computer tablets and laptops.
It's a brand new world out there, and advances in the world of wireless and wireline communication networks are coming at an astounding pace. The competition among the businesses that make up this field is brutal, and, as with all nascent industries, there are winners, losers and inevitable consolidations among the participants.
Take the proposed $39 billion purchase by AT&T of T-Mobile USA from the German company Deutsche Telekom.
Announced in March, the merger is being reviewed by the U.S. Justice Department and the Federal Communications Commission. AT&T hopes to have the sale completed by March 2012, but these kinds of reviews can take longer.
That's particularly true when there is opposition. AT&T critics — Sprint most vehemently — suggest this merger will diminish competition in a field that already has seen reduced competition and result in higher prices for consumers.
The critics are correct in one sense. The merger would leave AT&T and Verizon Wireless with more than 75 percent of the cell phone market. But there's nothing necessarily wrong with that as long as consumers still have choices, and there are a number of other competing companies.
But the critics are not necessarily correct about price. Consumer choice would be reduced by one, but AT&T argues that the reason consumers' bills have been going up is because they are buying more services.
They cite the number of consumers who have upgraded from cell phones to smart phones.
AT&T defends the proposed merger on the grounds that it's not only good for AT&T but also for its customers and the communities across the nation where AT&T does business.
Here's why. Because it has so many customers buying so many services, AT&T is experiencing traffic jams on its wireless network, "spectrum constraints" in the words of the experts. Spectrum is the "range of airwave frequencies that enable everything from broadcast television to cell phone to mobile broadband," according to the company.
The company's mobile traffic has grown by 8,000 percent since 2007 and is expected to continue to increase dramatically over the next four years.
AT&T wants T-Mobile's spectrum, much of which is unused because it is a smaller company with fewer customers. In Illinois alone, AT&T plans "enable 4G speeds to more than 500 cell sites," and build "at least 35 new cell sites." Virtually the entire state will be covered by AT&T once its plans are complete, a substantial increase over what is now in place.
Less important but still relevant are AT&T's plans to invest $19 billion nationwide to upgrade its wireless and wireline networks, a substantial portion of that in Illinois. Needless to say, Illinois could use the additional economic activity in the midst of the sluggish economy.
It's impossible to predict the outcome of the government review. But it would be no surprise if the merger is approved with conditions requiring AT&T to give up customers and spectrum in certain markets to address specific competition issues.
But the merger deserves approval, and here's why.
The history of this high-tech communications revolution is that service and services continue to improve and expand. Yes, costs go up, but that's generally because consumers choose to buy more.
The opposition is based on the theory that things will get worse because of predicted higher costs. But there's less to the cost argument than meets the eye, and the incontrovertible fact is that consumers concerned about cost have other options in the marketplace.
Much of this opposition argument is based on what the future holds, something no one can predict. But the history is clear.
Big companies like AT&T, Sprint, Verizon and smaller competitors including Metro PCS, U.S. Cellular, Windstream, Frontier, and CenturyLink are engaged in a brutal competition for the consumers' business, and that competition has brought a steady wave of improvements that address consumers needs and wants.
The free market — including its consolidation — has served the public interest.
There's no reason to think AT&T's purchase of T-Mobile would not do the same.








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