The Dangers of a Duopoly

Of course, the merger hasn’t happened yet, despite AT&T’s efforts to seem as if it has. The process of regulatory approval is just now getting started. A Federal Communications Commission (FCC) official has already been quoted as saying that the agency isn’t planning to rubber stamp the merger, and the FCC is the agency that approves the necessary license transfers. The same official has also been quoted as saying that AT&T has a pretty steep hill to climb if it expects approval.

While it’s not clear exactly what the FCC is prepared to do or not do, the Justice Department also has to approve it because of antitrust concerns. After all, after the merger, the company would control half of the wireless business in the U.S. It will be three times the size of Sprint. There’s no question that there are antitrust implications here. The Ma Bell that the Justice Department broke up once will be back.

But even if you’re not currently a T-Mobile customer, this proposed merger will affect you. The first effect will be the lack of competition in the wireless marketplace. AT&T users will have no place to go if they want to retain the global coverage of GSM that T-Mobile and AT&T currently offer. This means that AT&T won’t have to worry about losing them to the competition, and that in turn means there’s no incentive to keep prices down, to provide better service or to be business-friendly.

Customers at Verizon may find the effects of limited competition a little more distant, but they’re just as real. Not having a low-priced alternative that T-Mobile provides now means that Verizon also has little incentive to keep prices down or to provide business-friendly data services.

Sprint will be the only company that offers unlimited wireless data access, assuming that it keeps its current pricing structure. But how long can Sprint survive in a world where every other company is a giant? My guess is, not long. Ultimately, Sprint will either succumb to its financial woes, or it will be taken over by some other company, but there will be little effective competition in the U.S. wireless market. And the lack of competition means that AT&T and Verizon Wireless are free to have their way with you. Sounds exciting, doesn’t it? Maybe you should be thinking about this merger after all.