Lawmaker: AT&T/T-Mobile deal would hurt consumers

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AT&T’s proposal to buy T-Mobile USA earlier this year is still hanging in the balance. On Wednesday, a key lawmaker called for regulators to block the $39 billion deal, citing that it would lead to higher prices and fewer choices for consumers.

The Details

Herb Kohl, D-Wis., said the transaction would hurt consumers because it would leave just three national wireless carriers.

Two of those carriers — AT&T Inc. and Verizon Wireless — would control nearly 80 percent of the market, Kohl noted. And he said there is considerable doubt about whether the third national carrier, Sprint Nextel, would be able to survive as an independent competitor.

“We cannot turn a blind eye to the dangerous possibility that this acquisition could ultimately result in a duopoly in the national cell phone market,” Kohl said in a letter sent to the Justice Department and the Federal Communication Commission.

The Justice Department and the FCC will ultimately decide whether to let the transaction proceed. But Kohl’s input is important because he heads the Senate subcommittee that handles antitrust matters.

Kohl added that by eliminating T-Mobile USA, the fourth-largest wireless carrier, the deal would remove the one carrier offering less expensive prices and rate plans.

AT&T said in a statement that Kohl’s view is “inconsistent with antitrust law, is shared by few others and ignores the many positive benefits and numerous supporters of the transaction.”

The Background

AT&T, the nation’s second-largest wireless carrier, is seeking federal approval to acquire T-Mobile from Germany’s Deutsche Telekom AG. The cash-and-stock deal would catapult AT&T past Verizon Wireless to make it the biggest cellphone company in the country. Sprint would be a distant number three.

AT&T and T-Mobile say customers of the newly merged company would benefit from fewer blocked calls and faster mobile Internet connections. That’s because the companies would be able to combine their limited wireless spectrum holdings at a time when both are running out of airwaves to handle mobile apps, online video and other bandwidth-hungry services.

They also say the deal would position AT&T to cover more than 97 percent of the U.S. population with its new high-speed, fourth-generation wireless service.