There are reports in the news about a merger between the US only two GSM cellular service providers: AT&T and T-Mobile.
Why is it bad news? Well, for consumers it is. It effectively eliminates competition in the mobile providers world.
What about Verizon and Sprint? Well…
The thing about AT&T and T-Mobile is that both are GSM providers, and they’re the only GSM providers in the US. Verizon and Sprint use the CDMA technology. So, the merger will bring the number of GSM providers in the US to one. Single provider.
Why am I discarding the CDMA providers? Because they’re a duopoly already, and because they provide an inferior and limited service. For example, GSM is the system accepted worldwide, which means that the international travelers (both US residents traveling out of the country, and foreigners coming in) are limited to a single choice: AT&T.
Also, services like Amazon Kindle that provide world-wide 3G cellular connection, are also limited to AT&T for the US customers.
Another example? Unlocked phones. Now, when you buy an unlocked phone you can use it either on T-Mobile or AT&T. After the merger – no more choice. What’s the point buying unlocked phone then? No point. AT&T as the only choice will not let you get any discounts unless you buy the phone from them. Hundreds and thousands of businesses that compete with the cellular providers’ phone prices will go out of business.
Not to mention, of course, tens of thousands of T-Mobile and AT&T employees who will be laid off because of the merger. Not a very good thing for a straggling economy.
Free market is only free if all the parties can make a free choice to enter a contract. A market with a single player cannot be free by definition, it’s a monopoly.
I hope that the FCC, the regulatory agency that has to approve the merger, will prevent it from happening. Otherwise, we’re back to the Bell System divestiture was all for nothing, we’re back to the starting point of what has started the USA vs. AT&T antitrust suit back in 1982.
Your Little Advisor