Justice Department to AT&T/T-Mobile: No, But Not No Way

The government’s objecting to the proposed merger is simply par for the course, and how the game is played. It ain’t over by a long shot – a few concessions, and a few dollars, and this deal is still going through.

The TV business channels (and similar outlets on the Web, of course) are all abuzz today over the Justice Department's initial rejection of the proposed merger between AT&T and T-Mobile. No big surprise here, really - this is simply how the game is played, especially in the current political climate where upcoming votes and future jobs are on the line. As I indicated in my original posting on this subject back in March, there is a lot of concern about the competitiveness of the cellular marketplace if this deal goes through - the net result would be a duopoly of AT&T and Verizon, hardly what was intended by the antitrust action which broke up the Bell System back in 1982. Two carriers really aren't sufficient for honest, consumer-beneficial competition; everyone knows this. But the economics of modern carrier services certainly also don't favor that 1982 vision. What to do?

Well, IMHO, this deal is still going through, although AT&T will have to throw Justice a few bones. AT&T will owe T-Mobile about US$6 billion (US$3B of which would be in cash!) is this deal fails, so you gotta believe the game theorists really worked every possible scenario before the original merger agreement was inked. AT&T is not stupid, and I'm sure the bones required were selected, analyzed, valued, and boxed up with a nice bow back in March. Contingency planning - what a concept!

And, again, IMHO, this deal really is anti-competitive and consumers will be worse off as a result. But Justice really should have thought all of this through back in 1982, or at least with the next major Telecom Act in 1996. But, as we also saw with the tobacco settlement in 1998 (to be fair, a deal with the States, but motivated by Medicaid, a Federal program), the government is more interested in obtaining more funds for itself than it is in guarding the marketplace for consumers. Just you watch - a few bucks here and there, and, again, this deal is going to happen.

And that, sadly, is really what all of this is about. What's that old saying? Whenever they tell you it's not about the money, it is. Still true.

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