AT&T T-Mobile Acquisition: 5 Questions Senators Should Ask

This Wednesday, Congress will have its first chance to look under the hood of the proposed $39 billion acquisition of T-Mobile by AT&T. The Senate will hold a hearing on the deal, featuring representatives from AT&T, T-Mobile, Sprint, Cellular South, the Communications Workers of America, and Public Knowledge.

The hearing is a kabuki dance of sorts because, though the Congress plays an important oversight role, it has no formal part in approving (or not) the acquisition. That job rests with the FCC and DoJ.

While no one knows if, when, or in what form the resulting approval will look like (if approval in fact occurs), the hearing will help all sides begin to put forward their best PR case to the American public.

I believe that the acquisition – though complex and challenging for policymakers – will benefit the public interest. Yes, it will pare the market down by one, resulting in three major nationwide providers. But the market will remain effectively competitive. Consumers will benefit through the roll out of new and better mobile broadband services from a stronger AT&T. And this will in turn spur direct competition from the major and regional wireless players, as well as in services that are considered substitutes.

But, as the existence of the hearing reveals, the acquisition is not a done deal. Many questions abound, which Congress and the American public have a right to know about.

So, if I were a Senator sitting up on the dais – one who could see consumer benefit as a result of this acquisition – what top five questions would I want answered?

Well, for the AT&T and T-Mobile representatives, I’d want to know:

• How will the acquisition boost the roll out of next generation mobile services, as well as improve the overall broadband marketplace for American consumers? Is market consolidation automatically a bad thing for consumers, or can the marketplace and present enforcement mechanisms be relied upon to serve the public interest?

And, for the Communications Workers of America:

• Your union members support the acquisition – why? Aren’t unions generally against such deals because they can result in some job losses? Or, does CWA see greater offsetting gains for U.S. job growth, as well as its members’ own job security, as a result of the acquisition?

For Sprint and the others (who oppose the merger), I would change my approach. I suspect they’re at the hearing not so much to protect the public interest, but rather they’re there to protect only one thing – their bottom line profits. Thus, I’d start with the gang leader, Sprint, and ask:

• If, as has been reported, Sprint doesn’t want to see the marketplace contract, why was itself once attempting to acquire T-Mobile? Stated differently – aren’t Sprint’s concerns merely competitive concerns that can be fairly addressed in the marketplace instead of through public policy levers?

For Cellular South (the largest privately-owned mobile carrier in the Southeast), I would inquire:

• You keep referring to a “duopoly” if the acquisition goes through. But, don’t you have your math wrong? Aren’t the majority of American markets served by 5 or more mobile competitors? Moreover, if market consolidation is such a big competitive threat, how is it that as the market has become more concentrated, your company has only grown, at times through similar consolidation tactics as with your acquisition of Corr Wireless in 2010? Put a different way – is market consolidation a real concern here or just a chimera?

And for Public Knowledge (which is a public interest lobbying group that receives funding from George Soros and AT&T’s competitors, among others), I’d posit:

• Inarguably, market consolidation these past 15 years has helped make the Internet the great success that it is today. Why are groups such as yours so reflexively against such consolidation when the facts belie your Chicken Little assertions? Why is it so hard for you to trust the evolution of technology, industry best practices, consumer tools, marketplace guidance and current enforcement backstops to protect consumers, especially when these forces are working?

Though the hearing will reveal little new ground from any of the parties involved, sparks will fly at times, providing some entertaining fodder. Consequently, this stage of the kabuki dance will drive headlines for a day or so, and then recede into the background until the next hearing or manufactured crisis arrives, neatly packaged for media consumption.

This back and forth battle will continue for about a year until, in all likelihood, the acquisition will be approved by both the FCC and DoJ…with conditions, however. If past practices of the FCC and DoJ are illustrative, there will probably be a lot of them.

That’s not because the acquisition is inherently wrong. Rather, it’s because the government and all of its public interest proxies know that the companies seeking approval have a lot riding on the deal. This shifts the leverage in the government’s favor, which it’ll use to extract as much as it can (especially stuff it could never achieve through open processes of law or rulemaking) from the proposed deal.

If AT&T and T-Mobile tell their story compellingly enough – so that the acquisition looks to benefit the average American consumer; so that the public interest wins – then the approval process stands a better chance of being “reasonable” (it’s still legal extortion, however). If the companies fail in this endeavor, then the process will careen out of control, dooming the deal.

Wednesday is the first of many kabuki dances to take place on this long road.

More to come…