Wednesday, June 15, 2011

AT&T Aquisition of T-Mobile Will Cure the Common Cold!

Give AT&T Wireless credit for enlisting widespread support for its proposed acquisition of T-Mobile.  Disparate players including the Communications Workers of America union, Wall Street and its Journal, and various e-commerce vendors support the deal.  With or without a provided script from AT&T, these endorsers see the merger as expediting progress (however defined) and making AT&T a better competitor of Verizon.  The CWA curiously projects the merger as creating lots of new jobs, despite the fact that a merger typically achieves “operational efficiency” through consolidation, e.g., fewer advertising agency contracts and bricks and mortar stores.

So let me get this straight: AT&T will have the ability to do things that it cannot do now even with the deal requiring the company to pony up a substantial amount of cash that otherwise might have been allocated for new towers and service improvement.  AT&T will expedite wireless broadband deployment in rural areas, despite the fact that there is no spectrum scarcity in these areas and nothing currently prevents AT&T from using its ample, existing rural spectrum to provide improved service. In rural areas the company need only divide existing cell contours by installing new towers and cell sites.

This deal probably will happen, with a blend of AT&T “voluntary concessions” and the inability or unwillingness of decision makers to subject assertions both pro and con to rigorous analysis.  It is far easier for the FCC to forecast or project possible positive or negative consequences triggered by the acquisition than to quantify likely outcomes.  So long as stakeholders can make bold assertions, without having to provide anything substantive and scientific to support them, the FCC can largely pick and choose what assertions will support the Commission’s ultimate decision.  

The FCC does not have to explain just how the deal will or will not reduce, or increase employment and competition.  If you examine the dozens of deals examined by the FCC, you would not see heavy math, or deep science.  The Commission largely reiterates what the stakeholders claim without much critical analysis.

So in this anxious time, an acquisition that certainly will further concentrate the wireless industry miraculously will increase employment in the sector, solve the digital divide, promote competition and cure the common cold.  Who needs answers to why AT&T Wireless requires the assets of an ineffectual competitor to achieve progress it cannot now accrue?  And why wonder about a deal that simply reallocates spectrum to a company that already has ample existing spectrum in the 700 MHz band not yet used?

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