Will Wireless Prices Rise as AT&T Takes Over T-Mobile?
Congress is worried that AT&T‘s buyout of competitor T-Mobile will result in higher prices on wireless services for all. It is likely that T-Mobile, one of the four largest wireless carriers in the U.S. behind AT&T (NYSE:T), Verizon (NYSE:VZ), and Sprint (NYSE:S), won’t continue to be an affordable alternative to the more expensive carriers once AT&T takes over, but even worse, the decrease in competition could spell bad news for everyone. (Check Out “4 Ways Consumers Will Win and Lose with AT&T Buying T-Mobile“)
With ownership of T-Mobile, AT&T (NYSE:T) will become the nation’s largest network, giving them a lot of power over price-setting within the industry, which could result in them charging smaller competitors significantly more to use their mobile network when roaming. Those charges could break the backs of any competition AT&T might still have. Not to mention AT&T and Verizon would dominate the market, allowing them to push prices higher.
But AT&T (NYSE:T) CEO Randall Stephenson and CEO Rene Obermann of Deutsche Telekom AG (PINK:DTEGY), T-Mobile’s parent company, both say the deal would make for better service through an increased wireless capacity, though rural carriers who stand to be destroyed by AT&T’s plan to expand their grid say the merger will result in higher prices for inferior quality.
While plans for a merger were announced in March, it is not planned to go through until early next year, and the transaction requires approval from the Justice Department as well as the Federal Communications Commission (FCC) before it can move ahead. Congress doesn’t have any authority over the matter, but lawmakers are worried about the possibility that the merger will result in job losses, while the Justice Department is concerned with antitrust laws.