Herb Kohl: voice of reason in the AT&T/T-Mobile proposal

Today Rep. Herb Kohl of Wisconsin has called on Attorney General Eric Holder and FCC Chairman Julius Genachowski to block the proposed merger of AT&T and T-Mobile.  Though himself not responsible for deciding the outcomes of proposed mergers, Kohl is the Hill's top antitrust lawmaker, and his opinion will likely be considered at the Department of Justice, overseen by Holder, and at the Federal Communications Commission, which regulates telecommunications and broadcast media.

The trouble with the proposed merger is two-fold.  First, it would lead to such a concentration in market share that Verizon and AT&T would control the wireless carrier market.  Second, far too few people seem to be paying attention to the proposed merger and its outcome. Here is why they should.

If T-Mobile is absorbed into AT&T, a low-cost competitor will be eliminated, leaving Sprint to fend for itself on the national marketplace as the sole lower-cost alternative for consumers.  That will not last, however. If that one competitor is left against two gargantuan national carriers, it will either be forced to raise prices to compete, or be forced out of the market altogether by the two giants. 

This is not the problem. It is not the justice system or regulatory agencies' responsibility to keep a corporation afloat.  Rather, the problem is that with the entire market split between two massive corporations, Verizon and AT&T can either work together to raise prices for all American consumers or simply have prices rise across the board on their own because of a lack of competition in the market. 

Either alternative is unacceptable. It is both against public policy (keeping competition in the market to lower prices for consumers) and antitrust law, whose goal is to stop the creation of monopolies and the formation of conspiracies to raise prices.

Regardless of whether or not Sprint fails in this scenario, the proposed merger must not be permitted.  Even if Sprint were to survive, prices for all American cell phone users would rise because two companies would posses so much of the market that they would control it.  A negative ruling would stand out as regulation at its best; government would not be stymieing a capitalistic free market - it would be saving it.