AMERICA - Blocking of Phone Company Merger

"U.S. Moves to Block Merger Between AT&T and T-Mobile" by EDWARD WYATT, New York Times 8/31/2011

Excerpt

The Justice Department on Wednesday sued to block the proposed $39 billion merger between the cellphone giants AT&T and T-Mobile USA, arguing that keeping them separate would preserve competition in the wireless industry and even help save jobs of American workers.

In a lawsuit filed in Federal District Court here, the Justice Department argued that the proposed deal, which would join the nation’s second- and fourth-largest wireless phone carriers, would result in higher prices and give consumers fewer innovative products. The companies disputed those assertions, and labor unions that support the deal said that the merger would add jobs, not cost them.

“The view that this administration has is that through innovation and through competition, we create jobs,” said James M. Cole, the deputy attorney general, at a news conference announcing the lawsuit. Mergers usually reduce jobs through the elimination of redundancies, he said, “so we see this as a move that will help protect jobs in the economy, not a move that is going in any way to reduce them.”

The lawsuit, which could take years to wind its way through the courts, sets up a prominent antitrust battle — a rarity since the election of President Obama, who campaigned with promises to revitalize the Justice Department’s policing of mergers and their effects on competition, which he said had declined significantly under the Bush administration.

COMMENT: I have small experience in the phone business from a company in the past that made phone switching related equipment (in the Telephone Exchange buildings). One of the biggest mistakes the U.S. made is to break-up "Ma Bell" (AT&T) This was one case where a monopoly was a benefit to America as a whole.

Specific example, when I was working for the company the U.S. was one of the few nations (1 of 2 ?) which had appx 98% of the national phone system digital fiber-optic. Converting an old cooper-wire, mechanical switching, phone system (nation wide) to digital fiber-optic is very, very expensive. The cost was worth it to "Ma Bell" because they could directly benefit. The "Baby Bells" cannot afford this type of investment. Hence, the final step in upgrading our national phone system did NOT happen, running digital fiber-optic directly into your home or office. Most homes and offices still use copper land-line from phone switching stations into the home/office.

Of course, things have change with the advent of wireless cell phones, which is why the cell/smart phone providers are now the leaders in growth and innovation in phone systems. Heck, I know of many people who do not have a land-line phone in their home.