[yankee group] AT&T's proposed $39 billion merger with T-Mobile USA has now received support from 11 state attorneys general, led by Dustin McDaniel of Arkansas and Mark Shurtleff of Utah.
According to a Bloomberg article, the state AGs sent a letter to the U.S. Department of Justice and the FCC urging them to "expeditiously review and approve the proposed merger." In addition to Arkansas and Utah, AGs from Alabama, Georgia, Kentucky, Michigan, Mississippi, North Dakota, South Dakota, West Virginia and Wyoming all signed the letter.
In a statement e-mailed to the press, McDaniel said: "There are significant economic and public benefits to this merger. My primary concern is my hope that federal regulators do not require the divestiture of much-needed spectrum capacity."
The merger will significantly improve AT&T's spectrum capacity, especially in large cities like San Francisco and New York. The state AGs cite AT&T promise of being able to bring wireless broadband to more than 97 percent of the U.S. population as a key reason to OK the merger.
Unfortunately, Yankee Group believes the state AGs are missing the forest for the trees. While the merger will result in better coverage and AT&T might deliver on its promise to bring wireless broadband service to 97 percent of the U.S., the merger will also result in AT&T and Verizon enjoying an effective duopoly. Yankee Group believes such a situation will lead to higher prices for T-Mobile's consumer and business customers.
"Our analysis shows the proposed transaction will create significant market concentration in 15 of the top 27 U.S. markets," said Brian Partridge, VP of research at Yankee Group. "As market concentration implies less competition, we conclude the amounts that consumers pay will go up in the most concentrated markets. Our view is that the potential benefits just don't justify the costs."
11 State AGs Come Out in Favor of AT&T/T-Mobile Deal