The proposed merger of AT&T and T-Mobile was met with skepticism at the Senate Judiciary Committee Wednesday, as members said they fear the deal would create a “duopoly” and result in the resurrection of the “Ma Bell.”
Indeed, Sen. Herb Kohl (D-Wis.), chairman of the panel’s antitrust, competition policy and consumer rights subcommittee, entitled the subject of the hearing, “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?” The hearing drew great interest on Capitol Hill, requiring an overflow room to accommodate everyone.
While the presidents of the two companies emphasized that they firmly believe the deal would benefit consumers, opponents said it would inhibit competition and eventually result in only two mobile telecommunications companies, since Sprint Nextel likely would be purchased by Verizon. “It puts us in a position to be acquired,” said Daniel R. Hesse, chief operating officer of Sprint Nextel.
“That’s pretty serious,” Kohl said, reacting to the possibility of only two mobile carriers serving the United States.
But officers of the two companies disagreed, saying the deal would have tremendous benefits. “This transaction is all about consumers,” said Randall L. Stephenson, president of AT&T. He said the merger would result in fewer dropped cell phone calls, faster speeds and more access. He said no company has the capacity to handle the next generation of telecommunications, but that the merged companies would.
But Hesse said telecommunications industry “is an industry that thrives on competition and innovation. Robust competition has driven prices down.” The merger would result in the return of “Ma Bell,” the old Bell telephone system that was broken up following a Justice Department antitrust lawsuit, he said. “This merger is unfixable,” he declared.
Appealing to senators, Larry Cohen, president of the Communications Workers of America, said the merger, with proper conditions applied, “is an open-and-shut case.”
However, Sen. Al Franken (D-Minn.) said he feared returning to the days when telephone access was poor. “I’m sure I’m not the only one here who remembers when Ma Bell controlled how we communicated with each other,” he recalled. “I distinctly remember when I was a kid, every Sunday at exactly 9 a.m. in Minnesota my grandmother would call from New York and talk to my father for precisely three minutes.”
He added, “And that was the only time she got to talk to her son and her grandchildren. And thankfully the breakup of Ma Bell forever changed the cost of long distance service.”
He concluded, “But I fear that if approved, the merger would take us one step away from the monopoly market that we had under Ma Bell. It took the Department of Justice more than 35 years before they eventually broke up Ma Bell so it’s important to keep in mind the stakes of a merger of this size and scope.”
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) said his committee will press the the FCC and the Justice Department to do an “exhaustive analysis” of the proposed merger, and that his committee will do the same.
Andrew Ramonas contributed to this story.
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