Senator Urges Regulators To Nix AT&T Merger With T-Mobile

In a not unexpected move, Sen. Al Franken (D-Minn.) has told federal regulators they should deny AT&T's request to acquire T-Mobile, saying the merger would drive up prices for wireless customers and likely cost thousands of jobs.

In a filing sent to the Department of Justice (DOJ) and the Federal Communications Commission (FCC), Franken said the merger is a bad deal for consumers. He cited some analysts' predictions that wireless costs could go up by as much as 25 percent as a result.

He also said that the merger would further stifle competition in an already-concentrated wireless market and would allow only two companies-AT&T and Verizon-to control more than 80 percent of the market. Verizon is currently the largest U.S. wireless provider but would fall to a distant second behind AT&T, if it joins forces with T-Mobile.

'Not in the public interest'

"This transaction is not in the public interest," Franken said in his filing. "If approved, it would result in greatly reduced competition, the potential loss of thousands of jobs, higher consumer prices, and less innovation in technology. I urge the FCC and the DOJ to deny AT&T's application for approval of its acquisition of T-Mobile."

Franken's opposition to the proposed deal was not exactly a secret. He initially raised concerns about this merger during a statement on the Senate floor on May 4. Franken also questioned the impact of the merger on consumers at a Judiciary Committee hearing in May.

To sign off on the deal, the FCC must accept a deal that reduces the number of wireless carriers in the U.S. while creating, by far, the nation’s largest mobile company. The Justice Department, meanwhile, will look at anti-trust issues, to make sure the merger will not hurt competition. In markets where AT&T and T-Mobile are significant competitors, this could prove problematic.

The big three

If the deal is approved, 90 percent of the wireless business would be concentrated among just three companies – AT&T, Verizon and Sprint/Nextel. Of that, AT&T would have 43 percent of the business.

Will it be enough to derail the deal? Possibly, but AT&T is known in Washington for its lobbying power. The company says current customers of both companies will benefit from the union, because of expanded network coverage and additional spectrum.