No Daily Affirmation for This Telecom Merger

Before you go, we thought you'd like these...
Before you go close icon

The proposed merger of AT&T (NYS: T) and T-Mobile USA was never going to be easy for Ma Bell. In addition to about six kinds of regulatory inspections and a very public anti-merger campaign by Sprint Nextel (NYS: S) CEO Dan Hesse, now the deal has enemies in the Senate as well.

According to a letter of protest sent by Sen. Al Franken to FCC chairman Julius Genachowski, three other FCC commissioners, and Attorney General Eric Holder, the blockbuster $39 billion deal would allegedly create a AT&T-plus-Verizon (NYS: VZ) duopoly certain to hurt consumers.

Controlling 82% of the American market for mobile communications between them, Verizon and AT&T-Mobile would impair "consumer prices, customer service, innovation, competition in handsets and the quality and quantity of network coverage," Franken said. Also, he notes, the would-be partners haven't said how many American jobs would be lost to synergies and efficiency reductions -- an important consideration in this unemployment-tainted economy.

Finally, Franken isn't so sure that AT&T really would use T-Mobile's bandwidth licenses to blanket 97% of the nation with so-called 4G coverage, as promised.

Sprint, of course, still hates the merger. AT&T's recently revised proposal "does nothing to change the negative consequences of the takeover for consumers in the form of higher prices, reduced innovation, and decreased investment," Sprint said in a written statement earlier this week. Franken also borrows some market estimates from Sprint's no-deal campaign.

Unsurprisingly, T-Mobile still wants the deal to happen: "While we respect Senator Franken, his analysis of our pending transaction is just wrong." Talking about improved "speed, service, and reduced costs," the company's statement doesn't actually refute Franken's worries about rampant job losses, competition, or innovation. Because, you know, I don't think T-Mobile could do so truthfully.

So we have carefully chosen and probably lawyer-approved statements on both sides. If the merger happens, Sprint is a clear loser. If it falls through, AT&T owes billions in breakup fees. Neither side will likely give up until the last gavel has been smacked.

The only surprise in all of this is the lack of involvement from smaller mobile service providers. Clearly, the outcome of this deal will change the competitive landscape one way or the other. So how come we don't hear either protests or support from Leap Wireless (NAS: LEAP) , U.S. Cellular (NYS: USM) , MetroPCS (NYS: PCS) , or USA Mobility (NAS: USMO) ?

One small voice might not make a difference, but taken together, these guys might be able to shiftt the debate. And call me crazy, but I don't think they'd be siding with AT&T on this issue. Maybe Al Franken could call up a few allies.

Follow this misguided merger to the end, whether in glorious consummation or a burning wreck. Justclick here to add AT&T to your Foolish watchlist, and you won't miss a beat.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here.Motley Fool newsletter serviceshave recommended buying shares of AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. You can check outAnders' holdings and a concise bio, follow him onTwitterorGoogle+, or peruseour Foolish disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners