By now, you've probably heard the widespread consumer disappointment over AT&T's proposed merger with T-Mobile. To hear the company tell it, they're only trying to make good on the Federal Communication Commission's plan to expand high-speed Internet access to underserved and rural areas.The telecommunications giant, for its reportedly shoddy service and reluctant approach to innovation (spoofed to perfection by Jon Stewart after its competitor Verizon began selling the iPhone), announced its plans to acquire the much smaller T-Mobile over the weekend. The move would create what would easily become the largest telecommunications company in the country, and make a market that already lacks any serious competition even smaller.
Here are three key points that you should know.
Just how big is this potential merger?
Massive. AT&T would pay $39 billion to create what some have dubbed the "Mega-Merger of Doom." But seriously, the implications are huge: The nation's two largest mobile carriers, AT&T and Verizon, would control 70 percent of the market, up from the 55 percent that the two companies currently own. Even that number hasn't proved very useful for consumers since both companies have already faced complaints of price fixing for text messages. The logic is clear: the fewer options that consumers have, the less freedom they've got to make informed decisions about where to spend their money.
Is that even legal?
Probably not. News of the proposed merger was immediately met with concerns that it violates antitrust laws that are supposed to prevent monopolies from leaving consumers with raw deals. Industry insiders told Politico on Monday that even if the deal is approved by the Federal Communications Commission and the Department of Justice, it will likely be met with a "laundry list of conditions" that could include: net neutrality guarantees, lower early termination and text messaging fees, and improved service for low-income communities.
Yet what some analysts seemed even more disturbed by is the company's apparent disregard for the sins of its founders. David Lazarus reminded us on Monday at the Los Angeles Times that when the Bell telephone system -- i.e., AT&T -- was broken up back in 1984, the general consensus was that it was a good move that could increase competition in a market that, until then, had only truly known one national carrier. And then everything changed. As Lazarus writes:
When the Federal Communications Commission deregulated the telecom market in 1996, the intent was to compel local phone companies to open their networks to new players. That never quite happened. As the companies underwent consolidation, barriers to entry for new players grew steadily higher. Consumers saw fewer telecom companies providing a greater array of services.
...So Ma Bell is back. Federal regulators should waste no time in welcoming her home with new rules that address the shortcomings of our failed experiment in deregulation.
For now, the proposed deal will be closely examined by the FCC and DOJ, and likely torn apart by everyone else. And the FCC's recent track record isn't promising. "I predict that months from now the FCC will find a way to frame this merger as something really great for consumers," wrote Rob Frieden, a Penn State law and telecoms professor. "Bogus!"
What could all this mean for users of color?
In December, after months of intense scrutiny, the FCC passed a set of lukewarm rules that were supposed to keep the Internet's playing field equal. Those rules, known as net neutrality provisions, prevented carriers from playing favorites and charging users extra fees for Internet fast lanes on home-based broadband networks. But the mandate was noticeably missing any mention of how mobile carriers can conduct their business. Mobile broadband is fast becoming the future of the Internet, and it's already an important way in which communities of color are helping to close the digital divide. A Pew study released last year found that blacks and Latinos are among the biggest users of mobile technology, and in many cases, it's the primary way that they surf the Web.