AT&T’s proposed $39 billion purchase of T-Mobile USA
will have a negative impact on consumers, according to Yankee Group.
After analyzing Yankee Group consumer data and using the
U.S. Department of Justice’s (DoJ’s) market concentration metrics, Yankee Group
contends the merger will increase market concentration, decrease competition
and raise average mobile prices in the most heavily populated U.S. wireless
The firm urges the FCC to block the merger unless it
plans to take a stronger regulatory stance.
We believe this merger will reduce choice for consumers
and, more importantly, leave little incentive for AT&T to offer competitive
pricing for unbundled mobile services,” said Gigi Wang, Yankee Group’s chief
research officer and co-author of the report.
The report also concludes the AT&T/T-Mobile merger
would give AT&T more than a 50 percent market share in five major markets:
Dallas, Houston, Miami, San Francisco and St. Louis.
Grow the number of highly concentrated top 27 cellular
markets from 1 to 17, reducing network choices in those markets. Increase
mobile phone bills in seven major markets: Seattle and Houston would see mean
increases of more than $5 per month, and Boston, Dallas, Los Angeles, Miami and
New York would see increases of less than $5 per month.
recommends the FCC to reintroduce competition in highly concentrated markets,
the DoJ and FCC should consider creating a new mobile service provider from
smaller competitors or requiring the merged companies to cede a portion of
their customers to a mobile virtual network operator (MVNO) operating on their
The FCC should regulate the maximum rates carriers can
charge for unbundled wireless services. Otherwise, national carriers can easily
extend their market concentration in wireless to service bundles of wireless
and non-wireless services.
New requirements for reasonable data roaming rates went
into effect in June 2011 and both Verizon and AT&T are protesting those
With data-hungry smartphones making up the majority of
new phone purchases and national network carriers reluctant to provide network
access, the FCC must ensure that smaller regional carriers can compete by
enforcing these mandatory reasonable data roaming fees.
We think that the FCC and DoJ now have to step up to the
plate and regulate. Our research shows that the U.S. wireless market is
maturing into a duopoly. While agencies were reluctant to regulate too strongly
in years past because they didn’t want to upset a nascent marketplace, those
days are now over; it’s now time to get back into the game,” said Carl Howe,
research director at Yankee Group and co-author of the report.
By Telecomlead.com Team