At&t/T-Mobile Merger is About Spectrum, Redux

Lynne Kiesling

In case you were in doubt concerning my argument of a couple of weeks ago and back in March that the AT&T/T-Mobile merger is largely driven by our flawed spectrum policy, Gordon Crovitz weighed in with his version of the same argument in the Wall Street Journal earlier this week:

The great threat to competition for wireless data and mobile phones is not mergers—it’s government failure to free enough spectrum to meet demand. Deutsche Telekom agreed to sell T-Mobile, the fourth-largest wireless provider in the U.S., because it couldn’t get enough spectrum to compete and wanted out of the U.S. market. For AT&T, the $39 billion purchase price was the best way to get the spectrum and local cell towers it needs to serve 97% of U.S. consumers with a new 4G LTE network—a technology currently provided only by Verizon. In other words, this merger would mean more competition, not less.

However, as part of the political bargain to take some steam out of the DOJ’s challenge of the merger, AT&T is apparently offering to sell some of its spectrum to smaller wireless companies, according to Ars Technica. Presumably they would do so in markets in which they have substantial network overlap with T-Mobile (such as Chicago), which may reduce the DOJ’s estimate of the potential anti-competitive price effects of the merger.

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