Verizon is complicit

In a story (read it here) on May 24, 2011 in the Wall Street Journal, under the headline "These Companies Hate the AT&T/T-Mobile Merger," it was noted by reporter Shira Ovide that Verizon, which would drop from largest to second largest wireless company after AT&T swallows T-Mobile, has not come out against the proposed merger.

Duh.

Ovide notes the Verizon CEO is saying only “We’re not going to get distracted by this.”

Ovide refers to analysts who opine that the reason for Verizon's calm reaction is that "Verizon Wireless ... could get a lift if AT&T strips low-cost rival T-Mobile from the market. At the same time, AT&T could be distracted for a year or more securing all the necessary government clearances for the deal, and then integrating T-Mobile into the fold. The lull might help Verizon poach subscribers from its biggest competitor."

Sometimes it is hard to believe what passes for journalism. Distracted? Please.

One would think that a reporter from the Wall Street Journal would understand the value of a duopoly (like a monopoly, but with two) to one of the duopolists. In other words, if AT&T becomes the only GSM wireless company, and is able to hammer suppliers and gouge consumers, then Verizon, as by far the largest of the CDMA wireless group, would also benefit. Even without direct collusion.

Markets require competition to work effectively. AT&T and Verizon are doing everything they can in the media, in Texas, and before the U.S. Senate to cloud the issues.

"We don't know if the market is best served by three or four carriers," burbles one wireless exec. "If we don't have more spectrum, ambulances will be unreachable," growls another from AT&T.

Nonsense. This merger is about AT&T sucking up spectrum now, dollars and dollars later, from a distortion of a market that rides on licenses to use airways owned … by… us.

We need more choices of which carrier to use, not fewer choices. We need three or four GSM carriers, and three or four CDMA carriers, for there to be a truly competitive "free" market. There is less competition if there are only three, if Sprint hobbles along as a distant 3rd, or two if Verizon sucks up Sprint.

Verizon is sanguine about the AT&T and T-Mobile merger because Verizon executives know that even as number two, they will still get a larger slice of porker pie than they do now, even if it is not the largest one on the table.

The U.S. government should protect consumers and small business and refuse to go along with this merger. Communication is the economy's lifeblood now more than ever. Republicans should live up to their ideals of doing what is good for business, and that does not mean just doing good for one of their largest political donors. Where the hell is the U.S. Chamber of Commerce?

AT&T was broken up once before. We should look at this power grab as a reason to consider doing it again.