What AT&T's Potential Purchase of T-Mobile USA Doesn't Change

People love to speculate about what the AT&T purchase of T-Mobile USA means, or could mean. Right now, all such talk is speculation, as the deal cannot clear Federal Communiations Commission and Department of Justice reviews for roughly a year. People eagerly describe the deal as "transformative" or "industry-altering."

So here's a bit of a contrarian view: it will change much less than most people now think. AT&T and Verizon have been the two industry-leading providers since 1995 or so, and each firm has only become more dominant since then. The AT&T acquisition will make AT&T bigger, but nobody can say yet how much bigger, as divestitures will undoubtedly be required to gain regulatory blessing.

Verizon might bulk up a bit more as well, though Verizon's interest in doing so remains unclear. Many will assume the deal, if approved, will reduce the number of leading national wireless providers from four to three. Whether that is stable over the long term is open to question.

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Nor is it entirely clear whether consumer benefits, ranging from innovation to prices, would necessarily diminish, in a three-provider or even two-provider environment. The reason is that most innovation now occurs on the handset and application fronts. Nor can we accurately predict what will happen as cable operators and other existing and potential providers ramp up their own services. And though hoped-for spectrum auctions will likely find AT&T and Verizon in leading roles, spectrum auctions in the past have proven capable of shaking up the existing industry in serious ways.

There could well be far less impact, one way or the other, in the immediate wake of a successful AT&T acquisition of T-Mobile USA. In part, that is because the merger approval conditions undoubtedly will prevent AT&T moving in ways that are clearly threatening to continued innovation and competition.

What AT&T's Potential Purchase of T-Mobile USA Doesn't Change