In a Senate committee meeting on Wednesday, AT&T stood behind its decision to purchase T-Mobile, saying that the two companies united have a greater capacity for success in the wireless provider industry without “derailing” the competition. AT&T chairman and CEO Randall Stephenson claimed that with the acquisition of T-Mobile USA, AT&T would be able to provide high-speed wireless services to 97 percent of the US population as well as [the widely advertised term] fewer dropped calls.
The deal was first made public in March when AT&T revealed its plans to purchase T-Mobile USA from Deutsche Telekom for $39 billion. If the deal is finalized, AT&T would become the leading wireless provider in the US, surpassing big-hitter Verizon Wireless, with more than 102 million subscribers.
Following the announcement, The Federal Communications Commission and the Justice Department began looking into the union to decide whether or not the companies are abiding by requirements stated in the Communications Act and FCC rules, as well as whether or not the acquisition is in the best interest of the public. Perhaps AT&T and T-Mobile combined are too large.
Wisconsin Democrat Herb Kohl expressed his concern that a “duopoly” would occur if AT&T purchases T-Mobile. “Should this deal be approved, AT&T and Verizon will control close to 80 percent of the national cell phone market,” said Kohl. Should that be the case, the market power would completely shift, thus spoiling healthy competition in the wireless spectrum.
AT&T defended the deal, arguing that it will help with the growing demand for wireless services. Stephenson also assured the committee that purchasing T-Mobile will allow for less wireless congestion in over-crowded markets, thus benefiting consumers.
The jury is still out on whether the deal will be approved or denied and it sounds like it may take over a year to come to a conclusion.