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Did the federal government read its own jobs situation report?

Posted December 5th, 2011 in antitrust, AT&T, T-Mobile USA, wireless communications and tagged , , , by Alton Drew

Profound editorial in the Lowell Sun today about the approach to the AT&T, T-Mobile merger that the federal government is taking. “Too big to allow” seems to be the mantra, as two federal agencies and a federal court hold the two companies futures in their hands.

The hung up, according to the Federal Communications Commission (which has conveniently inserted itself into the antitrust expertise category along with the Federal Trade Commission and the U.S. Department of Justice) is that prices may rise; a competitor may be eliminated; and jobs would be lost.

History over the last decade has shown that prices have fallen, even after a number of wireless mergers, including AT&T and Cingular wireless. Smaller carriers should be given credit for bringing innovative products into the wireless markets and helping to drive prices down. Why should we not expect new entrants to continue the trend of taking advantage of new opportunities to brong innovative products into the market in the wake of another merger? Why shouldn’t we expect prices to fall even further?

Does the FCC need a reminder that they have not yet declared that the wireless market is competitive? How can the removal of T-Mobile USA now have any more detrimental impact on the market than its elimination by its own parent?

And talk about job loss. Over 300,000 people left the labor force in November. Does allowing T-Mobile to fade away make really support a “jobs creation” policy?

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Public opinion may have driven AT&T lawsuit. Law and economics will decide the lawsuit

James Haggerty, in a piece written for Law.com’s Corporate Counsel, points out the reality that AT&T faces in the courtroom of public opinion. To law and economics purists, the arguments offered by Public Knowledge and Free Press are, to be kind, frustrating. They rarely if ever have anything to do with antitrust law, or the law of economics.

Innuendo, name calling, and fear mongering, mixed in with an apparent lack of knowledge regarding the basics of economics is the order of the day from these advocacy groups.

It is difficult to say whether these arguments directly influenced the U.S. Department of Justice’s lawsuit to enjoin the acquisition of T-Mobile by AT&T. It is safe to say that the arguments have created a political environment that may have left the Justice Department with no choice but to file a lawsuit.

Courts of public opinion are rarely bastions for accurate information, and investors and consumers should be mindful of their sodium intake when listening to the arguments of Public Knowledge, or the forecasts of market analysts when opining about the probability of AT&T’s success in getting it’s petition approved.

For one thing, public opinion means nothing in a court room. If you believe that, then Casey Anthony should be in prison and Troy Davis should be getting released. What matters is who will make the strongest legal arguments, and based on the Justice Department’s filing, I am not impressed that their filing is impregnable.

Second, it’s too early to call this deal dead on arrival. The court and the parties haven’t even calendared discovery and trial dates yet, meaning there is, as always, room for settlement.

I won’t issue a call on the probability of AT&T’s success today, but the probability that the courts will not give any of the innuendo regurgitated by grass roots advocate any weight is pretty high.

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Steve Forbes’ take on antitrust and information infrastructure is an accurate one.

Came across an article written by Steve Forbes questioning the impact of today’s antitrust framework on proposed mergers such as AT&T and T-Mobile. Yes, I know that we should expect nothing but cheerleading for capitalism and free markets from the Forbes Magazine editor-in-chief, but, as usual, he’s right for the most part.

While I disagree with his de-emphasis of the role that traditional infrastructure projects play in our economic turnaround, I agree that government policy as well should be promoting the role our information technology infrastructure in the recovery.

While I give the Obama administration overall credit for making broadband deployment to the unserved and underserved insular, urban, and rural parts of the nation, I cannot get my head around its application of mid-twentieth century antitrust law with the constantly evolving 21st century broadband technology.

How fast are we evolving? In 1972, I remember reading an article in grade school about AT&T’s vision to build phones with TV screens. Back then the closest thing to that was Mr. Spock’s tricorder.

Fast forward 35 years to 2007 and Apple’s iPhone makes that a possibility.

In four short years since the iPhone, Facebook and Ooyala introduce social TV, which allows Facebook users to share video with friends while commenting on the content. Allegedly, production companies are considering using the platform to provide content for sale or rent.

How would antitrust policy be used in the event that Google decided to buy a wireless company like Sprint, or better yet, go after an asset like AT&T in order to get its aggregated content and search capabilities further entrenched in the home?

Hopefully policy makers would move out of the way having learned that the next big innovation is right behind.