DOJ Gives AT&T-BellSouth A Free Pass, But Competition Questions Remain

The Department of Justice has approved the BellSouth-AT&T merger with no conditions, surprising many observers that expected the department to raise some antitrust concerns over the combined entity’s control of the consumer landline market. The decision sparked an angry response from the FCC’s two Democratic commissioners, raising the possibility that the commission won’t vote on the deal Thursday, as Chairman Kevin Martin had hoped. They and other critics of the deal say that the new company would control more than half of the country’s landlines, be the largest broadband provider and the largest cellular operator in the country, giving it an unprecedented amount of control over the market. The control over landlines doesn’t seem as particularly important as it once was, given the rise of competitors like VoIP and the replacement of fixed lines with cellular, which itself is a fairly competitive industry. The lack of meaningful competition for broadband, however, means that a combined, stronger AT&T-BellSouth will be better placed to maintain the status quo and hold down the level of competition. This is where things start getting sketchy: part of the DOJ’s rationale for approving the deal is the emergence of new technologies will help maintain competition and consumer choice. The biggest of these is wireless broadband. However, when AT&T and BellSouth (through Cingular) are the top wireless provider in the nation and together will control significant amounts of wireless spectrum, particularly that which is earmarked for future wireless broadband technologies like WiMAX. So how can these new technologies emerge as viable competitors when, like the existing ones, AT&T can exert so much control over the market for them? Questions are being raised about the government’s approval of previous telco mega-mergers; there are enough questions surrounding this one that it — at the very least — deserves thorough examination, and not to be rushed through the approval process by an FCC commissioner looking to deliver a deal before the upcoming elections.

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