Consider that, today, AT&T and Verizon control 80 percent of the industry earnings, have 70 percent of the wireless customers in the U.S., own licenses for over 80 percent of the ultra-efficient low band spectrum, and own the networks supplying most of the landline connections to the towers used by all other wireless carriers. Note that AT&T and Verizon did not reach their tremendous size by beating their competition; they did so by buying their competition during an era of unfettered acquisitions and near-total regulatory disinterest. The several “Baby Bell” descendants of the original AT&T spent a decade reconstituting themselves into the “Twin Bells,” while also acquiring various smaller operators. That era of consolidation is why we now have a wireless duopoly. Without market-based competition from a third comparably-sized wireless carrier, heavy-handed, public utility-style regulation is the only option for promoting competition in the industry. Since that solution is generally regarded as politically untenable, a merger of Sprint and T-Mobile provides the best option to inject competition into the wireless industry.
Congressional Democrats still must reconcile their support for such a transaction with the Justice Department’s stated opposition and the FCC’s less-than-lukewarm interest, but the FCC is an independent agency that may be convinced of the public interest benefits such a transaction would deliver, and the Justice Department, when presented with an actual transaction to evaluate, could easily determine that their preconceptions about the industry and their fears about such a merger are unfounded.
If the wireless industry is to be competitive and deliver the benefits of competition to the consumer, Sprint and T-Mobile must be allowed to merge and then must work with the nation’s smaller competitive carriers to create both the scale and combined footprint of a third national wireless carrier. Then, and only then, will we have a counterbalance to the wireless Twin Bells, and true competition for the U.S. wireless consumer.
Sen. Jeff Flake, R-Ariz., takes a selfie with his cut-out head during the Hoops for Youth 16th annual charity basketball game held at George Washington University's Smith Center, September 8, 2014. The members of Congress team beat the lobbyist team 46-40. Buy photo here.