This is screaming out to the Justice Department because it may give AT&T too much control over other service providers. It would also hurt the consumer because the big three would have much more control over prices (since it is an oligopoly) and it would be safe to assume that they are not going to lower prices. For these reasons the Justice Department is going to look very closely at this deal to make sure it does not hurt the consumer too much. There is absolutely no way that the government will allow this to happen, and I agree completely. There is no way that AT&T's proposed deal will not end up hurting the consumers; AT&T and the other members of the oligopoly would have too much control over prices. Are there any ways this deal could benefit the consumer?
Tuesday, September 20, 2011
AT&T and the Big Three of Phone Service
I am sure that by now everyone has heard of AT&T's proposed purchase of T-Mobile. Well this is not going down as smoothly as AT&T would have hoped. This is an enormous deal with many implications on the cell-phone service market. If this deal were to go through, AT&T would become the nation's largest service provider, and the three biggest service providers (AT&T, Verizon, and Sprint) would control 90% of the market (sounds like an oligopoly to me).
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2 comments:
I definitely agree with all of your points. However, just to play devil's advocate, I think that one way the consumer could benefit is if AT&T incorporated the better aspects of T-Mobile into their business structure. Some areas of improvement would include quality customer service and better coverage (i.e. fewer dropped calls/faster data service). However, I do think that this scenario is very unlikely and that simply not merging would be best for the consumer.
Another possible outcome of this would be more people switching over to another service provider such as Sprint or Verizon. This possibiliy would provide incentive for AT&T to work on areas where they are sorely lacking customer satisfaction, thus benefitting the consumer.
I agree with your points as well as Sophia's. The costs to the consumers are almost certainly going to outweigh the benefits, yet I think some good can be derived from this deal. When I was reading your post, I thought about the benefits that customers of the same service provider enjoy (such as unlimited calls between any two AT&T customers I believe), and I think the phone service industry might benefit from a little more standardization. However, this oligopoly could engage in anti-competitive behavior such as collusion, and prices could very likely shoot up (interestingly enough, the richest man in the world, Carlos Slim, is the chief executive of two large mobile-phone carrier companies). Let's hope there aren't any more mergers among the Big Three.
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