Proposed Merger Of AT&T And T-Mobile Is The Ultimate Horizontal Consolidation Test

Former Federal Communications Commission Chairman and antitrust lawyer Reed Hundt says the proposed merger of AT&T and T-Mobile USA (not Comcast-NBC Universal) is the ultimate horizontal consolidation test under existing regulatory standards.

A rigorous discussion on CNBC’s Squawk Box this morning involving REH Advisors principal Hundt and Evercore Partners chairman Roger Altman, an advisor to the mega telecom deal, covered many of the hot points in what is expected to be a contentious review process.

“This is the defining test of the antitrust policies of the Obama administration,” Hundt said. “This is a significant horizontal consolidation by all the traditional measurements.This level of concentration, two-thirds of the time, has been rejected by the Department of Justice.”

Conceding this will be a long, drawn-out, complex process, Altman defended that the scale created will not extinguish competition even while the deal is pending. Sprint had been negotiating its own alliance with T-Mobile

The stakes are high. The explosive growth of e-tablets, e-readers and smart phones which are becoming core to our existence makes this more than just a $39 billion wireless union. The merged entity would broadly manage and dictate the terms of nearly every aspect of an increasingly connected marketplace. 

One of the key factors is whether the proposed AT&T-T-Mobile deal supports or exploits the creation of universal broadband and a 4G standard in the United States. When AT&T and Verizon have completed their extreme land grabs, will there still be substantial enough players to support a low-end market with modest products and pricing? Where does free market competition end and monopoly begin, even in the shaddow of the 1996 Telecommunications Act?

By the time AT&T and T-Mobile, public interest advocates and other constituents on either side battle it out in Washington DC, rapidly moving technology will have created a new set of issues and competitive realities.Still, it is unclear where consumers everywhere on the service spectrum wind up in all of this.

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