AT&T House Hearings Resurrect Ghost of "Ma Bell"

By James Lee Phillips

May 27, 2011 3:50 PM EDT

The United States House Judiciary Committee continues its hearings on the proposed acquisition of T-Mobile by AT&T, in part seeking to determine potential anti-trust issues as well as the more general economic impact of such a deal. Yesterday's comments by Democratic Representatives Ed Markey of Massachusetts and John Conyers of Michigan certainly paint the deal's likely outcome to a serious threat to competition and innovation.

Rep. Conyers succinctly encapsulated the objections of the anti-trust side of the debate. "I am concerned that this merger is bad for consumers, bad for business, and bad for innovation," said Conyers. "Mergers always eliminate more jobs than they create. There is every likelihood that the proposed acquisition of T-Mobile by AT&T could lead to both higher prices and decreased consumer choices."

Rep. Markey was even more explicit in his warnings, likening the results to the days when AT&T's own "Ma Bell" monopoly ruled the telecommunications sector of the United States for over a century, before being broken up by one of the most dramatic anti-trust rulings in the country's history.

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"The AT&T/T-Mobile deal is like a telecommunications time machine that would send consumers back to a bygone era of high prices and limited choice," said Markey. "AT&T and Verizon have divided the nation into Bell East and Bell West. Approving consolidation of the number of nationwide carriers from 4 to 3 and then inevitably to 2 would return consumers to a duopoly in the national wireless market. This would be an historic mistake."

In response, Randall Stephenson, AT&T's current CEO, began by touting his company's wireless networks (to a degree to which most iPhone users, for example, would certainly take exception) but ultimately dismissed the "duopoly" arguments."The combination of AT&T and T-Mobile could not possibly derail the powerful forces of competition in one of the nation's most competitive industries...certain critics may attempt to create a myth that only a few national competitors exist, but wireless competition occurs primarily on the local level."

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While the Judiciary Committee hearings are full of strong opinions on the acquisition, there is technically no official power that the House can wield over the deal itself -- only potentially applying pressure towards any actual subsequent rulings by the Federal Communications Commission or Department of Justice -- the very agency that ended AT&T's telecommunications monopoly in the early 1980's.

James Lee Phillips is a Senior Writer & Research Analyst for IBG.com. With offices in Dallas, Las Vegas, and New York, & London, IBG is quickly becoming the leading expert in Internet Marketing, Local Search, SEO, Website Development and Reputation Management. More information can be found at www.ibg.com.

This article is contributed by IBG.com and does not represent the views or opinions of International Business Times.