Steve Chapman

Outside the Washington headquarters of the Federal Trade Commission is a sculpture of a powerfully built, shirtless man forcibly restraining an unruly horse. It's called "Man Controlling Trade," and it captures a common attitude in government: Oftentimes, capitalist firms need to be saddled and broken.

That assumption underlies an antitrust suit filed Wednesday by the Justice Department to block a merger between AT&T and T-Mobile. They want to join forces for mutual advantage in their competition with Verizon and other wireless carriers. The Obama administration claims that fewer providers will mean higher rates and worse service.

But the regulators overlook the obvious benefits of the deal. AT&T, unlike the Justice Department, seems to grasp that it will have to compete against the market leader, Verizon, regardless.

It wants T-Mobile for the cellphone towers and wireless spectrum that AT&T needs to overcome the lousy reputation of its network. Besides upgrading performance, it says the merger will allow a $40 billion reduction in costs -- which in a functioning market is bound to be passed on sooner or later to consumers.

"Many analysts agree with AT&T's argument that the combination could improve the quality of voice calls as well as data service," reports The Wall Street Journal. That need has become more pressing since the carrier lost its exclusive right to the iPhone.

The lawsuit argues that losing T-Mobile would be a devastating blow to competition. But there are plenty of other, lesser-known cellphone companies, including U.S. Cellular, MetroPCS and Leap. In fact, 90 percent of Americans can choose from five or more cellphone companies.

The Justice Department scoffs at the importance of these smaller operators because they don't compete nationally as the larger carriers do. It's a strange position that misunderstands the nature of the wireless marketplace.

Joe's Burger Shack doesn't compete with McDonald's nationally, but McDonald's still has to compete with it and thousands of other single-site restaurants across the country. If prices go up under the Golden Arches, patrons have plenty of options besides Burger King.

AT&T faces a similar landscape of small and large rivals. If it loses customers who resent being gouged, it's cold comfort to see them sign up with rivals that don't buy Super Bowl ads.


Steve Chapman

Steve Chapman is a columnist and editorial writer for the Chicago Tribune.
 

 
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