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The Anti-Competitive, Anti-Consumer Grotesqueries of AT&T

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In a filing submitted yesterday to the FCC, Public Knowledge, a Washington, D.C.-based public interest group "working to defend citizens' rights in the emerging digital culture" and the Future of Music Coalition, which advocates for artists' rights in the music industry, presented a scathing critique of AT&T's proposed T-Mobile takeover.

Attorneys for the two groups maintain that, "even under the most favorable product definition and geographic market urged by the applicants, assuming away all switching costs and information asymmetries that would impact the ability to switch, the merger would presumptively fail the hypothetical monopoly test in the top 30 markets under a standard antitrust screen," though AT&T and T-Mobile, obviously, argue otherwise.

According to the filing, the entity formed by such a merger would also be "contrary to the express policies of Congress and the Commission to rely on competition rather than regulation to protect consumers and spur deployment of new services," as the "merged entity would be able to assert control over over handsets, applications, equipment and protocol development, telco and tower equipment, conditions on retailers and mobile commerce while at the same time having dominant control over ancillary areas such as special access, video program distribution, enterprise data and intercarrier compensation."

In a release distributed last night, PK and FOMC noted the "struggles that Apple had in getting AT&T to accept the iPhone," and predicted that, should the merger be approved, "device manufacturers with less clout than Apple [will] have even dimmer prospects for innovation in an even more concentrated market."

"If AT&T had had its way with the iPhone in 2006, consumers would not be able to access YouTube or perform many other tasks now taken for granted. Every new innovative service that might require additional investment by the carrier can either be subjected to profit-maximizing additional charges, or simply be rejected to preserve legacy revenue streams," they wrote.

But, perhaps most alarming is AT&T's blatant disregard for fair play. As PK and FOMC point out, AT&T has, in the past, "threatened to withhold investment if the Commission adopts this or that pro-competitive or pro-consumer regulation, while simultaneously promising to invest in rural deployment if granted license transfers or waivers."

So, now we know why AT&T's coverage map looks the way it does...

...and why Nebraskans, in particular, should be steadfastly opposed to this deal if they ever hope to be treated like their neighbors in South Dakota -- which makes the Cornhusker State look like the North Korea of US cell coverage:

As yesterday's filing states, in no uncertain terms, "At some point, an application crosses a line and becomes intrinsically inimical to the public interest," and thus, "No remedies are enough to save this merger. It must be blocked, not 'fixed.'"

Of course, the folks over at AT&T might consider giving the old "cupcake strategy" another shot -- it's worked for them before.
POSITION:  No positions in stocks mentioned.