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Competitive Implications of the Proposed Acquisition of T-Mobile by AT&T Mobility

Mar 2011
Policy Brief
By  Roger Noll, Gregory Rosston
AT&T’s announced acquisition of T-Mobile’s U.S. wireless communications business raises important competition policy issues that require careful analysis by the agencies that must approve the acquisition, the Federal Communications Commission (FCC) and the Antitrust Division of the U.S. Department of Justice. The United States currently has one of the most competitive and best-performing wireless communications industries in the world. Four carriers (AT&T Mobility, Verizon Wireless, Sprint, and T-Mobile) provide service to almost the entire nation, and several smaller carriers provide regional service, at least one of which operates in each of the major metropolitan areas. American consumers benefit from competition as prices in the United States are substantially below prices for comparable services in other nations. As a result, American consumers are among the world’s most intensive users of broadband wireless communications. Superficially, the proposed acquisition appears to run seriously afoul of the merger policy of the antitrust enforcement agencies. The first step in merger analysis is typically to measure concentration—an indicator of the extent of competition. The standard measure of concentration is the Hirschman- Herfindahl Index (HHI), which is the sum of the squares of the market shares of the sellers in the market.