Should AT&T and Verizon own 80% of cell phone market?

This is from Michelle:

Here is an article I found in “The Week” that I thought was interesting:
Basically if the government does not fight this merger, AT&T and Verizon will own about 80% of the market. Prices will most likely go up for customers rather than go down, but I feel that the government should not interfere with tech markets. They should allow competition, which could thus encourage more innovation, and also could encourage tech mergers internationally.
What is your opinion on this type of merger? 
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About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

6 comments

  1. I think the government should fight the merger. If AT&T and Verizon dominate the mobile market, then there will be no room for others in that market to compete, hence a monopoly. Plus, I for one have AT&T and can't afford higher prices!

  2. The government needs to stop this merger. Out of the top four wireless carriers, T-Mobile is viewed as the cheap alternative. If AT&T is allowed to acquire T-Mobile, there will no longer be the low cost option. The people who need or want low cost wireless service will only have one option; selecting small carriers such as Boost Mobile or other carriers along those lines. If the government allows this merger, competition and innovation will be hindered because the 3 remaining large carriers will no longer have to worry about people switching to a company that can provide basically the same service at a lower price. If the merger is allowed people will have to choose between paying a higher price or sacrificing service. The 3 large remaining companies will have no incentive to provide low cost service and all the innovations they introduce will be priced highly. All in all, I think the government did the right thing by filing suit to stop the merger.

  3. We should understand the arguments for going forward with the merger? Here's One – both AT&T members and T-Mobile members will have access to better coverage and broader bandwidth.Here's Another – If AT&T and Verizon become lazy and uncompetitive, then what is there to stop a newcomer (like Metro PCS) from capturing more market share?

  4. As a consumer, I do not like the idea of cell phone rates going up due to Verizon and AT&T owning majority market share. However, I think that the government should not be interfering with the potential merger because it could lead to innovation and healthy competition. Higher rates could incentivize new companies to emerge.

  5. The problem in my view is the cost to compete in this market. When you factor infrastructure investments like upgrading their network and adding 4G capability, their return on that investment is going to be much lower than the larger carriers. Verizon has a significant advantage in this regard and AT&T merging with T-Mobile would help them compete. I don't think it is ideal as a consumer, but neither is T-mobile going out of business due to shrinking profits and an overall inability to compete.

  6. I believe the government should only get involve and prohibit this merger, if the merger gives the new company (combined AT&T and T-Mobile) the kind of market power that will enable them to engage in unilateral anti-competitive behaviors that prevent or reduce competition in a market.

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