Why AT&T and T-Mobile should not be allowed to merge

The U.S. justice department is suing AT&T for the proposed merger with T-Mobile. The government fears that the merger of the #2 and #4 wireless carriers will be monopolistic and create pricing pressures on customers. I think that the two should not be allowed to merge, firstly for their own benefit, secondly for the benefit of the cellular industry and lastly for the customers.

If the prices go up for the consumers, people will find other cheap alternatives in Boost mobile or something else. Bur merging of too giant companies will create a behemoth organization which starts affecting the industry as a whole if it runs into trouble. To understand this you don’t have to look beyond 2008. When Lehman Brothers went into bankruptcy it affected the entire financial system and the US and the world economy went into the rut. The government has allowed too many mergers and aided the formation of companies like Lehman, Goldman Sachs, Bank of America, GM …. The list goes on. Same was the case with the Auto industry when GM seemed to crumple the whole auto sector, including suppliers and dealers went into doldrums.

Large organizations are highly inefficient and very clumsy to adapt to changing market needs. Being too powerful they live under the illusion of “too big to fail” and operate very complacently. AT&T is trying to look for a short term solution to its bandwidth problems by buying out T. But what are they going to do when T-mobiles bandwidth runs out too? If AT&T buys T, prices will go up, people will shun their products, existing customers will still congest their network by streaming videos, and they will have nowhere to go. Finally the tax payers will have to bail them out.

The merger should be averted for the good of everybody.