(WASHINGTON) — AT&T’s decision to drop its $39 billion planned purchase of smaller rival T-Mobile USA is being cheered by consumer groups and government officials, who say more — not less — competition in the cellphone business is needed.
“[This] is good news for consumers,” Parul Desai, policy counsel for Consumers Union, told ABC News. “It keeps four competitors in the market rather than allowing the wireless industry to move towards a “duopoly.’”
“As you move towards duopoly, there is less choice and ultimately higher prices for consumers,” she added.
AT&T decided to pull its plans for the purchase after objections from the Department of Justice and the Federal Communications Commission on competitive grounds. Deutsche Telekom, the owner of T-Mobile, will get a $3 billion break-up fee and $1 billion worth of airwaves from AT&T, the second-largest U.S. carrier behind Verizon Wireless.
“The FCC is committed to ensuring a competitive mobile marketplace that drives innovation and investment, creates jobs and benefits consumers,” FCC chairman Julius Genachowski said in a statement.
“This deal would have done the opposite. The U.S. mobile industry leads the world in mobile innovation, and we agree with AT&T that Congress should pass incentive auction legislation that will unleash new spectrum for mobile broadband,” said Genachowski.
In April, Consumer Reports did an analysis that discovered T-Mobile customers typically pay $15 to $50 less each month for comparable plans. For a year, or 12 months, that’s a savings of $600.
The attorney general’s office called the decision to keep a low-cost competitor in the market a victory for Americans.
Copyright 2011 ABC News Radio
Stephen Collinson, CNN
John Clyde, KSL.com
Jethro Mullen, Ravi Hiranand and Frank Pallotta, CNN