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Jon Fox,
CALPIRG

CALPIRG Statement before the California Public Utilities Commission Regarding the Proposed Investigation into the AT&T-T-Mobile Merger

My name is Jon Fox, and I am the Consumer Advocate for the California Pubic Interest Research Group (CALPIRG). CALPIRG’s mission is to deliver result-oriented public interest activism that protects consumers, encourages a fair sustainable economy, and fosters responsive democratic governance. I would like to take this opportunity to thank you for allowing CALPIRG to voice our concerns regarding a possible AT&T – T-Mobile merger.

CALPIRG urges the PUC to thoroughly examine the impact an AT&T – T-Mobile merger will have on mobile service consumers in the state of California. Many questions remain about the long-term impacts a potential merger will have on prices, services, and market structure. How will AT&T plan to maintain and develop mobile infrastructure? If a duopoly arises, how will the mobile communications market remain competitive? Will AT&T provide others with access to their mobile infrastructure and spectrum after the merger? These are but a few of the fundamental questions that must be answered before the merger is allowed to continue forward.

A competitive mobile service market is the best way to keep prices fair, maintain high levels of mobile technology innovation, to ensure “Net Neutrality” on the mobile web, and encourage fair access to Internet and mobile communication services.

Therefore CALPIRG objects to this merger unless significant consumer protections and market regulation are put into place that encourage a competitive mobile services market to flourish. CALPIRG would like to put on the public record the following key issues for consideration:

  • AT&T and Verizon have a history of raising prices together, as they did early last year by requiring all customers with smart phones to buy data plans. We’re concerned that less competition would result in higher prices and fewer alternatives in the future, particularly in the low-end market.
  • AT&T has a history of poor maintenance of both mobile and land phone infrastructure.
  • As “gatekeepers,” AT&T will have disproportionate influence over which technologies do or do not reach the American mobile market, and the pricing structures when they do. For example, AT&T already restricts access to competing applications such as Google Voice and Slingbox.
  • Following a merger, together with Verizon, the market share of the top two firms would be 76%. This is unreasonably high even when compared to other large industries such as the petroleum (24%), airline (30.7%), and banking (20.2%). Such a unique market position must be thoroughly justified.

According to the U.S. Department of Justice’s own Horizontal Merger Guidelines, the U.S. mobile industry is already considered to be “highly concentrated.” Further consolidation of the market through an AT&T – T-Mobile merger warrants significant scrutiny at both the state and federal levels.

CALPIRG urges this Commission to investigate these and other issues in order to protect Californians who rely on mobile services for their day-to-day lives.

Thank you for your time and consideration.

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The California Public Interest Research Group (CALPIRG) is a result-oriented public interest group that protects consumers, encourages a fair sustainable economy, and fosters responsive democratic governance.

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