Townhall...
Wired
for Overregulation
By Steve Chapman
9/4/2011
Outside
the Washington headquarters of
the Federal Trade Commission is a sculpture of a powerfully built,
shirtless
man forcibly restraining an unruly horse. It’s called “Man Controlling
Trade,”
and it captures a common attitude in government: Oftentimes, capitalist
firms
need to be saddled and broken.
That
assumption underlies an antitrust
suit filed Wednesday by the Justice Department to block a merger
between
AT&T and T-Mobile. They want to join forces for mutual
advantage in their
competition with Verizon and other wireless carriers. The Obama
administration
claims that fewer providers will mean higher rates and worse service.
But
the regulators overlook the
obvious benefits of the deal. AT&T, unlike the Justice
Department, seems to
grasp that it will have to compete against the market leader, Verizon,
regardless.
It
wants T-Mobile for the cellphone
towers and wireless spectrum that AT&T needs to overcome the
lousy
reputation of its network. Besides upgrading performance, it says the
merger
will allow a $40 billion reduction in costs -- which in a functioning
market is
bound to be passed on sooner or later to consumers.
“Many
analysts agree with AT&T’s
argument that the combination could improve the quality of voice calls
as well
as data service,” reports The Wall Street Journal. That need has become
more
pressing since the carrier lost its exclusive right to the iPhone.
The
lawsuit argues that losing T-Mobile
would be a devastating blow to competition. But there are plenty of
other,
lesser-known cellphone companies, including U.S. Cellular, MetroPCS and
Leap.
In fact, 90 percent of Americans can choose from five or more cellphone
companies.
The
Justice Department scoffs at the
importance of these smaller operators because they don’t compete
nationally as
the larger carriers do. It’s a strange position that misunderstands the
nature
of the wireless marketplace.
Joe’s
Burger Shack doesn’t compete
with McDonald’s nationally, but McDonald’s still has to compete with it
and
thousands of other single-site restaurants across the country. If
prices go up
under the Golden Arches, patrons have plenty of options besides Burger
King.
AT&T
faces a similar landscape of
small and large rivals. If it loses customers who resent being gouged,
it’s
cold comfort to see them sign up with rivals that don’t buy Super Bowl
ads.
Just
because a small carrier doesn’t
operate coast-to-coast today doesn’t mean it won’t tomorrow. If big
companies
boost their rates, they give upstarts the chance to build their
business with
alluring discounts. They also encourage the entry of new rivals. The
market has
its own ways of deterring rip-offs, and those methods are typically
faster and
surer than federal intervention...
Read
the rest of the column at
Townhall
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