Consumers lose in blocked cell phone merger

On antitrust, the U.S. government seems stuck in the Model T era. It just doesn't understand that, in this age of Apple, Google, Facebook and thousands of lightning-fast digital companies, it's practically impossible to build a monopoly.

That's why the Justice Department was so wrong in thwarting AT&T's attempted $39 billion purchase of cellphone competitor T-Mobile USA. In its Aug. 31 suit against the merger, the government contended that competition would be reduced, increasing costs to consumers. The merger would have made the AT&T the largest U.S. cellphone company, with Verizon second, Sprint third and smaller companies following.

On Dec. 19, AT&T dropped the merger attempt, costing it $4 billion in fees and other charges to Deutsche Telekom, T-Mobile's German parent.

"This result is a victory for the millions of Americans who use mobile wireless telecommunications services," cheered Deputy Attorney General James Cole. "A significant competitor remains in the marketplace, and consumers will benefit from a quick resolution."

The opposite is true. "One of the worst aspects of this is that it actually deprives consumers of competition," Wayne Crews told us; he's vice president for policy and director of technology studies at the Competitive Enterprise Institute. Because AT&T and T-Mobile both will be weaker now than a combined company would have been, "the competition can just sit back and take it easy. It's a form of corporate welfare."

He added that "antitrust is often called an 'alternative to regulation.' This is one of the worst interventions you can have" by government into industry. He said that, aside from antitrust, American businesses face an incredible 4,000 new federal regulations a year. And state governments, especially California's, are no slouches, either, at regulating industry.

Crews said that California, with clusters of high-tech companies, in particular could be harmed by the government's victory against AT&T. On Dec. 20, two U.S. senators called on the Federal Trade Commission to investigate Mountain View-based Google for supposedly rigging its search results to favor its own "secondary products and services." Sens. Herb Kohl, D-Wis., and Mike Lee, R-Utah are neither from California nor computer experts. They don't know what's going on out here.

Crews pointed out that there are search-engine alternatives to Google, such as Microsoft's Bing. And who knows what some kid might create in a garage, the way Steve Jobs started Apple, or in a dorm, the way Mark Zuckerberg created Facebook?

The future is too unpredictable, and exciting, to be hamstrung by outdated regulations. If federal bureaucrats hamper technology development in America, especially in California, it will occur, instead, in Germany, China or India.