T-Immobile

[Commentary] Within the next five years, we'll make it possible for businesses to deploy the next generation of high-speed wireless coverage to 98% of all Americans." So President Obama said in his January State of the Union address. His Justice Department seems to have other ideas.

We're talking about the lawsuit that Attorney General Eric Holder's Antitrust Division filed to block AT&T's proposed $39 billion takeover of T-Mobile USA. Justice claims the deal, which would combine the country's second- and fourth-largest cellphone companies, would reduce competition, raise prices and retard innovation. In the government's view, the U.S. needs at least four major wireless carriers to have a competitive market, and it has its ancient, theoretical, antitrust market-share models like the Herfindahl-Hirschman Index to prove it. What it doesn't have is evidence that this has, or will, hurt consumers. Since the government started auctioning wireless spectrum in the 1990s as technology has advanced, consumer telephone choices have proliferated and prices have fallen. Americans pay some of the lowest cellphone rates in the developed world. The Federal Communications Commission noted in a June report that 90% of Americans could chose from five or more mobile voice-service providers in 2010, up from 73% in 2009. That's hardly a sign of markets becoming less competitive.

The political interpretation of Justice's actions was borne out yesterday when acting antitrust chief Sharis Pozen said that "our door is open" to AT&T if the company wants to resolve the government's "concerns." In other words, do our bidding on some regulatory or political business, and you can still get your merger. Meantime, Pozen and Justice are putting a legal damper on investment and innovation in one of America's few dynamic industries, and that will do economic damage far beyond AT&T.