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Post date: April 7 2011

A.G. Schneiderman Reviewing Impact On Rochester Cellphone & Broadband Users Caused By Proposed AT&T, T-Mobile Merger

Attorney General Analyzing Largest Wireless Merger in History to Ensure Less Competition Does Not Mean Higher Prices or Worse Service for Western New York

Schneiderman: Merger Must Not Unduly Raise Cell Prices or Reduce Access to Low-Cost Options for Western New York Consumers

ROCHESTER - Attorney General Eric T. Schneiderman today announced that his office is thoroughly reviewing AT&T’s proposed acquisition of T-Mobile to specifically examine the potential impact on cellular and broadband users in the Rochester area. 

The proposed merger would create the nation’s largest wireless company with a total of 130 million subscribers nationwide, opening the door to a near duopoly shared by the merged firm and Verizon.  The Attorney General will analyze the merger for potential anti-competitive impacts on consumers and businesses in Rochester.

"When two major wireless companies merge, that means there's less competition in the industry and the impact could end up being felt in consumers' wallets. Our review will examine the potential impact on Western New York consumers to ensure that this merger does not mean higher prices and less innovation," said Attorney General Schneiderman. "Cell phones are a basic necessity in neighborhoods all across the state and T-Mobile, in particular, completes in many Upstate regions.  The purpose of our review is to ensure that Western New Yorkers are protected against higher prices at a time when every penny makes a difference."

Attorney General Schneiderman is particularly concerned about the deal and its potential pricing impact on Upstate cities such as Rochester, as well as Buffalo, Syracuse and Albany where there are fewer wireless options than in New York City.  If the merger goes through, this means larger market shares  for the large providers. That in turn will likely give them greater power over prices, which may mean higher prices for consumers in Western New York. 

The concern over the impact in the Rochester area is mentioned by the Federal Communications Commission's (FCC) concentration index,  which measures the number and size of competitors in a market, and is an important indicator  of how competitive a market is.  Markets with fewer competitors are more "concentrated" and tend to have higher prices, fewer choices and less innovation for consumers.

An FCC report from May 2010 found the Rochester area to be among the most concentrated and thus likely to be the least competitive in the state.

T-Mobile, a subsidiary of Deutsche Telekom, is the fourth-largest wireless company in the country. The proposed merger could start a process of consolidation that would lead to two firms – AT&T and Verizon – controlling nearly 80 percent of wireless subscribers nationwide and dominating the U.S. wireless business.

Attorney General Schneiderman stressed that he will closely scrutinize AT&T's argument that the merger has the potential to produce some benefits, such as expanding the coverage of AT&T's next generation broadband wireless network to rural areas in Upstate New York that are underserved and have poor wired broadband connectivity. The Attorney General’s review will weigh the benefits to New Yorkers against the anti-competitive risks posed to them.