The Department of Justice vs. AT&T


One of the reasons that mobile data and phone networks, especially those that serve popular smartphones like the iPhone, are so swamped is that, regardless of demand for additional service, it can be extremely expensive and time-consuming to build the new cell sites necessary to add network capacity. And various requirements set up by local governments make the process even more difficult than it otherwise would be.

As Jerry Brito, a technology policy expert at The Mercatus Center, explained earlier this year, "if a carrier wants to put up a new tower, or add antennas to existing towers, it has to get permission from the local zoning board. This can be an extremely onerous process as different localities will have different reasons to hold up the process." Here's Bret Swanson saying much the same thing in Forbes:

It's not easy to build cell sites. You've got to find good locations, get local government approvals, acquire (or lease) the sites, plan the network, build the tower and network base station, connect it to your long-haul network with fiber-optic lines, and of course pay for it. In the last 20 years, the number of U.S. cell sites has grown from 5,000 to more than 250,000, but we still don't have enough.

One relatively straightforward way to acquire new cell sites, then, is to purchase another telecom company's network infrastructure. AT&T, which has seen massive growth in data traffic in recent years, thanks in large part to being the first carrier to offer Apple's iPhone, proposed earlier this year to merge with T-Mobile, another mobile provider. The deal would expand the total number of AT&T's cell sites by about 30 percent.

It would also give AT&T access to the scarce wireless spectrum that T-Mobile currently owns—spectrum that's currently difficult to acquire thanks to federal rules that end up creating artificial scarcity. That additional spectrum would likely substantially hasten AT&T's ability to roll out faster data networks. Obviously there's no gaurantee that the deal would mean better service for customers, but the upside, if it works, seems reasonably clear: More robust service, and a faster network.

Naturally, Obama's Department of Justice has filed an antitrust lawsuit intended to block AT&T's acquisition on the grounds that if the two companies merged, consumers would suffer. 

The news was unexpected—AT&T officials claim they were given no notice—but it's not exactly surprising given the current administration's aggressive stance toward Internet providers, and wireless carriers in particular. Under President Obama, the Federal Communications Commission not only spent considerable time and effort passing net neutrality regulations, it's also begun paving the way for increased regulation of the wireless sector.