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Friday, May 13, 2011

Two bad deals: AT&T and WakeMed

I strenuously oppose AT&T's proposed acquisition of T-Mobile. I realize that AT&T has its butt in a crack and desperately needs more spectrum to increase capacity, and I also realize that T-Mobile is running a weak fourth in a field of four major players. However, if the acquisition is approved, AT&T would enjoy a virtual monopoly on GSM and 3G usage in the United States. AT&T would surely use its market muscle to drive those inexpensive technologies off the air and force everyone to adopt 4G LTE (and require everyone to buy a data plan!). Furthermore, billions of people worldwide use GSM and 3G; when they travel to the USA, AT&T will pry open their wallets like never before with unrestrained roaming fees. This proposed deal is bad public policy.

Similarly, at the local level I strenuously oppose WakeMed's proposed acquisition of Rex Hospital, a unit of UNC Healthcare. Make no mistake, WakeMed is trying to eliminate a worthy competitor and to gain a virtual monopoly on hospital care in Wake County. (Duke Healthcare's presence in Wake County is negligible.) Remember the USSR airline, Aeroflot? We would have to rechristen WakeMed as WakeMedFlot. Citizens would not be served by this degree of consolidation, with the only alternative being a drive to Durham or Chapel Hill. Any savings from eliminating redundancies at Rex would be offset by interest payments that WakeMed would have to make on the incremental debt needed to finance the acquisition. This proposed deal is bad public policy, too.