AT&T and T-Mobile: a Contradiction of Competition

Competition among capitalists is touted as the freedom, and not just freedom but the only thing that makes society function. The arguments are ones we already know. Only when people are directly competing to destroy each other can anything in society function in a productive way and supply that same society with the commodities it requires.

However on Capital Hill, two of the largest telecommunication providers in the United States sat before a Senate hearing with hands raised swearing that they were not in competition with each other. For nearly a year the executives of AT&T and T-Mobile have been arguing in support of their request to be allowed to merge into one company.

A merging would allow the two companies along with Verizon to control 80 percent of the market. This has caused great concern over a growing monopoly over all telecommunications in the country. Such a monopoly would seriously jeopardize the consumer sovereignty (what there is of it) and choice, a problem faced only by capitalism (socialism has a different solution).

The two companies declared that they were not in competition.

Senator Herb Kohl, a Wisconsin Democrat, didn’t believe the executives a questions their position. “I mean, please… You both sell the same service, cellphone service, on a national basis… Is it really credible to come up here and sit here and tell us that you and T-Mobile are not close competitors?”

Randall L. Stephenson, the chairman and chief executive of AT&T replied: “They’re not our competitive focus. I can tell you that.”

Both AT&T and T-Mobile are swearing that if they do not merge they will not be able to compete. They made arguments and gave demonstrations showing that a refusal to allow them to merge would ruin the growth potential of both companies and limited and their ability to meet customer demand for wireless Internet service.

The contradiciton here is very telling. The existence of competition is hindering competition. Both AT&T and T-Mobile very well know that, and they in fact are telling the truth when they can’t expand. Of course their goal is not to provide the best service, or the greatest amount of choice to the consumer. They’re interested in profits and profits alone.

Both AT&T and T-Mobile cannot expand their businesses because they come up against their competition, both themselves, Nextel and Sprint. Capitalist competition always concentrates capital into as few hands as possible. Each of these four companies has expanded as far as they are going to expand while there is competition. Unless one of them is removed the others will have to stay put. Basically this is a four-way stand off.

The only way to break this standoff is for AT&T and T-Mobile to merge into one larger company taking almost half of the market. With that accomplished, they will have the power to dominate the two remaining companies. AT&T and T-Mobile know this, as well as Nextel and Sprint. Nextel and Sprint are contesting the merger because they are fighting for their lives. They will both be crushed by this merger and the entire market will be dominated by one company.

The usual pro-capitalist defence to this is to declare that Nextel and Sprint should merge to be able to compete with AT&T and T-Mobile. Of course this would only lead to a duopoly with is not much better. This is the true nature of capitalist competition, to destroy competition. The whole concept of competition under capitalism is a complete fraud. How can they say competition is necessary, while they drive to destroy it? This is anther one of those contradictions that makes capitalism a system of contradiction.

By the way, has everyone forgotten how AT&T in collusion with National Security Agency were spying on Americans? In 2008 an AT&T technician Mark Klein exposed Room 641A to the media… Anyone?