5. Review of the Merger is Merited

Since 2002, the wireless telecommunications industry has consolidated from seven major wireless carriers to four in 2010. If AT&T's proposed merger were approved, only three major wireless carriers with substantial market share would remain, as shown in the following chart:⁷

While there are smaller, regional carriers in the market (like MetroPCS and Leaf/Cricket, having an aggregate 9.7% national market share (smaller in California),⁸ as well as pure resellers like TracFone Wireless, Inc., the loss of a major carrier requires further analysis by this Commission. Post-merger market concentration will be greater in California than nationally.⁹

We also recognize that the wireless market has been dynamic, gaining more than 100 million customers since 2002 as the above chart demonstrates. Wireless devices and network capabilities have revolutionized communications. Regulatory policies should facilitate innovation, service, and dynamic competition.

However, due to the increase in concentration in the wireless market that would result from this proposed merger, and the fact that the concentration increase would be greater in California than nationally, we find it reasonable to gather facts and receive comments in this Investigation in order to analyze whether the proposed merger comports with California law, and to inquire into the effects of such consolidation on California customers and the California economy.

Concentration in the wireless market would increase significantly as a result of this proposed merger. In addition, the increase in wireless market concentration would be greater in California than nationally if the merger is approved. Consequently, we find it in the public interest to gather facts and receive comments in this Investigation to assess the effects of such consolidation on California customers and the California economy.

⁷ Source: Strategy Analytics, published by the Washington Post website, and available at http://www.washingtonpost.com/business/economy/wireless-company-mergers-since-2002/2011/03/21/AByLkf9_graphic.html.

⁸ National figures are derived from July 2010 General Accounting Office (GAO) Report, "Enhanced Data Collection Could Help FCC Better Monitor Competition in the Wireless Industry," available at http://www.gao.gov/products/GAO-10-779. The smaller California figure, derived from aggregate Form 477 data, reflects a 6.7% market share for the smaller, regional carriers.

⁹ Whereas a post-merger AT&T would have a combined wireless market share of approximately 42% nationally, it would have over 47% in California. The differential would be larger in mobile broadband, where AT&T's post-merger market share in California would be over 55%, whereas nationally it would be in the 42% range.