Going deep on AT&T-T-Mobile merger: How will it really impact wireless competition?

Industry analysis reports don’t usually generate that much controversy, but the Yankee’s Group recent examination of how the merger of AT&T and T-Mobile would affect competitive pricing in the wireless industry hit a nerve with AT&T – while also yielding important insights into how the deal is likely being reviewed, and the impact it could have on the market if approved.

The report’s key finding: in several major markets AT&T’s share of overall subscribers would exceed 50%, creating concentration levels among the remaining providers that would drive prices higher for all consumers. Furthermore, the study analyzed the effect of former T-Mobile customers churning off of AT&T, abandoning their relatively low-cost T-Mobile plans and gravitating toward higher-dollar plans offered by other providers. The result, Yankee concluded, would be an increase in the average bill in many major markets, in some cases in excess of $5 a month by 2015.

AT&T asserts that the study is bunk and has attacked its methodology and conclusions. “The only thing the Yankee Group got right was that the merger will result in ‘better coverage and performance’,” AT&T Senior Executive Vice President and General Counsel Wayne Watts said in a statement. “Beyond this, the report ignores so many facts and is so analytically flawed that it cannot be taken seriously.”

For its part, the Yankee Group says its analysis is based on the same sorts of traditional metrics and analysis that regulators are likely to use to measure the impact of the deal. And the impact, they claim, will be major in many markets.

Obviously, Yankee and AT&T don’t see eye-to-eye here. Let’s get into it.

Next: What is HHI? And what does it mean for the merger?