The DOJ Missed the Obvious – More 4G means Lower Consumer Prices

In recent years, investment in 4G by wireless carriers has been in the billions of dollars, with much more to come. Verizon has invested billions and continues to invest even more. AT&T, in the wake of its proposed merger with T-Mobile, will spend $8 billion investing in their 4G network. And companies such as Clearwire and Lightsquared are investing billions more to provide 4G services to Sprint and other wireless carriers.

As a recent study by Deloitte, a global financial consulting firm, says this investment in 4G will be a huge boost to the economy, at a time when it’s greatly needed. According to the study, an investment between:

“$25 billion and $53 billion in 4G networks between 2012 and 2016…could lead to the creation of 371,000 to 771,000 jobs and an increase in gross domestic product of $73 billion to $151 billion.”

In addition to the purely economic benefits, there are the obvious benefits to wireless consumers. Of course, investing in 4G allows for faster mobile Internet connections. 4G is 3 to 10 times faster than 3G, something that other technologies can’t come close to. And because the investment means that wireless carriers will be greatly expanding their networks, it also means greater capacity and more coverage, which in turn means better service for consumers. Investment in 4G will also help to drive down the cost to consumers. Although it seems counterintuitive with the billions of dollars being thrown around, prices would drop for consumers–but they will for a variety of reasons.

First, competition between Verizon, AT&T, Sprint and other carriers will help to keep prices low. We see that already, with the GAO’s wireless report confirming that prices have dropped 50% since 1999. By encouraging as many companies as possible to invest in 4G, we’re ensuring that consumers will have many options for broadband-speed mobile Internet. Second, it’s simply cheaper for wireless companies to operate 4G networks. 4G can support up to 4 times the data than previous wireless networks (such as 3G), and, along with increased efficiency and greater data storage and transportation capacity, will in the end be cheaper for wireless carriers to operate. In other words, it will cost less per bit for 4G wireless networks.

We’ll realize all of these benefits as a result of AT&T’s proposed merger with T-Mobile. By adding T-Mobile’s existing infrastructure to it’s own, AT&T will be able to expand coverage for customers of both companies. According to AT&T, due to the proposed merger they’ll spend $19 billion on their wireless infrastructure just this year, and $8 billion on their 4G networks.

It’s ironic that the Department of Justice has come out to block the merger mere days after the DeLoitte study (referenced above), and only days before President Obama is to lay out his new jobs plan. If the President is truly concerned with creating jobs, this is exactly the type of activity he should be encouraging. Allowing the merger to proceed allows for more investment, which in turn creates jobs and creates a strong economy. Investment in new 4G networks should be encouraged in any way possible, including allowing the AT&T/T-Mobile merger to proceed. More 4G amongst more companies means more competition, faster speeds, lower prices, better service, and a stronger economy.

Zack Christenson is a Chicago-based digital strategist who writes on tech policy.

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