DENNIS J. KUCINICH 10TH DISTRICT, OHIO 2445 RAYBURN HOUSE OfFICE BUILDING WASHINGTON, D.C. 20515 (202) 225-5871 14400 DETROIT AVENUE LAKEWOOD. OHIO 44107 (216) 228-8850 PARMATOWN MALL 7904 DAY DRIVEl PARMA, OH 44129 (440) 845-2707 • Qtongr.eIlII of tl1.e Unit.eb~tat.eIl i;ouse of iKepresentatiues www.kucinich.house.gov May 3, 2011 RANKING MEMBER SUBCOMMITrEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT SPENDING COMMITTEE ON OVERSIGHT AND GOVERNMf.NT REFORM COMMITTEE ON EDUCATION AND THE WORKFORCI; Mr. Julius Genachowski Chairman Federal Communications Commission 445 12th Street, SW Washington, DC 20554 Re: Proposed merger ofAT&T and T-Mobile Dear Chairman Genachowski: The recent Supreme Court decision in AT&TMobility v. Concepcion highlights one more area in which the proposed merger ofAT&T and T-Mobile will greatly reduce, ifnot eliminate, competition in the wireless market. At the present time, four companies control over 90% ofthe wireless market. Over the past ten years, while they have been consolidating the market, they have also achieved a "conscious parallelism" in the terms oftheir customer agreements. Each and every one ofthese companies mandates that all disputes be resolved by arbitration and requires its subscribers, as a condition ofusing its wireless service, to relinquish their constitutional right to a jury trial, their constitutional right to use the courts, and their procedural right to participate in a class action. The only tiny sliver ofcompetition that remains is that T Mobile allows its subscribers to "opt out" ofthe arbitration requirement within the first 30 days ofservice. This is not a major concession by T-Mobile. A subscriber would have to read the 12 page agreement, find the provision, and take affirmative action to opt out separately with respect to each wireless line. And, T-Mobile still mandates that its subscribers waive their right to a jury trial and their right to participate in a class action. They can not "opt out" ofthose provisions. What the T-Mobile agreement demonstrates is that there is virtually no competition among the wireless companies in the terms oftheir subscriber agreements, and that the tiny sliver ofcompetition that does exist will be completely eliminated ifAT&T acquires T-Mobile. A similar situation existed in the credit card industry two years ago. At the beginning of 2009, a consumer could not get a credit card without agreeing to resolve all disputes through arbitration, to waive the right to go to court, to waive the right to a jury trial and to waive the right to participate in a class action. Those provisions were mandated in the customer agreements ofevery major credit card issuer. This situation was highlighted in a July, 2009 hearing before the House Domestic Policy Subcommittee, ofwhich 1was the Chairman. Subsequent to that hearing, my stafffollowed up with 14 ofthe major credit card issuers. In the months that followed, seven ofthose banks dropped their arbitration provisions entirely, and three ofthose also removed the jury trial waiver and the class action prohibition from their customer agreements. Finally, there was competition among them in the terms oftheir customer agreements. There are many reasons to disallow the merger ofAT&T and T-Mobile. A market with only four "competitors" will be reduced to three. And the AT&TIT-Mobile merger may eventually result in a market in which only two major companies exist. The Washington Post reported on March 21,2011 that, after AT&T's announcement ofthe merger, the stock price of"Sprint...fell nearly 14 percent, on concems about whether it could survive on its own." At a minimum, something should be done to create competition in the terms ofwireless subscriber agreements. The people ofthe United States, who own the airwaves, have licensed those airwaves to wireless carriers. The wireless carriers have responded by requiring the people ofthe United States to give up constitutional rights as a condition of using the airwaves that the people ofthe United States own. Ifthe FCC ultimately decides to allow AT&T and T-Mobile to merge, it should condition that merger on the return ofthose rights to the people. The merged companies should be prohibited from mandating arbitration, jury trial waivers and class action waivers in their agreements with consumers. That single action will finally create some competition in the terms of wireless subscriber agreements. Sincerely, ~~