Fortune’s Seth Weintraub pulls a four-year-old Stephen Colbert clip that’s as good a place as any to kick off a discussion of AT&T’s proposed $39 billion deal for T-Mobile.

Colbert’s punchline is that the country’s antitrust efforts, which broke up AT&T in the early 1980s, have come full circle with AT&T monopoly on cellphones. That was a bit of a reach, but it’s much less of one today.

I’ve been critical of the light touch the business press tends to give roll-up consolidation by companies trying to corrner markets and raise prices on consumers. But it does a pretty good job covering this news today and emphasizing the bold consolidation it would entail.

The New York Times puts the antitrust angle in the second and third paragraphs of its page-one story and gives it appropriately skeptical language:

The transaction, one of the largest since the onset of the financial crisis, is expected to start a fierce battle in Washington as regulators scrutinize the effect of the deal on competition and consumers. The deal would leave just three major cellular companies in the country: AT&T, Verizon and the much smaller Sprint Nextel.

Some critics denounced the merger within hours of its announcement, saying it would most likely lead to higher prices. T-Mobile had offered some of the lowest rates in the country, keeping pressure on competitors. While AT&T is expected to honor current contracts, T-Mobile customers may have to pay higher rates once those contracts expire.

The Wall Street Journal says this in the second graph of its clunky page-one story:

In stitching together the second- and fourth-largest U.S. mobile carriers, AT&T is showing a fearless attitude toward U.S. regulators, who will be heavily scrutinizing what is the largest planned merger deal of 2011. T-Mobile has long been an antagonist to AT&T and chief rival Verizon Wireless, offering low prices that kept pressure on rates.

And it gives a whole story atop the Marketplace section front to the antitrust question.

And the FT’s story mentions antitrust issues in the third paragraph.

Bloomberg has a very good story that it gives this headline, which actually quotes a consumers/citizens’-rights watchdog (!):

AT&T Faces Year-Long Scrutiny for ‘Unthinkable’ T-Mobile Bid

Here’s the full quote, which Bloomberg put up high in the story:

The combination of the second-largest wireless carrier with the fourth-largest is “unthinkable,” Gigi Sohn, president of Public Knowledge, a Washington-based advocacy group, said in a statement. “We know the results of arrangements like this — higher prices, fewer choices, less innovation.”

Nobody quoted here, not even the Wall Street analysts, can believe the nerve of AT&T:

“It is unlikely that AT&T would attempt a deal that they knew would fail; however, we can’t see how they would get this through without massive divestitures and concessions,” Jonathan Chaplin, an analyst at Credit Suisse Group AG in New York, said in a note. “We have never seen a deal with more regulatory risk be attempted in the U.S.”

And so we get a very distinct impression, particularly from Bloomberg and the Times, that this deal could be bad news for consumers and is a bold test of just how weak antitrust enforcement has really gotten in the U.S. How bold a test? AT&T will have to pay T-Mobile $3 billion and give it a chunk of valuable wireless spectrum if the deal gets blocked. It must be pretty confident about its regulators.

What we’re talking about is the consolidation of a duopoly that dominates cellphone market in the U.S. If regulators let the deal go through—and based on past behavior, you have to bet they will—AT&T (42 percent) and Verizon (31 percent) would control 73 percent of the nation’s cellphone market. Sprint, which lost $3.5 billion last year, would be a distant third place with about 16 percent (there are minor players like U.S. Cellular that have less than 2.5 percent market share).

But it’s hard to think of beleaguered Sprint as much of a competitor. Here are it’s annual losses for the last four years: $3.5 billion, $2.4 billion, $2.8 billion, $29.4 billion, with losses of $3.5 billion last year. Its revenue has tumbled 20 percent from four years ago and its stock is down 84 percent from 2006. Effectively, you’ll now have a two-company market, plus one waiting to be sold off for its assets.

It’s hard to imagine that that won’t result in higher prices for consumers. It will be even more problematic if Sprint disappears. You can see how weak the AT&T case is by the fact that it’s pushing this stuff:

Still, AT&T pointed on Sunday to a recent report from the federal Government Accountability Office that said cellular subscription costs fell 50 percent from 1999 and 2009, a period in which the industry has consolidated.

Right. First the biggie: Correlation does not equal causation. Just because cellphone plan prices have fallen by half doesn’t mean industry consolidation caused the price declines. Nor does it tell us whether prices would have fallen more if there had been less consolidation. And anyway, consolidation from seven to five, say, is different than going to three or two.

The press is off to a good start with its skepticism of this deal. This one deserves much more of it in the coming weeks and months.


Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.