…according to Hesse, is that the merger will give AT&T and Verizon a stranglehold on the cellular market in America. “The industry just won’t be as innovative and as dynamic as it has been,” he said. “It’ll gum up the works when everything has to go through these two big tollbooths, one that’s called AT&T and one that’s called Verizon.”

If the AT&T and T-Mobile merger meets regulatory approval, Sprint will have a hard time competing against the combined company and Verizon when it comes to pricing and snagging the hottest new phones. AT&T, of course, argues that the merger will benefit consumers since it will be able to provide better service. Others like Microsoft, Facebook and certain VC firms have also written letters to the FCC supporting the merger.

Sprint is organizing industry opposition and filed a 377-page dissent with the Federal Communications Commission. The company even tapped its own engineers to show AT&T how to get more capacity from its wireless network so it wouldn’t need to buy T-Mobile.”

[Sprint] is being outspent by AT&T in Washington by more than 12-to-1, so Hesse needs regulator support to pick up the slack. Sprint’s political action committee contributed just $257,500 on federal candidates in 2009 and 2010, AT&T on the other hand contributed $3.26 million
…

Should the merger go through, Sprint likely won’t last very long on its own. At that point, it could get snapped up by Verizon, although that raises even greater regulatory concerns. Perhaps federal regulators will take that possible future into account when it’s weighing the AT&T/T-Mobile deal — but there’s little chance of that happening. It would be difficult to argue that Verizon would definitely end up buying Sprint if the T-Mobile merger occurs.

Right now, it seems more likely that the T-Mobile purchase will be approved.