

Why AT&T’s deal for T-Mobile must be blocked - tshtf
http://www.marketwatch.com/story/why-atts-deal-for-t-mobile-must-be-blocked-2011-03-21

======
bgentry
This quote summarizes the whole issue for me:

 _Two weeks ago, as it happens, I took my business away from AT &T. The
reason? Simple. T-Mobile offered me a better deal.

Lower prices. No two-year contract. And monthy savings because I brought my
own phone.

It was a free market. So I moved._

And now, that choice is gone. Sure, you can choose between companies A, B, &
C. All of which cost roughly the same, nickel & dime you to death, and make
similar efforts to restrict customer freedom.

Did I mention I will theoretically have to pay an extra $50 to use tethering
the same way I've been doing since I got T-Mobile?!?

~~~
joebadmo
I'm actually not so sure. At least for me, the problem has always been that
it's so hard to switch carriers because of handset lock-in and the different
radio bands/technologies the different carriers are using.

Seems to me that if ATT buys Tmob, and maybe Vzn buys Sprint, it'll be a
duopoly, but at least they'll both be converging on the LTE standard, which
would theoretically make it easier to switch between the two with a single
handset, making them actually compete on price/coverage/speed/service, etc.

~~~
bgentry
I don't believe can be considered open and fair competition until the US
outlaws selling cell phones which are carrier locked and all providers are
required to offer fair discounts for unsubsidized/no-contract customers.

Even then, you'll have 2 options, both of which suck.

~~~
joebadmo
I pretty much agree with you, but right now we have four options that all
mostly suck. I think that's partly because of the tech/bands. If it were two
companies with handsets that worked on both, I think it would help.

But you're probably right that the subsidization/contract model is a bigger
problem.

------
Bud
Mr. Arends makes a very strong argument. And really, if you need a shorthand
way to understand this issue, all you need to know is that the Bush
Administration stripped away the limits on one company's ownership of
spectrum. Republicans talk a good game about the "free market", but it's
internally inconsistent talk; you can't have a free market if the number of
players in said market gets below a certain level. 4-5 is probably a pretty
good guess at what that level is, and in the GSM market, we're now down to 1
player if this deal goes through. Since many customers are forced into
choosing GSM for compatibility when they travel, that's an effective monopoly,
just like Arends says.

I'm an AT&T customer. But I'm not optimistic about what this deal will mean. I
know what it won't mean: cheaper and better service, as guaranteed by a
healthy fear of competitors.

~~~
Schultzy
What's so bad about a monopoly in a free market?

Doesn't that just create opportunity for some other carrier, perhaps a
currently small regional company, to step up and fill that hole?

If the pain is big enough, there will be competition. If we mandate
competition, it's not a FREE market.

~~~
jerf
"If we mandate competition, it's not a FREE market."

In addition to the other fine replies made, I want to highlight this to
strongly disagree with it. In fact actually having a free market requires
aggressively protecting it when a given market naturally coalesces into a
monopoly or oligarchy. Trust-busting isn't an anti-free-market position, it's
a pro-free-market position. The anti-free-market actions come from governments
picking winners and enshrining monopolies/oligarchies through regulatory
capture.

In particular, when advocates of other social organizations level this as a
criticism of free market, my response is to point out that when you have lack
of mandated competition with some form of government-selected winners, be it
communism, socialism, or "crony capitalism", you don't have a free market at
all and the criticism is more generally applicable to the social organization
being argued for by the person raising this criticism.

In a free market, a new company always ought to be able to come along and
completely destroy an existing company if they do a good enough job. If you
don't have this, you don't have a free market.

~~~
dantheman
Trust busting is an anti-free-market position. The freemarket consists of
individuals voluntarily interacting. Any position that advocates coercion,
i.e. government interference, is anti-free-market.

~~~
jerf
Trusts are a coercion, and a crime greater than a bit of government trust-
busting. (Or, in really far-out versions of anarchist theory, non-government
trust busting. I don't know of any real-world examples of that, though.) I do
not naively believe that an economy can be run completely without coercion,
but that such coercion as is necessary should be turned to keeping the market
free. The optimal ideal case for free markets simply doesn't obtain
everywhere. Spectrum is at least dubious; perhaps now we could just run it as
a free market and it could work (people with far more knowledge about radio
issues than me have argued both sides of this, I can only sit on the sidelines
of that one and wave genially) but that certainly wasn't the case in the
analog radio era.

------
baggachipz
We can bitch and moan all we want, but the truth is that this deal will
absolutely go through. If there's enough outcry, expect a dog-and-pony show on
C-SPAN; in the end, they'll approve the merger with a "stern warning." Count
on it.

~~~
gpapilion
I actually doubt this merger will go through. This would put AT&T far ahead of
Verizon in term of subscribers, even if they are less desirable due to the low
ARPU. There isn't enough churn in the wireless market to balance the AT&T and
Verizon out over a reasonable time, and Sprint would now be a distant third.
Effectively this will shut anyone else out of the National carrier business,
and eliminate the possibility of any new MVNOs, since customer acquisition
costs would be very high, and you only have two parties to negotiate licenses
with.

~~~
harryh
You care to put your money where your mouth is? I've got 500 bucks that says
you're wrong.

~~~
MichaelApproved
500? Sounds good to me. Meet me in the options market.

Edit: Bought 10 July 28 puts and sold 10 July 27 puts against it. If AT&T is
below 27 by July expiration I make $500. If the stock is above 28 by July
expiration I lose $500.

~~~
X-Istence
I had never thought about this, but that is one hell of a way to put your
money where your mouth is.

Interesting ... very interesting.

------
suprgeek
The author captures this point perfectly: AT&T and T-Mobile merger will create
a "GSM Monopoly" in the American market. This will be bad news for any
customer who has to use GSM handsets as Europe, Asia, etc have GSM. So if you
ever have to travel internationally you are better off with GSM phones. AT&T
must not be allowed to Monopolize this key market.

~~~
derobert
Everyone is moving to LTE, so this really doesn't sound like a huge deal, at
least in the medium-to-long term. You will be able to get LTE from
AT&T/T-Mobile, Sprint, and Verizon, at least.

~~~
metageek
It's a reasonable point, but we don't yet know whether there will be LTE
phones that work on both AT&T and Verizon, let alone when roaming abroad.

------
hoag
My response to this related HN post: <http://hackerne.ws/item?id=2349678>

My proudest accomplishment in law school was a research paper I wrote entitled
"Anti-Antitrust: The Need for Antitrust Law Reform."

In that paper, I argued that antitrust law as applied today totally misses the
point: the issue shouldn't be whether a company, otherwise satisfying the
elements of a monopoly, is harming competitors, but whether a company is
actually harming consumers. Put another way: who is complaining about the
alleged anticompetitive tactics: competitors, or consumers?

If one studies all the big antitrust cases of the 20th century -- from Alcoa,
to DuPont, to Microsoft -- a curious trend emerges: it was always those
companies' competitors who took issue with seemingly anticompetitive tactics
of the big evil "trusts," and rarely -- if ever -- was it the consumers
themselves.

A great example of this is Microsoft in the 1990s: do any of you -- aside from
our realm of early adopter computer savvy tech types -- genuinely remember any
everyday computer users actually complaining that Windows came preinstalled
with IE instead of Netscape? Were consumers actually harmed, were they
actually suffering? No: the only "people" who had an issue with MS bundling IE
with Windows -- frankly, a brilliant strategy -- were Microsoft's competitors,
and not, in fact, MS's customers.

So my take on this ATT & T-mobile merger is simple: the investigation should
not focus on whether ATT/T-mobile is a monopoly from competitors' points of
view, but whether it is anticompetitive to the point of actually harming
consumers, e.g., with higher prices, etc.

Frankly, a good example of a company that really deserves a DOJ investigation
is Apple -- IFF customers start to actually complain, and not not just Apple's
competitors' start to complain.

Put more simply: a DOJ investigation into whether a company is a monopoly
should be based upon whether consumers -- not competitors -- are actually
being harmed by the allegedly anticompetitive tactics of a "monopoly."

After all, a company could not become a monopoly without customers' support in
the first place. So clearly they have done something right that customers
appreciate.

A "monopoly" that is not causing harm to consumers, either directly or
indirectly, is not necessarily so terrible a thing. In fact, as with Apple, it
is often the case that consumers enjoy a net benefit from such a company.

~~~
envane
"do any of you -- aside from our realm of early adopter computer savvy tech
types -- genuinely remember any everyday computer users actually complaining
that Windows came preinstalled with IE instead of Netscape?"

That's a really narrow view of the damage done by the IE monopoly. The
ubiquity of IE6 continues to stifle the development of new web technology by
requiring developers to cater to hapless prisoners of corporate IT policy.

I don't have the patience to spell it out, but i'm sure you'll piece it
together if you lurk moar.

------
plusbryan
Without knowing much about the mechanics of acquisitions of this magnitude,
how plausible is it that AT&T made the offer simply to prevent Sprint from
acquiring T-Mobile and creating another competitor? I mean, if they're pretty
sure the FTC would block them anyway, if they set a high price, they've just
made it harder for Sprint to attain their size.

~~~
suking
There is probably a hefty break up fee in an acquisition this big which would
make this scenario unlikely.

------
theoj
Sure enough, it happened just like the author says. Tuned in to CNN this
morning and the announcer cheerfully smiled (?!) and said that ATT will
acquire TMobile and this is great because we will now get access to iPhones!
Nevermind that ATT's service is horrible and their costs are high. Made me
want to hit my forehead.

------
yalogin
Yep. AT&T would not even let you use a different smartphone even if you
already are on the iPhone data plan! Of course they don't let you use a
smartphone without a data plan at all. So this sucks.

~~~
warfangle
They won't? When I got my Nexus One back in april, I just put my iPhone's sim
card into my Nexus One and blammo, works fine. Same data plan. Grandfathered
in to the unmetered plan, too.

I still hate AT&T more than anything and wish to the silicon gods that I could
cut both them and Cablevision out of my life like the malignant tumors they
are.

~~~
yalogin
Nope. They don't. I am an iPhone user but bought a Nexus one to develop on and
put a sim card from an old dumb phone into it after disabling the data option
on the phone. AT&T immediately recognized the smartphone and automatically
added the data plan to my bill. When I called them they said I cannot even use
my iPhone sim with the Nexus one as they come under two different data plans
even though its costs the same freaking amount of money.

------
rhaygood
Having just been mugged by T-Mobile (read here for the details:
<http://nyti.ms/dRW9yO>), I can't say I expect worse customer service from
AT&T, but that certainly isn't saying much. Oligopoly means _rarely_ having to
say you're sorry; monopoly means _never_ having to say you're sorry.

------
brikmaster
Its pretty fascinating to think that in the US there will now be really only
one GSM choice until 4G is ubiquitous. Only one carrier where you can use
unlocked phones etc.

------
dangero
This article comes off as very whiny. It may decrease competition, but that
doesn't mean it creates a monopoly.

~~~
Bud
It creates a monopoly in the GSM space and an effective duopoly overall.

Pretty darn close.

~~~
Qo
Even if this deal goes through, you'll have three national carriers to choose
from and, depending on where you live, one or more regional carriers, plus
VoIP. That's not pretty darn close to a monopoly at all.

I think there's a stronger case for a GSM monopoly, but at some point the
argument becomes silly - where do you draw the line between an uncompetitive
market and a market with product differentiation? Would you have broken up
Standard Oil because they were the only ones offering Super Unleaded?

~~~
Bud
What do you mean, "a stronger case" for a GSM monopoly? There will now be one
(1) GSM provider in the US. Near as I can tell, the "mono" in "monopoly"
refers to "one", as well.

1=1.

This isn't a debate about how "strong" my case is. It's a monopoly in the GSM
space, by definition.

~~~
Qo
First of all, below (a) is the list of mobile providers in the US. Note that,
even if T-Mobile were removed, there would be more than one (1) GSM provider.
So your "mono" comment is both unnecessarily snarky and wrong.

But, if you really, wanted to push it, you could probably find a way to claim
that T-Mobile/AT&T had a monopoly. You could also claim that _any_ company had
a monopoly on their product, simply because the product that this company
sells is going to be somewhat different than those of its competitors. Yeah,
true, so what?

(a)

[http://en.wikipedia.org/wiki/List_of_United_States_wireless_...](http://en.wikipedia.org/wiki/List_of_United_States_wireless_communications_service_providers)

~~~
Bud
Ah yes, because Northeastern Alaska Sanskrit 2400-baud Modem Wireless has
sooooo many subscribers. Yeah, that argument will hold up.

There are no other GSM providers of note which offer modern, up-to-date
services (and handsets) and are a serious option now, besides ATT. I was
snarky because I suspected obtuseness; I think that obtuseness has now been
confirmed.

~~~
Qo
Of course my argument holds up. It's true by definition. But remember, my
first post said that I thought there was a stronger case for a GSM monopoly.

Look, the term "monopoly" is a pretty strong word, and it carries with it
certain connotations that I don't think apply here. So if you want to use it
in the strictest sense of "a market with only one seller" then I agree with
you, but saying that "AT&T has a monopoly on GSM mobile coverage" has about as
much weight as saying "Apple has a monopoly on iPods." Yeah, true, so what?

------
clistctrl
I wonder how much of this deal was made with the intention of acquiring
T-Mobiles spectrum rights? I'm under the impression that GSM was mainly a
technology focused in the time domain, and the newer 4G technologies seem like
they're more centered around the frequency domain. It occurs to me that if
lack of spectrum is a problem for 1 it is probably a problem for the other, so
it would make sense for both carriers to merge?

~~~
wtn
Nailed it.

