After reading Tim Wu's "The Master Switch" a few years ago, this can only be bad for consumers leading to less choices in the marketplace. Just one step closer to returning to the monopoly days of Ma Bell.
More competition leads to better innovation and better pricing for consumers.
It's funny, because I took away exactly the opposite from that book. It painted a very flattering picture of Theodore Vale and his "enlightened monopoly." After all, it was Ma Bell wired up the whole country and built a network that was, for its time, state-of-the-art.
"Enlightened monopolies" have historically been great for technology. Bell Labs created so much of the basic technology we depend on. Same thing for Xerox PARC (which was bankrolled by Xerox's copier patent monopoly). Maybe consumers would have paid somewhat less for phone service or copiers without those monopolies, but would the world have been better off? Conversely, competition has killed innovation in e.g. the PC market. With their razor-thin margins, Lenovo/HP/Acer/Dell/etc. have no money to innovate.
Agreed. However, and not to be political but a realist, if this is the only merger we see in the mobile providers in the next 4 years, I would consider it a win.
>Agreed. However, and not to be political but a realist, if this is the only merger we see in the mobile providers in the next 4 years, I would consider it a win
There are only 4 American non-virtual mobile providers.
If you expect 1 merger every 4 years, and there are only 4 providers, then you expect the entire market to re-monopolize in roughly a decade?
People forget that in America, there are only 4 major mobile network builders only.
I would consider it a win if we stayed at 4, or increased to 5+.
Anything else is a cataclysmic loss from my perspective.
Perhaps I'm mistaken but I think the parent was implying that the current political climate (Trump presidency) is going to encourage aggressive/expedient MnA activity, particularly in wireless/similar.
T-Mobile has been having a fine job of bleeding Verizon and AT&T of subscribers.[1]
Keep in mind, T-Mobile also just won a ton of 600mhz spectrum that will allow them to plug a great deal of the underserved rural areas without having to densify the network. First bits of that should be online at the end of the year.
CapEx is where T-Mobile is putting its money, not buying satellite companies (DirecTV), launching a failed mobile television service (go90?), or buying crappy mexican carriers (mexico nextel/lusacell).
If T-Mobile were to merge with someone to their benefit, it would be Dish as they have a nationwide AWS-3 license and won a good chunk of 600mhz as well. They could also start to pull the bundle shit AT&T/Verizon do.
I agree with the theory behind this, but if you talk to anyone who is working at Sprint, I think you'd start to realize that it is a zombie company at this point. In my opinion, Sprint is nothing more than uncollectable collateral for Softbank debt.
The best possible solution for consumers is to let T-mo acquire sprint & let Tint take a swing at things.
It depends, sometimes the product involves so much infrastructure that new competition is basically impossible. Water, sewage, electric, gas, internet, wireless internet all require very heavy investments in infrastructure that make it impossible for newcomers to come in and compete.
These are the things that should be classified as utilities and just operated by taxpayers, since everyone needs it and everyone benefits from it.
If they were regulated as utilities, maybe. But under the current political administration, that's not going to happen. We can't let them have it both ways - ideally there would be both competition and consumer protection regulations, but if one is certainly gone we can't compromise on the other.
How did four separate companies come into the market in the first place if "new competition is basically impossible?"
Many businesses are extremely infrastructure and capital intensive. Should the government also run shipping carriers like FedEx? What about retailers like Amazon?
When a new market comes about, there's enough profit to go around for everyone, but once the network effects kick in, then new competitors can't come in, and if they try to, existing ones can just lower their prices and drive them out. So barring any killer secret or patented exclusive technology, I don't see how its viable for a new company to come in, and that's why you haven't seen any.
When a limited public resource needs to be shared, such as wavelengths and pipes running to each home, then there must be some mechanism to allocate them fairly, and the most obvious solution to me seems to make it work like a utility, which it is.
Amazon and FedEx don't seem quite comparable since they're not quite using a shared public resource, or at least not one as constrained as wavelengths and wires/pipes to your home. I actually do wonder why UPS allowed FedEx to even exist, and why Sears/Walmart allowed Amazon to come in, but they're not quite utilities (yet) as in they're not the only vendor around.
I don't think it's quite as simple as keep the government out or have the government run it, but when markets don't have numerous buyers and sellers, they don't work, so you need to have something tip the scales to make it benefit society as a whole.
4 companies come into existence because historically the first US cell phone band was given in two parts, one to the local land line monopoly, one to someone else. All these were in small blocks of geographic area. The winners of this frequency started building cell towers and selling phones and quickly discovered their customers didn't like roaming changes. As a result they started consolidating: lots of little merges and buy outs. The land lines mostly became Verizon over the years as land line companies realized that running a cell phone network and land line are different enough that they couldn't do each effectively and so they spun the business off. In the mean time another block of frequencies was opened up and the result was 4 more companies got spectrum in each area (not the same areas of the first), and they too started merging. The big 4 are big because they have merged and/or bought enough spectrum to be essentially nationwide. There are some smaller regional companies left that are not nationwide.
More competition leads to better innovation and better pricing for consumers.