And 7 CEOs told us that cigarettes don't cause cancer.
3
The U.S. market is competitive right now precisely because T-Mobile and Sprint have to play the part of the small, scrappy competitor constantly gnawing at Verizon and AT&T. This merger changes their personality and strategy from "upstart" to "big player". The culture of the companies will change, and with it their competitive nature. Markets need players like these.
2
Anti-trust law is not the right approach to dealing with giant internet providers, as well as Google and Facebook. Rather they should be regulated as public utilities, according to the old model that governed AT&T. Competition does not insure that they provide a decent work environment for their employees—rather it encourages labor exploitation as a way to reduce costs.
2
Here's how awesome Japan's 3-carrier market is:
Japan attack on wireless 'oligopoly' awkward for SoftBank's U.S. plans
https://www.reuters.com/article/us-softbank-son-oligopoly/japan-attack-o...
Now there's no way to verify this and it doesn't even matter because ONE New York Times comment won't change things either way but . . . I am a right-wing Republican, proud Trump supporter (I voted for Ted Cruz in the primary) and I VEHEMENTLY OPPOSE THIS MERGER.
This is not about capitalism vs socialism. This is about an industry with a nigh impossible barrier to entry whose pricing is critical to the growth of our economy.
Anyone can start a company selling phones, shoes, etc because there's plenty of space to put up a factory. But to start a new cell company, requires spectrum of which there is not a limitless supply.
1
After AT&T took over Directv, my bill went from the low$() range up to $130.
Before the take over, you could call direct and they would work to get you a lower price. AT$T know they have a quasi-monopoly so they refuse to deal.
When I switched to Dish ( I know, same thing coming ), Direct-AT$T said they would cut my bill in half! AT$T has monopolistic control over it's customers.
If anything, these companies should be broken up. Unfortunately our right wing Supreme Court doesn't do anti-trust law!
1
Sprint/TMobile must think that since Americans can be convinced that tax cuts for the rich will somehow trickle down into their pockets, they're dealing with people stupid enough to believe that a competition-killing merger will be better for the consumer.
3
Couldn't T-Mobile repudiate Sprint's debt upon taking them over? Oh wait, sorry, silly me, that only works with pension obligations.
I’d love to replace AT&T with T-Mobile as my wireless carrier, but even in the high-population Bay Area where I live, it’s not possible to get a T-Mobile signal from my home. T-Mobile in its current form is not really a viable competitor to AT&T and Verizon because it lacks infrastructure. That hurdle would be overcome by swallowing Verizon, and I’m confident T-Mobile would continue their maverick ways and make life miserable for the two, currently unassailable, industry giants.
We have three major competitors in Canada, and even that is deceptive as the competitors strength is regionalized. We also have the most expensive cell phone prices in the Western world.....and terrible service.
1
One of the best things that happened to US consumers was when the ATT acquisition of T-Mobile was blocked, The resulting competition really helped lower the prices, eliminate onerous fees and penalties and helped US wireless industry to advance.
Allowing this merger will eliminate competition and will for sure lead to higher price s and price gouging of American consumers and potentially negatively impact US economy as Google, Apple and others will also be constrained by Verizon, ATT to gain more profits for themselves.
3
A few weeks ago I had to deal both with Sprint and T-Mobile on behalf of my elderly parents. Dealing with Sprint was an exercise in futility and frustration, both at a local retail shop in Florida and on the phone with overseas customer "service," while I had incredible service at T-Mobile, both in its local retail shop, also in Florida, and in a customer service call (to Tampa and not overseas!). What a horror it was dealing with Spring and what a pleasure it was dealing with T-Mobile.
3
At least when these scams are promoted nowadays, nobody talks about "synergy", which was code for massive layoffs.
1
Right now we have two giants, a growing tween, and an a fourth that since its poorly considered merger with a technologically incompatible Nextel in 2004 has been drowning in debt and losing subs trying to make their network work. If nothing changes there is a decent chance that Sprint will go under and be sold for spectrum scrap. Then we will still have two giants picking at the carcass and 1 tween, which would effectively be worse (a duopoly) than what is being proposed here.
Also, if the promise of 5G comes to fruition consumers could potentially save money by not paying both a cable company for High Speed Data and paying a cellular company for a data plan as well. T-Mobile would be the fat pipe not only into your home, but anywhere they have a tower in range.
1
Republicans oppose all government regulation of the economy. Even the regulations that enhance the workings of the free market. (e.g. preventing monopolies and cartels.) There’s a huge difference between being pro-business and being pro-free-market. Republicans, unfortunately, can’t tell the difference.
4
I remember when, before cell phones, we broke up the huge phone companies in order to lower the costs to consumers. Before that we were not allowed to buy our own phone but had to rent them from the phone company. after the phone company was broken up out costs for phone service went down due to competition. Allowint T-Mobile and Spring to merge would raise consumer costs.
It's is far better to regulate the markets through hyper competition than regulation and agreements between government regulators and oligarchs. The basic problem is that government, legislators and press simply do not understand the technology landscape. Unlike monopolies of old that ran for cash flow, current market leaders are rewarded zero cost of capital treasure troves that they use to bludgeon competitors. Look at Facebook, Mark Zuckerberg has voting control of the biggest influence platform in the world with more followers than the Pope and accountable to no one. Google operates the biggest video media company on the planet, Youtube - with over 1B views per day. Compare that to the Comcast with 30M subscribers. The real media battle and the companies that need to be broken apart are FB, GOOG, AMZN.
9
You missed a bet by failing to reference the Canadian mobile market, where three gargantuan players -- Rogers, Bell, and TELUS -- operate as a de facto cartel and customers pay some of the highest rates in the world.
Like the three remaining major US airlines divvying up hubs and territories, the three Canadian mobile providers no longer compete in a strict sense; it is more profitable to operate as a stable oligopoly whose captive customers have no choice. Like the US airlines, all three Canadian companies offer "suspiciously identical service for a suspiciously identical price," as one consumer watchdog north of the border put it -- and that service level is not rated very highly. That is precisely what awaits US customers if T-Mobile-Sprint goes through.
The US companies already slow-walk tech advances and suppress some innovations long common in Europe and Asia, because profits matter more. To imagine further consolidation making them any more responsive is touchingly naive.
Whenever merger-bound CEOs herald "more options for our customers" and "more competition!", we should know by now to laugh in their very well compensated faces.
2
It is a pendulum. Development started and consolidated big monopolies. Regulations were corporation oriented. Telecom with AT&T, oil with Standard Oil and so on.
Then, the State became more consumer-centered. I remember in AT&T the spined-off companies were called Baby-Bells. Just in time for corporations to perfect lobby, white papers and big-time financing of campaigns.
Now, the interests of those corporations and banks are the government itself. Is this when the pendulum stops?
1
Companies merge for one purpose - gain pricing power.
Larger companies wield this pricing power not only over customers, as mentioned in this editorial. They also wield it over employees and suppliers.
Beyond pricing power, larger companies gain even more clout in the political system.
These are great reasons to not only block this merger, but re-evaluate the competitive landscape of other industries and consider antitrust actions.
6
I guess anti-trust laws are a thing of the past.
4
I would like to know how much money has been spent on all the fruitless merger attempts by the C-level management at Sprint : brokerage, inside and outside legal fees, bonuses, expenses, staffing. It's like Sprint is trying to run a merger business at the expense of it's purported business in telecommunications.
Since Bill Esry led Sprint in the 80's starting with United Telecom, the management at Sprint has wandered, mis-managing subsidiaries and attempting to buy business in areas where they had already shown they had no expertise or special insight in buying. The last big one accomplished was badly executed leading to confusion and service issues for customers - but no doubt provided huge bonuses to those running the show.
Sprint has become a victim of the processes developed in MBA schools - profit above service and quality.
Do not imagine this will end well for customers and shareholders, but watch as the C-level and their cohorts make like bandits.
2
Your comment is ironic. Sprint has not made money for almost ten years.
I guess corporate leaders practice those freeze dried smiles.
2
“That said, Mr. Delrahim might only be trying to block the AT&T-Time Warner deal in order to please the president, who has railed against that acquisition and frequently criticizes CNN, which is owned by Time Warner.”
“Might”? Trump’s hatred of CNN is the only reason his DOJ lackeys are harassing AT&T and Time Warner.
1
As a customer for Sprint business services, I am very upset about this. One, Tmobile service is garbage and they charge their customers ridiculous prices for international phone plans. I am very worried and I hope Regulators put a stop to this. At the end of the Consumers will lose big time.
3
Sounds like we are headed to Ma Bell reincarnated.
3
None of the US Cell phone companies offer world’s best practice cell phone service now,
so good luck with that one!
1
I’ve tried them all AT&T, T-Mobile, Verizon...none of them have a World’s Best Practice Customer Service culture. None of them are selling you what you want to buy..... data on the go that can be topped up when the money runs out when YOU want to top it up, not when the “roll-over” date they give you comes up, and no dead spots.
T-Mobile has shops in Sonoma County, Ca, but the coverage is non-existent in 90% of it. Customer Service is great in the shop, but non-existent if you need help trying to top up the account.
Australia’s Optus, a division of Singtel (Singapore) offers by far the best standard in cell phone service. Japan’s DoCoMo is really good, too.
The USA Pay As You Go “plans” that are tied to calendar based roll-over dates are frustratingly incomprehensible and costly.
Even the Apple store is in cahoots with US phone companies, never explaining the locked phone system to a visiting family member several years ago. One sold her a locked-to-AT&T phone when all she wanted was to replace her under-warranty fully paid Australian damaged one that she already owned with the same thing. It took hours on the phone from Oz and more $ with AT&T to cancel a contract we never wanted.
1
How many G’s does one man need?
2
Neither company is going to build a 5G network. Together, or alone, both companies are lying.
The only way this nation will get a 5G network is if the tax-payer builds it.
3
I remember when Sprint called T-Mobile "ghetto" in an AD. They must have some very nefarious plans for Sprint to want to integrate.
1
Dear T-Mobile & Sprint,
We're coming for you.
love,
America's unions
4
Trump proposed a national 5G network. You know, something that would actually take America into the modern era and something other nations are doing or have done.
Instead the democrats were still whining over Hillary losing or DACA and refused to work with him. Just like universal healthcare we will be debating the issue for decades while other nations leave us in the dust.
Teddy Roosevelt is on the other side looking on in disbelief as the country is once again controlled by monopolies that pay off both parties.
1
Post merger, when the men who count the beans have their say, any promises to contain prices will quickly disappear.
3
No, No, No. We're moving toward monopoly, and the Corporate Shills that are the Trump "Administration" are breaking down all Consumer Protections to continue to swindle the country.
2
If in fact sprint loses money, then how can it go on without merger?
Competition, instead of consolidation, is always better for the consumer. Look at the old Soviet Union and Russia today. Their cars still look like they are from the dark ages. I saw a video some years ago where Putin was driving a Russian car. It was a little car that looked like a Yugo. Nothing impressive but it was Russian made so that's the point of him driving it.
I remember AT&T and then New York Telephone. You had to rent your phone in those days. And if you had extra phones at home you had to pay an extra fee for each one. I remember because a man from the phone company came to "inspect" my lines to see how many phones I had hooked up. Before he came I disconnected the other phones. How stupid and what a waste of time coming to my home just to rip me off.
Not too long ago if you had DSL you had to maintain a landline even though you probably only use your cellphone. I remember the NYT had an article on that. But with more competition from cable and satellite Verizon finally allowed a committed DSL line only. But too late. There's a lot of cable competition now so no one, at least in this city, really needs DSL anymore.
Most likely the consumers won't benefit. More jobs? I am skeptical. When they wanted to build Barclays Center in Brooklyn all sorts of promises of jobs and affordable apartments were made for eminent domain. The construction jobs never materialized and neither did the affordable apartments promised by Forest City Ratner. Resentment remains.
2
No cable competition here, or for that matter most of less than densely populated parts of America. Even there, What planet are the people on that claim there is cable competition. Rampant collusion between the cable company and state governments that "regulate" cable is responsible. So I dropped satellite (better than cable, but not by much) and have gone strictly to over the air antenna supplemented by Internet which has reduced costs drastically. But guess who owns the local Internet provider? You guessed it, the cable company. So I don't expect my lower prices to last much longer.
I wanted to follow up by saying look at the airlines how they have merged over the years. Northwest Airlines was gobbled up by Delta. Eastern Airlines had acquired Braniff Airline's South American routes then later filed for bankruptcy. American Airlines acquire Easter Air which later shut down. There is less competition. The airlines staff are no longer friendly or customer service friendly. Now you can be dragged off an airplane even though you legally paid for that seat. And have your teeth broken. If you don't like it chances are there is no other airline flying that route so good luck maybe on the Greyhound bus. The same with banks. I used to get free checking with WAMU (Washington Mutual) then when they collapsed during the 2008 recession it was taken over by Chase. Now I have to pay a fee unless I maintain $1500/month in my account basically giving Chase a free loan with my money. The examples I give in this post and the prior one show that consolidation works against the consumer. Competition brings out the genius. If companies know you have no choice there is no incentive to improve but makes things more expensive so the few who have it got status and clout while the rest can only envy them.
2
Mergers are never about quality and customer or employee value. Based on historical data of consolidation and monopolies its delusional to believe otherwise. I don’t know if the management at these two companies are being disingenuous or irrationally exuberant like the pre 2008 financial types. Either way its not a positive for everyone except upper management and the institutional investors, for them its just another big payday. As my least favorite president would say “sad”.
1
There is no reason why this should go through - unless you believe what the companies are saying, which, you really shouldn't.
But given the Trump administration's propensity for picking the worst possible option in basically every single case, and their clear disdain for anyone who isn't incredibly wealthy, you can bet your bottom dollar it will.
1
A Sprint-T-Mobile merger would make absolutely no difference to me. We've used both in the past and neither of them had decent signal coverage where we live. We tried all their suggestions and nothing got us the ability to use our phones in our home. What the heck good is that? So their promises of better coverage ring untrue. They're no better together than they were separately.
While sipping my coffee this morning I read this article. I thought I was reading the WSJ and typed my comment praising the editorial board for once standing on the side of customers, until I realized this is a NYT editorial. Nevertheless, NYT editors, thanks for always standing up for the small man and not toeing the corporate line. I have saved this editorial for the excellent balance of interests. Lastly, T-mobile and Sprint can share spectrum with clear notification to FTC and FCC to avoid falling into the collusion trap. There is no need to merge to be able to share spectrum on an exchange basis by paying the commercial whole sale rate.
3
What ever happened to the Robinson Patman Act that protected us against monopolies that would fix prices.Huge conglomerates seem to have no problems in merging and dominating markets.If this continues the word competition would become obsolete.Competition more than anything else prevents inflation, that is why free markets are so important, & tariffs leads to higher costs.Trump is a throw back to the despotic tycoons of yesteryear, & the great depression & will encourage these monopolies, which will eventually destroy Capitalism.
14
It seems ironic that while "competition" is the bedrock of free enterprise in our capitalist economy, conservatives and liberals are quick to embrace mergers and acquisitions reducing competition.
3
Yes - fewer competitors will mean lower prices! And these tax cuts will mean increased revenue!
13
This is not a surprising move by these two communications giants, since this administration and the recently passed G.O.P. tax bill makes it lucrative for big businesses to merge in order to squeeze even more out of the consumer.
The only ones "winning" is them.
9
This one is not straightforward.
Competition is good for consumers, and the absence of competition is bad. You have only to look at the airline industry to see and example of the latter. The DOJ foolishly allowed tremendous consolidation in the air travel industry; today, many markets are only served by one or at most two carriers, and the result has been a tremendous decline in service experienced by most travelers. We don't want this to be repeated in the cell service industry.
That said, there are differences between cell and air. All 4 or 3 carriers will likely service all major markets, which is not so for air travel. It is also very expensive to keep cell networks up to date, as the transition from 4G to 5G illustrates. This important upgrade really may be too expensive for T-Mobile and Sprint to each do on their own.
Overall, I think the merger is probably a bad idea. Better to move towards an arrangement where T-Mobile and Sprint remain independent, but are permitted to jointly construct a single 5G infrastructure, which they would share.
The FCC should not sit idly buy. It could substantially increase competition by requiring that all cell phones sold be "unlocked" or at least unlockable, and that cell phone hardware be operable on all major networks. This would allow consumers to move between carriers, without buying expensive new phones. It's technically feasible, some phones today are carrier agnostic. All should be. Get off your duff, FCC!
2
Are people in politics and the press *finally* waking up to the fact that big business has gotten away with building monopolies and destroying competition for years? That right wing supply side economics is great for building obscene wealth for the few, but lousy for everyone else?
If so, what took you so long?
The robber barons have had things going their way for decades since their allies on the radical right threw workers under the bus by persuading them to vote Republican in order to reject liberalism, oppose "big government" (really meaning, the power of people through government to enact regulations that might interfere with big business profit-making) and prioritize making abortion illegal. Ever since, worker economic power has declined, small businesses struggle, and economic power has become concentrated in the few.
Are the Democrats waking up to their role in allowing supply-side, monopolistic business practices to flourish? To how their devotion to unbridled economic globalism and free trade has played right into the hands of the robber baron/radical right/Republican Party coalition's strangleghold on the economic, political, and social narrative outside of the cities?
If, so, what took you so long?
it is loooong past time to make changes in economic policy. Championing demand side economics, reasonable government regulation to empower workers and competiton as well as a healthy economy, and breaking up monopolies is a good place to start.
5
And yet I am sure it will still be a better experience for customers than Verizon.
Because this is partially about leadership. If t-Mobile continues to be an “un-carrier” then I’m not so worried about it gobbling up the sick man of telecom.
When Legere is out I expect trouble.
3
Without the merger both companies will go bankrupt and we will be left with a duopoly. That is the worst outcome for consumers.
2
This reminds me of the WorldCom/ MCI merger. “Scrappy” WorldCom gobbled up MCI. (Although MCI didn’t have the debt.) That merger didn’t end so well, on many fronts.
3
This editorial does not raise one important question that none of the telecom carriers have answered adequately so far. What is 5G? While we are at it, how when and where will it rolled out and will it eventually be nationwide? So far, 5G appears to be vaporware, but this does not keep the telecoms from talking it up big, glossing over the festering issues and their claims bordering on fraud about the wonders of 4G with its reputed 98% coverage.
I live in a hilly town. To say that 4G coverage is spotty is to be kind. It does not exist in and around my house and elsewhere in town, for all the major carriers. No 3G coverage in my hood either.
5
If you have sighed with satisfaction at the consolidation trends that have made airlines, banking, cable systems and even grocery chains what they are today, you will love love love the consolidation of wireless telephony as proposed by Sprint and T-Mobile. Love love love it.
14
Tell Gigi Sohn, Soros her backer and Wheeler her puppet, that her view of the world is antiquated. This deal makes a ton of sense for everybody involved. Rural, business and government customers will finally have more competition. Around the world, carrier networks have shrunk from 5 to 3 or 4 to 3. In the U.S. it makes even more sense given the sheer amount of territory needed to be covered. Plus, Sprint and T-Mobile face limited fiber providers for the terrestrial backhaul needed, unlike T/VZ with their big wireline businesses. Is it really competition in wireless if AT&T has wireless, wireline, international, DirecTV and soon Time Warner? Or with Verizon with their wireless, wireline, FiOS, Internet businesses and dominant government services biz? Sprint and T-Mobile each bring a wireless knife to an integrated communications gun fight. Plus 5G is significantly more capital intensive with dense fiber and cell site networks. Scale matters in this case. The world changes and it would serve consumers and the country well if the DOJ and Obama cast offs got with the program. The DOJ remains anchored to the correct notion that blocking AT&T and T-Mobile was good for consumers. However, this is a very different case (3+4) and the strongest case for competition in 5G, rural, business and government markets is through a stronger 3rd carrier in a business that is tremendously capital intensive.
I think it's a good idea... one crummy company is better than two crummy companies. And maybe they can make it into a decent company.
1
Not sure that crummy + crummy = good is a foregone equation. What if it turns out to be: crummy + crummy = super crummy?
3
What could possibly go wrong for the consumer? Less choices, monopoly, no doubt higher rates. But the top guys will still get their multi million dollar salary + bonus. Al Franken was spot on when he raised doubts about this.
14
I support any competition that has the potential to be effective against Verizon, which is actively destroying our only reliable emergency communications infrastructure, our copper wire land-line phones, which work in a power failure.
https://arstechnica.com/information-technology/2016/10/verizon-workers-c...
Due to their monopoly position on landlines, Verizon is forcing onto "fiber" even those of us who want to keep our reliable land line service that works in power failures as we do not want to rely on battery backups (which did NOT maintain service in the aftermath of Superstorm Sandy, leaving people in high-rises who lost elevators and water without any way to communicate).
Verizon now plans to disconnect my land line phone completely this summer unless I switch to fiber. (IF they do that, my plan is to switch to cell phone only service--which, of course, also did not work reliably when the power failed---hopefully to a T-mobile/Sprint merger that also would provide competition for Verizon v. TWC for internet, as described in this article)
If you too have been, or are being threatened by Verizon to lose your reliable copper wire emergency communication infrastructure, please speak out and encourage friends to drop Verizon cell phones and FiOS TV until and unless Verizon stops its ongoing block by block destruction of our emergency communication capabilities, over which it holds a monopoly.
8
Let's see now. Soon after the merger between T-Mobile and AT&T was disallowed T-Mobile became a company offering better service at lower prices than it had ever been. It attracted many more customers.
Is there any lesson here? I think there is.
Why would anybody in the public or government want to go in an opposite direction?
11
T-Mobile received $3 billion from AT&T as a breakup fee in the failed merger. I imagine that may have helped.
Maybe Amazon will get into the telecom business. And/or cable business. Would love to see the biggies, including the hated Comcast and Time Warner, scramble at that news.
6
I hope that if this merger goes through that mobile phone service won't go the way of gas prices.
1
Come on, corporations always put the interests of the consumer ahead of their own. What could possibly go wrong?
25
The first question jumping to mind with respect to this proposed merger is what happens to MVNOs (mentioned elsewhere, MVNO stands for "mobile virtual network operator," e.g. Consumer Cellular, Ting, Republic Wireless, etc. Stand-alone MVNOs (those not actually owned by Verizon, ATT, Sprint, T-Mobile) rent space from the biggies but are otherwise independent and in almost every case are far cheaper and provide way better customer service. Ting, for instance, is an astonishing company: no contracts, bring-your-own-phone, low prices, and, believe it or not, a real person always answers their customer service phone after no more than two rings. If MVNOs can survive unscathed this merger is meaningless. For the average mobile phone user MVNOs are a far, far superior option to any of the fat-cat companies.
I do not and never have worked for Ting. But I am a very happy customer of the company.
5
I'm not a believer in consolidation, although when you compete with a global juggernaut it might be necessary. Companies trying to compete against the nation of China or giant conglomerations like BASF might need to consolidate, or fade away.
But Sprint and T-Mobile are looking to consolidate the American market. Can that be any good, reducing the number of carriers from four to three?
It might be, if the carriers cannot survive alone. A merger would reduce our options to three, but so would having one of those companies fold. Having both fold would give us two. With AT&T and Verizon owning two thirds of the market, Sprint and T-Mobile have their work cut out to simply survive.
Our problem is not that we will go from four to three, but that *ALL we have* is four, two of which are weak.
2
Mobile services in America are notoriously poor and expensive. What you need is some smart regulation to free the networks for competition. Europe could teach the US a few things about capitalism and competition for the people's benefit.
Protecting dinosaur de-facto monopolies' profits is not "freedom from government meddling". For the people, by the people and so on.
36
Density, Europe has a greater population density.
It's not that simple. In Europe as in the US population is pretty much concentrated on few areas.
Finland's population density is low, but so are the prices. In Germany, the density is higher, and so are the prices. The defining factor seems to be competition or the lack of it. And a government can do a lot about that.
The trouble with monopolies and oligopolies, claiming benefits of scale, really profit immensely by having no competition, and raising consumer's costs at will, even prohibitively so. Just look at pharmaceutical companies, among others, where gouging is always a concern when no sensible regulation is in place. Profit is the aim and 'legit' in any private enterprise, avarice is not.
7
Didn't we do this in the late 80s already? Oligarchies are good for only one thing: making the rich richer. The FCC should block things like this. But they won't because they, like all of the agencies put in place to protect consumers, are in the pockets of the corporations they are designed to protect us from. In the not too distant future there will be only two companies on the whole planet: Amazon and Alibaba.
14
I can only say as a consumer T Mobile has reduced my rates twice over the past two years. I have been provided with unlimited data and no throttling of my data use. I welcome the merger. There will be
coverage over a wider area. T Mobile has been responsive to my needs and there consumer response has been excellent. In theory lack of competition may have be harmful to consumers but in practice T Mobile has so far has treated me fairly.
5
It should be added that mobile phone plans in the US are on average 30 to 40% more expensive than in European countries, as well as in other countries, due to the overwhelming power of the ATT - Verizon duopoly.
While this Times Editorial arguments about the proposed T-Mobile - Sprint merger are generally valid, one would have liked to see as well articles on the dominance of ATT and Verizon and on the relatively very high level of mobile phone plans in the US, a situation which has been with us for many years and which is reflected by ATT and Verizon consistently high profits.
18
Anti-trust Laws were instituted in America between 1890 and 1915 to encourage free enterprise and to prevent large corporations, called trusts, from combining into monopolies to restrict competition. Beginning in the 1980s "Me Decade", government seems to have relaxed application of anti-trust laws allowing corporate mergers that created fewer, large competitors dominating certain markets.
The Chicago School of Economics notes antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.
If the FCC allows T-Mobile and Sprint to merge, the telcom market will be dominated by three entities.
Regardless of definition, this and any merger must be evaluated based on its ability to benefit consumers and overall efficiency. I'm not sure T-Mobile and Sprint can prove AND guarantee those two outcomes.
Three large corporations dominating a market are not in the public interest. No one corporation should be allowed to control a large percentage or a market (say 35%) and while that percentage threshold may be subjective, there are fewer risks to the consumer with more than three competitors in a market.
28
Verizon owns 35%
AT&T owns 33%
T-Mobile owns 17%
Sprint owns 13%.
You do not seem to have an issue with Verizon or AT&T having a huge market share....
2
It might surprise a few readers, but I share the editorial suspicions offered here. I believe that corporate accretion is necessary in an environment of completely new technology, where resources must be concentrated to effectively develop that technology to be self-supportive, thereby benefiting not only stakeholders but society generally – the oil company concentrations of a century ago and more represent a good example, and Microsoft and Apple are more recent good examples. However, in a complex, highly diversified economy where the purpose of such a merger isn’t developing and entrenching something new, we have an obligation to be suspicious, because the results almost ALWAYS are fewer jobs, less professional mobility which affects attainable compensations, and higher costs to consumers as overall competition is exercised among fewer market contenders. It can even result in inferior service to consumers as competitive pressure to provide high levels of service often diminishes with fewer competitors.
They don’t want to merge to develop a chip that is implantable in a human brain that links the individual with all information sources and other humans on the planet: they want to build-out a 5G network, a fairly mature technology.
I suspect the promises of benefits at no social cost as intensely as do the editors.
But why not hold them to those promises? Why not stipulate that allowing the merger is conditioned on attainment of the promises?
4
Revisit the new entity in a decade or two to confer permanent approval or withdraw it, depending on results. If approval is withdrawn, break them up. We found the guts to break up AT&T (entirely under Reagan, of all people), and look at the incalculable benefits THAT wrought. Yes, yes, that was a judicial decision, but it was made in a conservative political environment.
2
I am still undecided about this deal and proposal. As someone who believe in the free market, I believe that AT&T and Verizon has a big monopoly on most of our cell phone services. Both AT&T and Verizion already has a great investments in both landline and mobile services and both companies also has great investments (AT&T with their DirecTV and Verizon with Fios) while Sprint and T-Mobile basically has none.
1
Where have I heard this before? Riiiiight, when Suncor took over PetroCanada and they promised that the efficiencies would be passed on to consumers in lower prices at the pump. It didn't happen: Pump prices in Canada are nearly twice as high in relation to the price of crude oil, as they were before the merger.
21
Stop taxing gas so much.
You EXPORT oil.
Your complaints are like someone complaining that shooting themselves in the foot hurts.
No duh. Lower your taxes.
There's one certainty of a potential merger: It will help the big corporations a lot more than the average consumer.
32
I work in the industry, and the push for the lower prices that T-Mobile offers has caused AT&T and Verizon to layoff countless employees and spend less on capital improvements that could make them more money in future. People always complain about a loss of quality and moving work outside the US, but it seems like all people care about these days is getting the most cheapest price. My bill is less now then it was 20 years ago when adjusting for inflation. I would rather save the jobs and the quality, and pay $5 more a month.
17
While I am 100% with you on willingness to pay five bucks more a month to save thousands of jobs---lets turn it around. How about the investor class give up a little of their profits in order to save jobs and fund capital improvements?
91
Could it be that your bill is lower than it was 20 years ago because of economies of scale? Mobile carriers 20 years ago sold phones and service largely to people that could afford to pay $400 per month. By steadily offering lower pricing on handsets and service, these same carriers were able to add more subscribers at a lower profit margin per subscriber but generate higher absolute cash flow for their companies. Sprint and T-Mobile have kept Verizon and AT&T in check by being leaders in offering affordable service. Four major carriers is better than 3. Three is better than 2. Two better than 1.
15
That means your 401k, too. We’re all “investors” under the rules proposed by the only person talking about this, Sen. Sanders.
This editorial is raising concerns that the T-Mobile and Sprint merger will reduce competition in the cell phone market. It seems to me that three strong competitors is no worse that two strong and two struggling competitors.
But there's an issue that's being missed here. The editorial points out that, "executives say the companies’ combined wireless spectrum will allow them to offer a 5G service so good that some people will use it to replace their home broadband connection, providing competition to the likes of Comcast and Charter." If so, that would help the newly merged company INCREASE competition in home Internet access and TV. Here in Milwaukee, we only have two home providers, Spectrum (the old Time Warner) and AT&T. A third strong provider with an alternative way to provide the service would be great for consumers in this market.
26
May comment on my own comment? Speaking of monopolies, note that the Spectrum/AT&T merger seems to be going forward--which here in our city would leave us with ONE provider of home broadband. So for a T-Mobile/Sprint to be able to undercut the combined Spectrum/AT&T by providing Internet and TV to your home using the new wireless 5G would be great. There's actually a name for this--it's called the "disruptive impact of technology," the new technology being 5G.
ATT is buying Time Warner entertainment not Time Warner cable.
Charter already closed the purchase of Time Warner Cable on May 18, 2016.
And if I may sneak in one last comment (promise), there’s one more interesting angle on this. To implement 5G the providers must replace all of their transmitters, etc. Doug Dawson of CCG Consulting was recently quoted in Government Technology as saying it would take the providers “about seven years on average to implement the (5G) standards.” Except for a T-Mobile/Sprint to bust into the home Internet and TV business they can do so neighborhood by neighborhood—your house doesn’t move, and all you care about is if your provider has one 5G transmitter on the cell phone tower over the hill from you. So more bad news for Spectrum and AT&T. Spectrum is trying to maintain its 1980s coax cable infrastructure (with some fiber added later), and worse yet AT&T is maintaining its ancient twisted pair phone wiring, with also some fiber. But now, fair or not, T-Mobile/Sprint gets to end run all of that and undercut their home business with a wireless technology. So again, I’ve got to believe this a big piece of this puzzle.
Build out the 5G network, NOW. Also, there was the collusion by the telecom industry to delay the introduction of the eSIM which would allow consumers to switch carriers much more easily. And there is also the issue that our phones don't work overseas unless we got some exorbitant cellphone bill from one of the major carriers. Calling them, the telecom carriers in really as misnomer, crooks is more like it.
38
Yes, Telecomm Crooks!
But, really, what is 5G? Do we know what it is and how it will work? If so, somebody please tell.
Who in their right mind would think that having 3 companies instead of 4 would increase competition?
And less competition invariably will lead to less innovation and higher prices.
34
It's not as simple as saying three companies versus four. The wireless industry is far more complex than that.
If you talked to someone who studies the industry, it's more like a 2+2 situation. You have a certain amount of customers who value service quality. This happens to be AT&T and Verizon customers. Then you have a certain amount of customers who value price. This happens to be T-Mobiles and Sprints customers. The problem is, Verizon and AT&T compete for 66% of all the wireless customers in the nation while T-Mobile and Sprint compete for the other 34%. All the promotions Sprint and T-Mobile have ran over the past five years, AT&T and Verizon has lost little, if any market share despite charging more than T-Mobile and Sprint.
24
I had Verizon for years. The service was excellent and I supported the union. Because of disability of both my wife and me, our incomes took a big hit and cost became a decider. We switched to Sprint. The service is spotty - we have to change rooms for good signal, but the price is half of Verizon. This merger has us fearing the inevitable price increase because of less competition. We're discussing going back to talk/text only flip phones.
4
Actually it’s more complicated than you claim and you are simply wrong on carrier quality.
The point here is that with the depth of spectrum the two companies possess, they can compete against the likes of Comcast and the other big cable giants. Many of which presently are the only option in the home broadband market for many Americans. Thus, the number of firms competing is not 3 its 7 or 8.
Comcast and other traditional cable companies have already started offering cellular service, in part backed by the bulky energy gobbling modem/routers they deploy to their mostly unwitting customer base.
Further, Legere has shown time and again that he is willing to upturn the chummy collusion-lite apple cart that passes for ‘competition’ in most us economic sectors.
Finally, you are utterly wrong on network quality. Verizon and AT&T no longer have more coverage areas than T-Mobile. Not better spectrum in all areas. And they certainly do not have as good a backhaul if wired internet to their towers to service all of those phones banging away on them.
This Verizon & AT&T is better thing is an ossified zombie lie that won’t die among older cellular users who just ‘know’ its right, but don’t know the underlying technology and don’t actually have any data to support the claim. Just flimsy anecdote.
The problem with T-Mobile/Sprint is that the tie-up gives it a monopoly in spectrum assets across all 100 of the top 100 markets.
In addition to this, and something not disclosed at length, but Sprint also has a broadband fiber network that crosses the country. So fiber companies like Level3/CenturyLink stand to loose business too.
There’s also the question about combining MVNOs. Would we really need T-Mobile, Sprint, Boost mobile, Virgin, MetroPCS stores and staff anymore?
It seems that HHI is often used to gauge a company’s market concentration based on customers. But in this case, the technology isn’t real yet. DoJ should apply HHI to percentage of spectrum assets in a given marketplace in leu of customer count, and also apply methodologies and remedies (if there are any) similar to that which CenturyLink’s acquisition of Level3. That merger was approved as a Trump-era Telecom Horizantal Merger, and required remedies based on HHI.
New and more fiber can always be buried in the ground. But the problem with this merger is we can’t make any new spectrum, and the way auction processes work, we should also assume that the German and Japanese owners will never default on a payment to change ownership. Remedies should take into realistic scenarios where Americans or US companies will never see the spectrum owned by an American again... and we’ll be hounded for a lifetime by Legere on how terrible American companies AT&T and Verizon are.
3
I do not think Sprint has a huge fiber/broadband network. Do you have source on that?
I think the 3.5 spectrum that will be auctioned off will balance out the holdings. It's unlikely the combined Sprint/T-Mobile entity would bid on that, considering their holdings in 2.5.
1
Remember the promises of increased competition made when Ma Bell was broken up into many parts. Now we're down to just four, possible three, telecom providers. As the late Kurt Vonnegut might lament, "And so it goes." It seems as Teddy Roosevelt long ago realized that capitalism really detests competition, and with lawmakers now indebted to them for financing their campaigns the merger and acquisitions producing bigger and bigger corporate behemoths and the near monopolies they enjoy is what we are seeing. The alternative now is for states to treat them as highly regulated utilities as they do with electric, gas, and water companies.
21
Hopefully this will counsel the decision on whether to let AT&T merge with TimeWarner. The issue is control of physical networks, whether cell towers or buried coaxial cable. Content and advertising arguments are misdirection.
Consumers always benefit from increased choice. The burden of proof is on the would-be monopolists to convince the regulators.
8
Horizontal integration always helps the consumer. I'm sure this administration will rubber stamp this and tell us we would thank them.
2
The big problem is that Sprint is not a viable company. They are not making money, have $26 billion in long-term debt, and have to borrow even more to keep operations running. Eventually, they will not longer be able to keep going.
Sprint's best course is to sell themselves to a strong company with good management, TM has shown they have operational strength, and might be able to take Sprint's assets and turn them around.
21
Ajit Pai is committed to carrying water for the companies he regulates. After repealing net neutrality and helping Sinclair Broadcasting by raising the number of stations they can own and supporting a new HD service that will send royalty payments to them, this seems like a logical next step.
Instead of draining the swamp Pai, aided by his fellow GOP commissioners, is committed to building a much bigger one. Net neutrality and station ownership rules can be brought back. But, the new TV standard and this merger, probably not.
59
The problem I have with the NYT, or any news paper editors commenting on this is, none of you understand the wireless industry, and it's obvious.
First, if you were study, you'd find out Sprint has had a negligible impact on the wireless market over the last several years. Sprint's "free year of service" has not attracted many net customers, nor has any of the other promotions they've ran. Sprint's churn is the highest in the industry.
Second, over the last few quarters, Sprint has broke even from a financial perspective, while under-investing in their network. They have the worst product, and the cheapest prices in the industry. They are already leveraged to the hilt. Sprint has lost billions of dollars over the last ten years.
Third, what do you think is going to happen when Verizon and ATT spend 20 billion on 5G, and Sprint spends a fraction of that while incurring more debt to do it?
Finally, I guess you think forcing an unsuccessful company to stay independent, and offer an inferior product in the name of the idea of competition instead of allowing actual competition to the duopoly is the way to go. Three superior networks is better than two superior networks, and two inferior networks.
44
"Third, what do you think is going to happen when Verizon and ATT spend 20 billion on 5G, and Sprint spends a fraction of that while incurring more debt to do it?"
You would think what happens is "Verizon and ATT get broken up by sane regulators so we can actually HAVE competition in the mobile sector", but, well...covfefe.
10
Precisely.
1
I do not think so. Then you get four inferior networks. It requires immense scale to fund a world class network.
Your choice is this:
A. Two good networks/two bad networks
B. Several bad networks
C. Three good networks.