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Antitrust Enforcement Yields Increased Investment in Wireless
We have long argued that smart antitrust policy promotes investment and competition in the market. Allowing a few firms to consolidate too much power allows them to ignore our needs because we lack alternative service providers. In economic terms, they can use their market power to prevent market entry from innovative new firms.
Harold Feld recented provided more empirical evidence for our view by comparing the present cellular wireless market against that of 20 months ago. He notes new investment from abroad in T-Mobile and Sprint and that U.S. Cellular plans to expand its footprint; AT&T is planning upgrades in its spectrum holdings. Bottom line - investment is starting to happen, which was not the case a year ago.
Feld breaks out details in FCC and DoJ activities to show the relationship. In addition to the DoJ and FCC mutual block of the AT&T/T-Mobile deal, Feld notes the FCC's new attitude regarding regulatory reform. From the Feld blog:
On top of this, the FCC sudden[ly] started getting all serious about regulatory reforms designed to keep carriers other than AT&T and Verizon in the game as serious players. This included not just the long-awaited data roaming order (which now looks like it will probably survive review by the D.C. Circuit after all), but also revisiting special access, 700 MHz Interoperability, and renewed interest in clarifying the spectrum screen/possibly reviving the spectrum cap. While the last three are still in progress, the fact that the FCC is even talking about them in a serious way is so radically different from what folks expected at the beginning of 2011 that it puts heart into investors and competitors who were looking for some sign that anyone in DC gave a crap or if competitive wireless would end up going the way of competitive telecom and competitive ISPs.
Feld acknowledges that there will be those that jump to conclusions and discourages an all-or-nothing viewpoint in favor of a more measured approach. Also from his blog post:
New Year, Same Lame Cable and DSL Monopolies
AT&T Abandons Wireless Consolidation Attempt
“Without the combination, we think the wireless industry will be further weakened by continued hypercompetitive activity, particularly regarding subscriber acquisition costs,” said Nomura Securities analyst Mike McCormack. That means customers can still get lower rates as the industry competes for their dollars. T-Mobile, for example, will continue to be a low-cost competitor, according to consumer advocacy group Consumers Union. A survey showed that data plans from T-Mobile were $15 to $50 less per month than those offered by AT&T.An excellent reminder that what is best for Wall Street is not what is best for the 99%. Big companies like AT&T find competing for customers a hassle that lowers their profits -- they consider a market with four sellers to be hypercompetitive. In wireline, they have acquiesced to the "competition" of two competitors -- cable and DSL. This is one reason communities build their own networks -- the private sector is not truly competitive when it comes to ISPs and most communities have no prospect real of improvement absent a public investment. But we should rejoice in this victory -- because we earned it. Without the hard work of many grassroots groups, it is hard to imagine the Department of Justice or FCC standing up to such a powerful corporation.
AT&T Takeover of T-Mobile Will Kill Tens of Thousands of Jobs
Two weeks ago, Deutsche Telekom (DT) Chief Technology Officer Olivier Baujard accidentally spoke truth about T-Mobile to an audience of German investment analysts. After running through the usual company talking points about the effort to sell T-Mobile to AT&T (e.g., it will happen, DoJ is just playing hardball with negotiations, etc.), Baujard said at a public presentation at a Paris broadband conference that: “any rational company had a Plan B and that Deutsche Telekom had other opportunities for its U.S. operations should the U.S. Department of Justice succeed in terminating the deal.” This is vitally important because, after accidentally shooting the “this is the only way to bring 4G to rural America” argument in the foot by accidentally leaking documents proving AT&T could bring 4G to rural America whenever it wants, and T-Mobile killed the ‘this will create jobs’ argument by confirming that it was preparing pink slips for more than 20,000 employees after the acquisition gets approved, the “T-Mobile is a sickly gazelle” argument is about all AT&T and it supporters have left. Unfortunately for AT&T, this is not the first time Deutsche Telekom has screwed up the “sickly gazelle” storyline by revealing inconvenient truths about its other options.
AT&T&T Merger and DOJ: What is Happening?
The Real Impact of the AT&T&T-Mobile Merger Isn't Funny
But that doesn't mean we can't use humor to illustrate the very serious impact of more consolidation in the mobile market! Check out four short commercials prepared by Free Press and vote on your favorite. Our favorites are below.
More Consolidation, Fewer Jobs, No Duh
"AT&T and Verizon have slashed the frontline workforce, and there simply are not enough technicians available to restore service in a timely manner, nor enough customer service representatives to take customers' calls. Let me share some statistics. Since 2004, AT&T reduced its California landline frontline workforce by 40%, from about 29,900 workers to fewer than 18,000 today. The company will tell you that they need fewer wireline employees because customers have cut the cord going wireless or switched to another provider, but over this same period, AT&T access line loss has been just under nine percent nationally. I would be shocked if line loss in California corresponds to the 40 percent reduction in frontline employees. "Similarly, since 2006 Verizon California cut its frontline landline workforce by one-third, from more than 7,000 in 2005 to about 4,700 today. I venture that Verizon has not lost one third of its land lines in the state."Note that AT&T, Verizon, and other massive incumbents like Comcast have been wildly profitable over this term. The same trend holds in cellular wireless - as noted by the Wall Street Journal:
The U.S. wireless industry is booming as more consumers and businesses snap up smartphones, tablet computers and billions of wireless applications.
Community Groups Oppose AT&T Takeover of T-Mobile
“Our communities cannot afford higher prices and less choices. We need the FCC and DOJ to block this takeover if it's found to be in violation of antitrust law and does not meet public interest obligations,” said Betty Yu, National Organizer for MAG-Net. "If AT&T takes over T-Mobile, it will be a disaster for all mobile phone users. It will stifle information, choice and innovation- and lead to higher prices and fewer jobs nationwide, added CMJ's Policy Director, amalia deloney. "It's a real jobs and democracy killer.” The groups also contend the takeover will disproportionately harm consumers of color, who rely on their cell phones to access the Internet more than whites. While 10 percent of whites access the Internet only from their phones, 18 percent of blacks and 16 percent of English-speaking Latinos depend on affordable wireless coverage to get online.And an excerpt from the letter [pdf]:
The impact that this merger would have on affordable mobile phone service, broadband access and adoption, openness on the mobile web and broadband competition presents a real threat to our communities. We hope that the Department of Justice and Federal Communications Commission will examine AT&T's proposed acquisition of T-Mobile with appropriate scrutiny and protect our communities by blocking this merger. We intend to host a series of open and participatory meetings in our communities to discuss this merger, and we hope that FCC Commissioners will commit to joining us. It is only by communicating directly with people and hearing our stories that you will feel our deep concerns with this merger and the devastating impact it would have on our communities.We continue to advocate for universal, affordable, fast, and reliable broadband, which to us means a wired connection eventually to all homes that are connected to the electrical grid.