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Cingular Wins bid for AT&T Wireless
Newer Guy writes "Cingular has won the bidding war for AT&T Wireless with an offer of $15 a share, or about $40.5 billion." This means Vodafone is out, and the number of competitors for wireless devices in the US is down by one.
Less carriers means less competition means higher prices.
In the end, it's the consumers who will lose out with this consolidation of mobile providers.
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The mobile phone industry is one industry that could actually benefit from consolidation. Running redundant networks with redundant cell towers is very expensive. 3-4 major players should provide enough competition to keep prices down.
horrid coverage reputation? odd, i've never heard of it. care to elaborate?
Why gripe about a reduction in the number of wireless providers, when the last mile of copper is still a legal monopoly?
Every wonder why wireless phone service is becoming cheaper than wired? Ever wonder why your wired service is a few decades behind in technology?
Ever wonder why you can get a broadband cell phone set up immediately, but you often have to wait a month for DSL installation?
Say what you want about the wireless market, it will soon offer better services at cheaper prices than wire. And the difference isn't technology, it's regulation.... it's the legislated monopoly that claims to protect consumers. But nowadays, poor folks who talk a lot are using wireless phones, because it's cheaper.
Creeping toward monopoly, or only a (smaller) handful of key players in the mobile phone market might not be so bad in terms of quality of service. For some markets consumers benefit from conglomeration of resources. Think about long distance service. There are 3 major players and a handful of tiny players. I don't feel particularly ripped off on my long distance service. If there were 45 different long distance companies, then they would all be charging each other fees to go from network to network, there would be incompatibility problems which would cause decreased quality and also slower adaptation of new technology.
:-)
Don't get me wrong, the reason it's like this is because the government doesn't step in and regulate the industry as much as it "should". If we were magically fully utilizing all of the state of the art fiber optic line that we had in the ground and it was all seamlessly available on the free market for any provider to rent at a standardized price, then having 100 bandwidth/long-distance companies would indeed be a good thing for consumers.
But like the wording of my example might suggest, I don't think it would be possible for the technology to stay state of the art AND fully regulated at the physical layer even if the government wanted to. Governments are (reasonably...) good at taking something economically tangible, like value-units of food or healthcare, and distributing it pretty much fairly (not that they always do this, but if they do then they are capable of succeeding).
But even if the US government regulated the network, and had a board of domain experts constantly auditing the state of the system, the fact of the matter is they would not have the motivation to maintain a state of the art network to support bandwidth and voice. Greedy corporations are good for that.
And 100 greedy corporations would never be able to interoperate and also provide state of the art and fairly priced services.
Lawrence Lessig, are you reading this? Set me straight!!
Actually, it's very typical for an acquiring company's stock to drop upon the announcement of a deal like this. It's a huge risk, the benefits of which (if they occur) are realized years down the road. In the short term, however, it can cause a cash crunch and provides an obvious distraction from the day-to-day work of improving the existing business.
Rest assured that if Vodaphone announces a deal for Vivendi, the stock will drop once again...
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I have heard various "learned" sources state that there is little point in having more than 3 serious competitors in any market.
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Fishing around on the web for a synopsis of this theory, I came across this:
"So why three? The authors contend that markets are inherently efficient, and three competitors is the best number to promote and sustain that efficiency. Having two companies will lead either to monopoly pricing or to the two destroying each other, and more than three leads to overcapacity and perpetual price wars.
Thus, when faced with three established competitors in a field, you want to think long and hard about whether you're willing to spend the money to knock one of them off. Consider instead becoming a product specialist ("We make the world's best X") or a niche player ("We only serve the Y market"). Trying to force your way in either by taking on a market leader directly or by expanding outside of your niche just doesn't seem to be a wise use of resources, according to the research."
The source of this article can be found here:
http://www.cioinsight.com/article2/0,3959,
In which case, why does it matter?
Because the cell phone producers have to make special versions of their hardware to work in the U.S, which increases effort and in the cases where they bother, also increases costs. Your phone is both out of date and expensive because of the work required by companies like Nokia in making it work in the U.S
Besides which millions of Americans do travel to Europe and millions of Europeans travel to the U.S The U.S carriers are missing out on millions of dollars of roaming-call charges because the vast majority of those millions of phones moving in and out of the country don't work and therefore, cannot make calls on their network.
Is SBC just determined to piece together what the courts broke up twenty years ago?
Its a good thing I only opted for a one-year contract with AT&T Wireless when I switched from Cingular back in November. There is no way I'll resubscribe this year with the merged entity unless the FCC forces SBC to spin off Cingular (doubtful). I do not want to be forced into signing up for a residential landline with SBC just as they do with DSL. My rule of thumb is I do not do any business with SBC and I don't intend to break this now. I don't reward shoddy service providers like SBC.
"Right now, somewhere in this world, Scott Baio is plowing a woman he doesn't love," - Peter Griffin, *Family Guy*
You have just described the entire US cellular industry. Scope out the cellular newsgroups and you will find the same exact complaints stated almost daily about EVERY carrier.
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" I bet we see Vodaphone or Verizon grab T-Mobile now. "
Wrong technologies. Verizon Wireless would more likely grab Sprint - which uses the same carrier technology. Its also one of the reasons Sprint's stock raised on the news of the AT&T merger - rampant speculation that they would be "plan B".
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