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Ma Bell Stifled Innovation, AT&T May Do the Same
An anonymous reader writes "AT&T recently announced it plans to acquire T-Mobile to create the largest wireless network in the US. If the deal is allowed to complete, it will create only three major players in the industry with Verizon being a close second and Sprint being a distant third. Sprint, along with consumer rights groups, have already cried foul. They argue that AT&T's proposed acquisition will stifle competition and innovation."
Ever heard of "Bell Labs"?
That it's even an open question shows how far from actual trustbusting we have gone.
Even as a libertarian, I see this, just as all democracies (as opposed to republics) devolve, so does uncheck capitalism - always in the direction of corporate socialism (rent-seeking, bailouts, etc.)
Stuff never broke, you knew that your neighbor wasn't getting a better deal, and you didn't have to worry about sevrice or dropped calls; ma bells team of engineers and workers kept stuff running smoothly
And, as anyone who travels abroad knows, the supposed "benefits" of competition don't seem so good: in those awful socialist countrys like france, they have, and have had for many years, superior telecoms.
Of course, when the CEO of Verizon makes 18 or 20 million dollars a year, he has an incentive to hire (on Verizon's nickel) economists and journalists to tell the world how great competition and the unbridled capitlism are...
In Canada you have a lot more choice in providers, most of the American companies are available as well as Rogers and Bell, i guess it's just better, like our healthcare...
It's like the mind going AWOL, it's there somewhere
Whats there to be argue. if there is a SINGLE provider monopoly in a nation, more than innovation is stifled. Not even right wing economists argue against that anymore.
Read radical news here
T-Mobile is the only provider that I've found in the USA that does not truncate the high bit on text messages. I can send text messages in Chinese and Japanese with my unlocked iPhone on T-Mobile. AT&T and Sprint clip the high bit. I hope AT&T won't screw up T-Mobile's network.
That it's even an open question shows how far from actual trustbusting we have gone.
Maybe the problem is too much trustmaking (restricted licensing, monopoly granting, etc.)
Set your phasers on "funky"!
>> i remember the days when we had a dozen cell carriers in the US. expensive service, crappy reception almost everywhere you went. as the competition dried up we've had prices drop and better phones come out.
My first computer ran Doom like a slide show and cost $3,000. I bought an iPod Video for $40 recently, with hacked firmware it runs Doom smoothly. This is the result of technology progressing, not with removal of competition.
I had Comcast cable internet for around 5 years because there was nothing else but even worse DSL in my area. They gave me 50kbytes/s upload and 750kbyte/s download. 2 months before Verizon installed FiOS lines in my area the upload jumped to 200kbyte/s and the download to 1.5mbyte/s.
Hotmail gave you 10mb disk space for eons. Gmail came out then Yahoo and Microsoft had to change.
As long as there is competition, even if it's just 2 mega-corps battling it out, companies can not sit still and must continue to innovate/advance.
The Myth of Natural Monopoly p.56-57
Unnatural Monopoly: Critical Moments In The Development Of The Bell System Monopoly
The article claims that Bell stifled innovation by choosing not to bring an invention made by a company employee to market, in this case magnetic tape audio recording. That's such an overblown reading of the event that it's laughable. Companies create ideas all the time they decide not to productize because they're not really in their core business, because they fear (rightly or wrongly) that they'll will have a negative impact on that core business. In this case it was both.
In any case, magnetic audio tape was invented in Germany in the prior decade, and magnetic wire recording technology had existed since the 1890s and was widely commercialized in the 1920s.
On the other hand, in Ma Bell's tenure we had the development of Unix, computer networking, and satellite telephony, in which the company paid key roles. The break-up of the Bell System was motivated in part by the hypothesis that competition would bring new technologies like digital telephony (in this case ISDN) to market faster. While nobody can say what would have happened without the break up, on that goal at least the break up could not be called a success.
The result of the break-up wasn't rapid technological innovation; it was price competition. That was a good thing. By in large the AT&T monopoly worked very well, within the expected limitations of any such regulated monopoly. We had *excellent* telephone service for the era, but it was much more expensive than it might have been. Under the covers it was quite technologically advanced. Ma Bell designed the multiplexed digital transmission system (the T Carrier system) that is still used in North America today back in the 1950s, and did early deployments as early as 1961. The commercial adoption of the Internet occurred a decade after the break up of the Bell System in 1984, but it was based on the T Carrier system and its refinements, all designed and implemented by the Bell system in the 60s and 70s, *before* the break-up.
Which is not to say that monopolies are necessarily a good thing. It was good that the break up lowered long distance prices. Nor are such monopolies always technical successes (BT comes to mind). It is even possible that the columnist is right, and that the Bell System *did* somehow stifle innovation, despite the historical fact of all the innovations it brought to market as a monopoly. The problem is his argument, which is pure, ignorant BS.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
In our conversation, Ray noted there is a very good chance that U.S. consumers will be disappointed by the LTE roll out, mostly because Verizon and AT&T don’t have enough spectrum.
“Our competitors are launching LTE in fairly limited bandwidths of spectrum,” he pointed out. “So, 10 to 20 megahertz of LTE spectrum doesn’t give you a significant benefit in any manner, or form, from a performance perspective over and above HSPA+.”
...
“We have clean, uncluttered, untouched spectrum that we can leverage to support growth in smartphones and other devices into over the coming months and years,” Ray said. T-Mobile USA, he continued, has used only about a third of about 6030 MHz of spectrum it acquired for roughly $2.64 billion in the 2006 AWS auction. This gives them ample room to upgrade to 42 megabit per second capability next year, Ray pointed out.
From: T-Mobile USA CTO Disses AT&T, LTE and WiMAX
PocketPermissions Android Permission Guide
The company called "AT&T" is not, was not, and has only a tenuous relationship with the entity "Ma Bell," American Telephone a Telegraph. The company called AT&T is actually the old SBC, Southwestern Bell Communications, one of the RBOCs, that took over AT&Ts name and trademarks after buying the AT&T Corporation in 2005.
Don't blame me, I voted for Baltar.
The FTC uses the Herfindahl index to evaluate market competitiveness. Using just the top 5 carriers (the big four and Tracfone), the current index is 1810 (market share data from here).
'According to the DOJ-FTC 2010 Horizontal Merger Guidelines, the agencies will regard a market in which the post-merger HHI is below 1500 as "unconcentrated," between 1500 and 2500 as "moderately concentrated," and above 2500 as "highly concentrated." A merger potentially raises "significant competitive concerns" if it produces an increase in the HHI of more than 200 points in a moderately concentrated market or more than 100 points in a highly concentrated market. A merger is presumed "likely to enhance market power" if it produces an increase in the HHI of more than 200 points in a highly concentrated market.'
So by their own definition this merger will raise "significant competitive concerns" since the HHI will increase by 650 points to 2460. With all the other little guys added in, it is fair to say that the final number would be more than 2500, i.e. "highly concentrated."
I'm a T-mobile customer with a Nexus S phone that I bought 2 weeks ago. I have learned that my phone won't work on the AT&T network -- at least not for data. That phone cost me over $600 with tax and accessories. It's supposed to take awhile for regulatory review and there's supposed to be some phase out period blah blah blah but I'm losing roughly half of the useful life of my phone -- and I'm the kind of guy that hangs onto my gadgets for a long time so this pisses me off. I cannot switch to another provider in the US because there will be no other GSM provider. If I choose a CDMA provider then my phone won't work abroad.
More importantly, my bill right now for unlimited minutes and 5GB of data per month (one GB more than AT&T's top-of-the-line data plan) plus 400 text messages is a mere $95 per month -- and that's the whole bill taxes and all. I'm not sure how much that'll go up because when I called AT&T to inquire about rates, the poor girl on the phone couldn't figure it out due to the byzantine service options/restrictions imposed by management. From the information I did get, I believe I can expect this to increase to anywhere between $125 and $150 *before* taxes.
T-Mobile is the low cost leader in our phone market. They provide excellent customer service. The were the first to offer an Android phone. AT&T was the last. For those who moan about big government hampering business, I invite you to prepare yourself to deal with the bureaucratic nightmare that AT&T will become. When you are only one of 130 million customers, dealing with your phone company is going to make a trip to the DMV feel like a vacation.
And by the way, I've been to AT&T's headquarters in New Jersey. I attended a business meeting there in the mid 90's as a management consultant. The building was in the middle of a *private golf course* left over from the monopoly days when a long distance call cost around a dollar a minute. The so-called strategists that we met with had no clue what the Internet was all about. In those days, the only reason AT&T was making money was because they had millions of aging customers who didn't realize that they could switch to a different long distance provider and slash their bill by roughly 75%.
This merger sucks for all of us except the fat cats at the top of AT&T and T-Mobile.
Of COURSE innovation will go down. As someone who remembers the old ma-bell days....when they came out with a phone that WASN'T any color but black, people thought it couldn't get any better than this! Once Ma-Bell was split, we had these neat things that came along. Cordless (landline) phones, answering machines, voice mail, pagers (that were affordable!) and in the late 80's bag phones and then the Motorola brick! The rest, is history. Once at&t gobbles up t-mobile (and they will...they've greased enough palms), even though they say they won't, you can bet Verizon will throw a ton of money at Sprint to get them. Sprint's CEO says he wouldn't sell, but, you know 99.9% of the people will take the money and run. Once you have Verizon & at&t as the only companies providing wireless service, they can come up with a new gadget every once in a while, but with the bulk of people on contracts anyway, you won't get the churn like you did when there were a dozen wireless providers, not to mention the cool whiz-bang devices to use. Two things will happen, to say the least. 1. Prices will go up 2. Service will go down