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Senators Taking Sides In AT&T/T Mobile Merger
Sniper98G writes "US senators have no official power to block the AT&T/T Mobile merger. But that has not stopped them from making strong recommendations to the FCC and the department of justice. This whole situation has left me asking 'If the US senate and house are so concerned about a Triploy in wireless communication, where are the hearings about why most US household only have access to one or two wired communication providers?'"
They had plenty of time to "take positions" earlier but remained silent. I have to wonder if this has more to do with collecting campaign funding than actually caring about a cause.
Clearly someone has missed their yearly bribe payment, oh wait, I mean "campaign contribution".
I'm sure this will all get sorted soon. Once that check gets deposited, it always does...
In answer to the question from the original post... I think there are no hearings about wired communication "monopolies" because there are a variety of wired providers nationally, even if only one or two of them service each domicile or office. There's still comparatively heavy competition in most markets for wired communications services. Wireless, on the other hand, utilizes a finite resource (EM spectrum) and the 4 remaining carriers are largely the only ones available in the US. If I move from Miami, Florida, to Miami, Ohio, I probably have the same options available to me. Virgin Mobile, Boost, Wal-Mart Mobile, etc. all lease their spectrum from one of the big 4, so they aren't true alternatives or competitors. Three providers (or really two providers since I don't count Sprint) controlling all of the cell network EM spectrum seems like a very bad idea. I think that's why Congress is more concerned about the wireless merger than the paucity of wired communications providers serving Podunk, Montana. Other thoughts on this?
The reason they aren't upset is that the telecom monopolies are and were always caused by explicit government policy.
Read The Myth of Natural Monopoly by Thomas J. DiLorenzo http://mises.org/journals/rae/pdf/RAE9_2_3.pdf
The record of Congress in the telecom industry is so poor. Why would anyone even give two thoughts about what these politicians say?
Do you mean triopoly?
Free Martian Whores!
Except there is some evidence to price fixing for rates. Verizon and AT&T are only a few dollars difference to each other per month, though you get less for more with Verizon's service. If you remove T-Mobile, then Sprint will fall, and then people will really notice how odd it is for AT&T and Verizon to have similar rates. Roaming rates are a form of price fixing that AT&T and Verizon heavily rely on as well. As a result, the only carriers that can offer rates lower than $40/mo are ones who don't allow roaming (Sprint Prepaid Group, basically). There is a tenuous balance of two GSM and two CDMA2000 national carriers that deflects away attention from the indirect and direct price fixing that AT&T and Verizon do in the market. If T-Mobile is absorbed by AT&T, Sprint will fall, and the federal government will have to step in, again. Once they step in, they'll have to take drastic steps to make sure the market is as fair as possible. Admittedly, they won't get far because AT&T and Verizon "contribute" to so many campaign fund ventures.
For this reason, it is extremely important that the government block the deal. They'd rather not have to heavily regulate the telecom market like they did prior to the Telecommunications Act of 1996.
Technically, the Telecom Act of 1996 also deregulated fixed internet services too. As a result, it is actually possible to start up a new broadband internet service company and offer service. However, it is a very expensive venture. Which means that nobody will do it unless they feel the social benefit outweighs the financial risks and costs (a la Google Fiber).
They just don't like the new name that it would become: AT&T&T
My mom always said, "Jim, you're 1 in a million." Given the current population, there are 7000 of me. God help us all!
It's well established in the business literature that large stock mergers like this almost always hurt the acquiring company's stock holders, as well as employees and consumers. I'd imagine this even applies to the acquired company's stock holders.
As a rule, the only people that benefit from the acquisition are the executives of the acquiring company, who's power & compensation increase vaguely proportionally to the size of the company they run. In effect, the acquiring executives are devaluing their own stock holders investments to make themselves more important and force those stock holders to vote them more compensation.
Just fyi, cash mergers average out like investing in the S&P500. In a cash merger, the acquiring company's executives have real utility for cash on hand, so they negotiate a fair price or make better strategic decisions even when overpaying. In the stock merger, they simply acquire the largest company possible using other people's money.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
I got a text message from T-Mobile a few weeks ago saying their price for text messages will go up to $0.10/message on August 13th. They might not be waiting for the AT&T takeover to do their learning.
This is a huge gamble for AT&T. They are basically trying to buy a 4G network instead of building it themselves. They've made the gamble that they can buy T-Mobile and bribe regulators for less money than they would have to spend to build it themselves.
Of course the consumer will get screwed in the deal. Rather than having two 4G networks to choose from, we will be left with one over subscribed 4G network and thousands of fewer jobs once AT&T gets finished digesting T-Mobile and jettisoning the remaining workers. The merger is a complete FAIL for everyone other than AT&T. The fact that Congress is evening considering letting it happen just shows how dysfunctional our government is.