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Don't Expect US Approval of Huge Telecom Mergers

Posted by Soulskill on from the it's-nice-to-have-options dept.

An article from Reuters explains how mergers involving T-Mobile and Time Warner Cable are likely to face a high level of scrutiny from the Obama Administration. Officials are wary of allowing any more power to consolidate among the huge corporations dominating the industry. A merger with one of the smaller companies would have a much easier time gaining approval. "Regulators could, on the other hand, welcome transactions that bolster new entrants, such as one combining satellite TV service provider Dish Network Corp with T-Mobile, experts say. 'Dish/T-Mobile, from a regulatory standpoint, it would be a slam-dunk,' said Stifel analyst David Kaut. ... The FCC, in an annual report released in March, said competition in the wireless industry is 'highly concentrated.' Similarly, the Justice Department's assistant attorney general for antitrust, William Baer, has described the industry as 'not uniformly competitive.' 'The Department believes it is essential to maintain vigilance against any lessening of the intensity of competitive market forces,' Baer told the FCC in a filing in April related to an upcoming auction of low-frequency airwaves. The government's rejection of AT&T's $39 billion plan to buy T-Mobile from Deutsche Telekom in 2011 remains the biggest shadow looming over big communications deals."

1 of 64 comments (clear)

  1. Re:What competitive market forces by tlhIngan · · Score: 4, Interesting

    Verizon Wireless has a 41% profit margin

    And you know what? Canada has it worse. In fact, the big 3 carriers were so scared of Verizon coming in that they ran attack ads on the basis of "we pay the lowest!" (of the two major carriers) and "think of the children!" and "jobs jobs jobs!".

    Nevermind that if Verizon actually charged more in Canada, people wont' flock to them.

    Canada's big three are so scared they tried to buy out the small AWS carriers before they even got started - going so far as to offer Wind a 10x profit for their wireless license.

    Then they're pulling every dirty trick in the book to ensure that Wind won't get established (foreign ownership rules, etc). Finally, they even forced Industry Canada to take down their "wireless calculator" because no matter how you sliced it, the small competitors WERE cheaper in every way possible. This tool was in beta testing for a couple of years, and they lobbied to kill it just when it rolled out.

    And when Verizon announced they weren't going to Canada? Their stock rose 30%.

    Yes, it's that bad in Canada. You guys in the US actually have it fairly good.