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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."

39 of 64 comments (clear)

  1. What competitive market forces by Anonymous Coward · · Score: 5, Insightful

    You mean the ones where they collude to keep the cost of service artificially high?

    1. Re:What competitive market forces by Anonymous Coward · · Score: 2, Informative

      i've had a cell phone since 2001. prices have stayed the same and the amount of service you get has gone up.
      back in the 90's you used to pay almost $100 a month for just 60 minutes per month. and if you called someone on the same carrier which was almost impossible since there were like 20 cell phone carriers in the USA you still had to use your minutes

    2. Re:What competitive market forces by CanHasDIY · · Score: 2

      We're not talking about cell phones, now take your Nokia brick back to 2001 where you both belong.

      --
      An enigma, wrapped in a riddle, shrouded in bacon and cheese
    3. Re:What competitive market forces by Bill+Dimm · · Score: 4, Informative

      Verizon Wireless has a 41% profit margin

    4. Re:What competitive market forces by game+kid · · Score: 4, Insightful

      I love the part where that disappoints the market and it could go up to 50%.

      --
      You can hold down the "B" button for continuous firing.
    5. Re: What competitive market forces by jonwil · · Score: 1

      The whole pricing model for US phone carriers is totally broken, they need to look at carriers here in Australia and copy their models (not necessarily Tel$tra though)

    6. 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.

    7. Re: What competitive market forces by icebike · · Score: 2

      And I remember when long distance was prohibitively expensive on mobile plans, then suddenly became reasonable, then essentially free.

      I also see international mobile to mobile calling slowly proceeding down the path to being free. With everything hopping onto the internet backbone in the LTE world, there is precious little that you need from a carrier except that last two miles from your handset to the tower.

      None of this is germane to the issue at hand.

      There is no earthly reason to hand telco business over to the same Big Media companies that have played so fairly with their own customers over the last decade. These people have been suing everyone left and right, charging exorbitant viewing rights, and demanding ridiculous court fines for anyone sharing at a movie, while at the same time distributing their wares in digital form across the web.

      Nothing good can come of giving this bunch of schemers access to telephone records, control over what goes onto our devices or what gets carried on out networks. I'm perfectly fine with the DOJ stepping in and preventing such.

      --
      Sig Battery depleted. Reverting to safe mode.
    8. Re:What competitive market forces by macpacheco · · Score: 1

      There's no need to collude.
      It's a natural thing. Less competition = higher prices.
      All the arguments that cell phone plan prices (per minute, per GB) are coming down, that's a given.
      The cost of ALL mobile hardware is coming down (handsets, radio base stations, backhaul connectivity, switching centers), that's ZERO excuse to say they should be allowed to merge.
      They should be coming down faster if there were enough competition.
      Plus the overcrowded airwaves are mainly the mobile companies fault, they keep advertising unlimited bandwidth plans, then when lots of customers tries to use their mobile data plan like they use their DSL = overcrowded airwaves.
      Mobile data plans aren't for p2p transfers, netflix, downloading linux distros/windows updates, that's for your wired broadband, but the mobile companies keep making you think the mobile plan is just as good.
      Finally, there's a simple solution to the crowded airwaves, it's called femtocells, which are coming to market really slowly, because they're much better for customers than they are for the mobile companies.

    9. Re: What competitive market forces by icebike · · Score: 1

      If it was truly your network and you owned it, you could control what gets carried on it.

      It IS our network. Read my SIG.

      That we allow publicly traded heavily regulated corporations to our networks, using our airwaves, draping cable over our landscape, is simply a matter of organizational convievnce. We have entire government organizatios dedicated to making sure they use these things correctly.

      We built and paid for this industry. We gave them tax breaks and access to lands they could never afford to buy. They are caretakers. They don't even own majority share of their own companies, because they sold so much stock that all they have now is tenuous control, which we allow them to keep,as long as they do what we want.

      --
      Sig Battery depleted. Reverting to safe mode.
    10. Re: What competitive market forces by macpacheco · · Score: 1

      charging per invidividual SMS is criminal
      an SMS uses less network resources than if someone called someone else, it rang for 2 seconds and gave up (actually about one order of magnitude less)
      that's a normal consequence of not having enough competition
      SMS should be like US$ 5/month for unlimited texting (or perhaps 1000 texts, every extra 100 texts costs US$ 0,10)
      A single cell tower segment (one antenna) can handle at least 100 million texts / month if there was nothing else for it to do, and even with other activity something like 10 million texts easy peazy, so a whole USA nationwide network should be able to handle a trillion texts per year easy.

    11. Re: What competitive market forces by macpacheco · · Score: 1

      It's called the effect of cheap VOIP ! you need a disruptive technology to change the ballgame.
      If all 2G technology were retired tomorrow, and all spectrum relocated to 3g / 3.5g / 3.75g / 4g the cost per minute of voice calls would essentially be free
      even a basic 3g network can place something like 1000 simultaneous calls per sector (each antenna is usually 6 sectors, so 6000 simultaneous calls on a single antenna)
      the numbers are huge, hence those 45% profit margins
      using lots of femtocells for high volume traffic offload would increase system wide capacity but a lot, since it helps frequency reutilization
      PS: I'm really knowledgeable on landline carriers (voice, data and internet) so my data might be a little off, but not by much, I'm typing on the top of my head

  2. This is nothing a few big campaign donations... by Nova+Express · · Score: 2, Insightful

    ...won't fix. Time-Warner and T-Mobil just need to pony up, and then the crony capitalist decision-making will kick in ala Solyndra, GM, CGI and Serco...

    --
    Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)

    http://www.lawrenceperson.com/

    1. Re:This is nothing a few big campaign donations... by macpacheco · · Score: 1

      The Solyndra case is typical GOP flip flopping.
      1 - It was George W Bush initiative, approved by a GOP majority in the house
      2 - Those gov't incentive plans are expected to have a small number of failures, otherwise the criteria of who gets the money is being too conservative, which means that innovation isn't being sparked
      3 - The reason Solyndra failed wasn't their incompetence, but instead the Chinese dumping of solar panels below cost
      And they try to pin the blame on Obama and a democratic majority (at the time) in the house.
      Stop rehashing the same stupid misconceptions, it just shows how brainwashed you were by the Tea Party !
      Most of the Tea Party platform is great in theory, but much, much worse than the status quo in practice, much like the libertarian platform. That's the consequence of trying to do politics driven by ideology, it tends to ignore a little think called FACTS !

      The fact is the Tea Party doesn't want to help the middle class one little bit. It true purpose is to make the billionaires even more rich and try to rollback basic social advances created by the New Deal and the 1960s social policies. It's amazing how effective their brainwashing on the middle class of GOP voters work.

      The simple fact is the USA needs a center party, based on pragmatism, and rejection of both labor union driven politics and big oil / the industrial military complex / unlimited power to the billionaires thinking. The problem is the vast majority of those is the middle just don't care enough to push for change, leaving a small minority that aligns themselves with the Tea Party out of ignorance.

    2. Re:This is nothing a few big campaign donations... by macpacheco · · Score: 1

      Mod parent up

    3. Re:This is nothing a few big campaign donations... by macpacheco · · Score: 1

      Just one change to the US electoral system would make it viable for third parties to get house seats.
      France has district voting very similar to the USA, except they have run up elections (if the winner don't get 50% + 1 of valid votes). And the runup election includes all candidates that got at least 10% of the voting.
      This creates a large incentive for the 2nd best voted to make serious alliances with the as many of the other voted as possible to win the run-up.
      This is the system I'm advocating for Brazil (which unfortunately has a brain dead proportional system that prevents voters from know exactly who represents them and prevents representatives from knowing who is their constituency).
      Of course even such a small change would take an act of god (in the USA, for Brazil it would be HUGE), but it would be a pursuit much more useful than anything the smaller parties are advocating for today.
      Only USA and UK seem to have such a totally polarized two party system. Here in Brazil our problem is the other way around, we have over 20 parties, with no more single one with more than 20% of the national assembly and no clear ideological identity for all but 3 or 4 very radical left parties. Everybody else either is a political whore to the party that won the presidency, plus a coalition of about 3 parties making some resemblance of an opposition to the party in power (labor).
      In the end, the USA system is better as it is (than what we have now). I lived in both countries.
      The biggest problem with democracy isn't the system, it's the stupidity of the voters ! The system is as good as the intelligence of the voters.

  3. Too bad.... by Rick+Zeman · · Score: 4, Insightful

    ....the government didn't have this kind of wisdom when they allowed allow of the oil company mergers again. (It's amazing how 100 years and millions and millions of bribe...err, campaign donations have changed perspectives.) How well have they worked out for the American consumer?

    1. Re:Too bad.... by bill_mcgonigle · · Score: 1

      (It's amazing how 100 years and millions and millions of bribe...err, campaign donations have changed perspectives.)

      Um - perhaps you're unaware that John D. Rockefeller wrote the regulations that broke up Standard Oil. He laughed all the way to the bank.

      --
      My God, it's Full of Source!
      OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
    2. Re:Too bad.... by linearz69 · · Score: 2

      No, its the same wisdom as the oil company mergers, just not as obvious. Ultimately, this will result in T-Mobile declaring bankruptcy (or exiting from the US market), and the RF broadband then resold to AT&T and Verizon, furthering consolidation in the industry.

    3. Re:Too bad.... by Rick+Zeman · · Score: 1

      (It's amazing how 100 years and millions and millions of bribe...err, campaign donations have changed perspectives.)

      Um - perhaps you're unaware that John D. Rockefeller wrote the regulations that broke up Standard Oil. He laughed all the way to the bank.

      You're right, I'm unaware of that. Here I always thought this case might have had something to do with it. But yes, he did laugh all the way to the bank pre- and post-breakup.

    4. Re:Too bad.... by bill_mcgonigle · · Score: 1

      Sure, they fought the breakup as an unconstitutional adventure, but JDR had both sides of the play covered. I seem to have lent out my copy of Constitutional Chaos out, but I'm pretty sure that's where the background info is (the book is mostly "things they didn't teach you in school about Supreme Court cases").

      --
      My God, it's Full of Source!
      OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
    5. Re:Too bad.... by NJRoadfan · · Score: 1

      They also swallowed up MetroPCS in the process (mostly for their spectrum).

    6. Re:Too bad.... by macpacheco · · Score: 1

      The past is the past, the present is Oil is on it's way to obsolescence. Much like computers used to double in speed, half in power consumption and size every 18 months, electric batteries will follow that trend but more likely on a 8 year cycle. But in that case double power per weight, half price per power and increase rate of charging and discharging. And with just a half cycle (50% move) to make the high end electric car have a 400 mile range, and affordable cars (to the middle class) have 150 mile range.
      Since large scale eletricity production uses no oil, then the next generation electric cars will lead to the end of 95% of the need for oil.
      Even as we speak, Tesla Model S / GM Volt / Nissan Leaf is doing the first stage of this revolution is showing it's possible, even if still a little too expensive / too little range. But the current tech is good enough for most environment conscious upper middle class (in the case of the Tesla Model S). The next generation will start the mass migration. By 2025 gasoline cars will be only bought by the most ignorant climate change denier / I want a monster muscle car / my car must make big noise semi cave men.

  4. Time Warner and Comcast are NOT Competitors by zbobet2012 · · Score: 3, Insightful

    Due to the way the cable industry is regulated, there can only be one cable provider in a given market....

    1. Re:Time Warner and Comcast are NOT Competitors by Enry · · Score: 1

      Bzzt.

      I currently have my choice of Comcast or Verizon FIOS. There's a number of areas in eastern MA where this is the case, probably other locations too.

    2. Re:Time Warner and Comcast are NOT Competitors by Jah-Wren+Ryel · · Score: 1

      I currently have my choice of Comcast or Verizon FIOS. There's a number of areas in eastern MA where this is the case, probably other locations too.

      You are technically correct, but not usefully correct. I lived in a boston suburb with a similar choice (some towns even have 3 choices there, comcast, verizon and RCN). But for the vast majority of the population there is only one choice.

      --
      When information is power, privacy is freedom.
    3. Re:Time Warner and Comcast are NOT Competitors by melchoir55 · · Score: 1

      Two megalithic corporations do not a competitive market make.

    4. Re:Time Warner and Comcast are NOT Competitors by antdude · · Score: 1

      Same for phone services on landlines. Did cable (TWC vs. Comcast) and phone (Verizon vs. Sprint) companies ever have competitions with each other in their own cities in the past? It seems to only apply to landlines. I only see competitions with wireless, Internet (phone, wireless, coax, etc.), TV (satellite and cable), etc.

      --
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    5. Re:Time Warner and Comcast are NOT Competitors by Rick+Zeman · · Score: 1

      Two megalithic corporations do not a competitive market make.

      Yep. Real competition doesn't begin until there are 4 (or more) entities.

    6. Re:Time Warner and Comcast are NOT Competitors by R3d+M3rcury · · Score: 1

      Accurate, but not entirely true.

      I have TWC, Verizon FIOS, and AT&T U-Verse where I live. TWC is the cable monopoly and Verizon is the telephone monopoly. Of course, TWC provides phone service and Verizon provides television service. AT&T is available, but it runs via Verizon's copper-wire DSL service.

    7. Re:Time Warner and Comcast are NOT Competitors by Enry · · Score: 1

      Technically correct is the best kind of correct.

  5. Let them merge but regulate their rates by JoeyRox · · Score: 2

    Jesus there are already too few telecom companies in the USA as it is. If they're dead set on upgrading their position from oligopoly to monopoly then let them do so but regulate their rates like we do other natural monopolies. I imagine they'll quickly lose interest in merging.

  6. I'm a poet by Anonymous Coward · · Score: 1

    'Twas the night before xmas, and all through the dot
    Not a comment was posted, not even bit rot

    The flamebait was slung at first post with great care
    In the hopes that St. Noob would soon be there

  7. Oh hay! by MobSwatter · · Score: 1

    Keen observational skills. Maybe they could do the same with food industry as well? I mean they went postal on ma bell, industry is industry right?

  8. Re:Content by Jah-Wren+Ryel · · Score: 1

    Time Warner is also a content maker.

    No, that is a completely different company. They were spun-off in 2009.

    https://en.wikipedia.org/wiki/Time-warner_cable

    --
    When information is power, privacy is freedom.
  9. Why is this surprising? by ubrgeek · · Score: 1

    If you allow two of them to merge you've cut in half the number of corporations that can buy your vote.

    --
    Bark less. Wag more.
  10. Re:Content by Dragonslicer · · Score: 1

    Time Warner is also a content maker.

    Comcast is owned by NBC.

  11. Re: Contents by Wister285 · · Score: 1

    False. Comcast owns NBCUniversal and is definitely the established leadership.

  12. Translation: by rabbin · · Score: 1

    Translation: If you want that merger approved, you'd better pay up.