Don't Expect US Approval of Huge Telecom Mergers

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."

Comments

What competitive market forces

[Anonymous Coward]

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

Re:What competitive market forces

[Anonymous Coward]

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

Re:What competitive market forces

[CanHasDIY]

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

Re:What competitive market forces

[Bill Dimm]

Verizon Wireless has a 41% profit margin

Re:What competitive market forces

[game kid]

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

Re:What competitive market forces

[tlhIngan]

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.

Re: What competitive market forces

[icebike]

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.

This is nothing a few big campaign donations...

[Nova Express]

...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...

Too bad....

[Rick Zeman]

....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?

Re:Too bad....

[linearz69]

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.

Time Warner and Comcast are NOT Competitors

[zbobet2012]

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

Let them merge but regulate their rates

[JoeyRox]

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.