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Would a T-Mobile-Sprint Merger Hurt Consumers? (dslreports.com)
Following a report from Reuters claiming T-Mobile is close to agreeing on a deal to merge with Sprint, an anonymous Slashdot reader shares a report from DSLReports arguing how such a merger would remain "a very bad deal for consumers": The Sprint-T-Mobile merger could prove problematic for not only wireless prices, but the recent resurgence in unlimited data plans. While wireless carriers still often engage in theatrical non-price competition more often than not, the government's decision to block AT&T's acquisition of T-Mobile several years ago helped spur an unprecedented period of competition in wireless (something large ISPs and their policy armies like to ignore). The end result was a brasher and more competitive T-Mobile, who lead the way on a wave of improvements in the sector culminating most recently in the return of simpler, easier unlimited data plans. The government's decision to block Sprint from acquiring T-Mobile helped keep that competition intact, something large ISPs and their policy folk would similarly like you to forget. As a result, T-Mobile has added more customers per quarter than any other wireless carrier for several years running, as the resulting competition put an end to numerous, nasty industry tactics including overcharging for international roaming, to obnoxious fees and long-term contracts. And while the new, combined company will likely still be run by current popular T-Mobile CEO John Legere, the very act of eliminating one of only four major players in the wireless market will indisputably reduce the incentive to more seriously compete on price, and could help reverse the progress the sector has seen in recent years. It's well within reason that this reduced competition could also bring back metered plans and put an end to unlimited data.Wirefly is a good place to compare cell phone plans to see the difference between Sprint and T-Mobile.
It won't *lead* to an oligopoly; it will remove one of the four oligopolists.
By reducing the number of oligopolists/increasing the concentration, the optimal price for the remaining members increases.
As a practical matter, if sprint is indeed already doomed to fail, the other three are the likely purchasers of its assets in bankruptcy--and I'd rather see it parceled out in bankruptcy then in a single deal like this.
We certainly have at least *some* evidence of the value to consumers of a fourth, smaller member of this oligopoly in tmobile's scrapping its own way back from near death a few years ago . . .
Also, this will give us some insight into the new administrations's monopoly policy--it *says* it will protect us from monopolies, antitrust enforcement has dropped from its highpoint in the Reagan administration, which bought into the Bork line that the *only* valid test was the effect on consumer welfare (instead of the prior "big is bad" which actually increased prices in widely dispersed industry), but has been watered down by each successive administration of either party. The DOJ now looks at "how much" pricing power the new entity will get, while the Bork/Reagan answer was, "if it's not zero, it's bad for the consumer."
hawk, displaced economics professor
GSM initially used TDMA - time division multiple access. Basically each phone took turns talking to the tower. This was terrible for data because each phone took a timeslice of the bandwidth regardless of how much data they had to transmit, or even if they had no data to transmit. If a tower had 50 Mbps of data bandwidth and had 50 phones connected to it, each phone only got about 0.5 Mbps (there is padding at the ends of the timeslices to account for latency due to the phone's distance from the tower and the speed of light).
CDMA (code division multiple access) phones don't use timeslices. They all transmit simultaneously and the tower tells them apart because they're using orthogonal codes. Kinda like writing horizontally and vertically on the same sheet of paper. Your letters overlap, but they're distinct (orthogonal) enough that you can still figure out what the letters are in the direction you're reading. CDMA has no problem with data because each phone sees the other phones as an increase in the noise floor. Since the data bandwidth is the signal to noise ratio, the more phones are transmitting, the higher the noise and the lower the data bandwidth for a single phone. If fewer phones are transmitting, the noise floor drops, and each phone gets more data bandwidth. So in CDMA the data bandwidth available to each phone scales automatically. If there's just one phone using data, it can use all of the tower's 50 Mbps. If there are 50 phones transmitting, each gets 1 Mbps.
CDMA completely destroyed GSM in cellular data performance. Within a year GSM threw in the towel and amended the GSM spec to add UMTS which used wideband CDMA for data. That's why GSM carriers took about a year longer than CDMA carriers to move to 3G data. That's why GSM phones could talk and use data at the same time - they had two different radios, a TDMA radio for voice, a CDMA radio for data. CDMA phones only had a single CDMA radio so couldn't do both at once.
If you'd gotten your wish and the U.S. had gone along with the rest of the world and mandated GSM, CDMA wouldn't have happened and cellular data speeds today would probably be 1-2 Mbps. We would not have LTE because most LTE implementations use OFDMA (orthogonal frequencies instead of orthogonal codes). CDMA was the proof of concept that this crazy "everyone transmits at the same time and we tell them apart by orthogonality" idea actually worked when scaled up to a nationwide cellular network. Without that proof, there would've been little incentive to develop the higher-power consumption OFDMA.
GSM vs CDMA is actually a perfect example of why market competition produces better results than government-mandated standards. (The SIM card is very cool though and I'm glad it got incorporated into LTE.) Government should not be mandating technological standards. It should stick to mandating standardized requirements, and leave it up to the market to come up with the best technologies to meet or exceed those requirements.