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Top US Antitrust Official Uncertain of Need For Four Wireless Carriers (reuters.com)

Posted by msmash on from the how-about-that dept.

An anonymous reader shares a report: The head of the U.S. Justice Department's antitrust division, Makan Delrahim, declined on Friday to support the Obama administration's firm backing of the need for four U.S. wireless carriers. Asked about T-Mobile's plan to buy Sprint for $26 billion, Delrahim declined to reiterate the view of President Barack Obama's enforcers, who had said that four wireless carriers were needed. Instead, Delrahim told reporters, "I don't think there's any magical number that I'm smart enough to glean." He also said the department would look at the companies' arguments that the proposed merger was needed for them to build the next generation of wireless, referred to as 5G, but that they had to prove their case.

4 of 123 comments (clear)

  1. Four isn't nearly enough by Areyoukiddingme · · Score: 5, Interesting

    Four isn't nearly enough.

    Fonseca, Miguel A., and Hans-Theo Normann. "Explicit vs. tacit collusion—The impact of communication in oligopoly experiments." European Economic Review 56, no. 8 (2012): 1759-1772.

    The money quote from the paper: "...the n=4 oligopolies exhibited the highest frequency of explicit cartels...".

    I completely believe that Makan Delrahim isn't smart enough to know how many competitors are required before a functional market emerges, but plenty of other people are smart enough. Funnily enough, the problem has been studied.

  2. Re:Technically Correct - The Best Kind of Correct by Anonymous Coward · · Score: 3, Interesting

    That will result in one carrier, sky-high prices, terrible service, and barriers-to-entry that prevent any competitors from entering the market.

    Have you learned nothing from history?

  3. Re:Technically Correct - The Best Kind of Correct by ShanghaiBill · · Score: 3, Interesting

    How about we let the market decide, and not the government, mmkay?

    Because the wireless business requires a lot of infrastructure, has network effects, and has huge barriers to entry. Free of regulation, it will coalesce into a single monopoly provider.

    But 4 isn't necessarily better than 3. Currently we have two strong companies (Verizon and AT&T) and two weak (T-Mobile and Sprint). Competition may be better with three strong companies.

  4. Re:Technically Correct - The Best Kind of Correct by Anonymous Coward · · Score: 3, Interesting

    Or if the two smaller can't compete, maybe the two bigger ones need to be split up.