My guess is that Boehner will announce a bill to "defund" it shortly. That seems to be their favorite way to control the executive currently.
As a very happy T-Mobile customer, I nearly punched my monitor when I saw the announcement that it was going to be consumed by the Death Star. I did not have faith that the justice department had the cajoles or the honesty to actually try and stop it. I still have little faith that the government will be able to stop it, given that Congress has dropped all pretense of being anything other than available to the highest bidder.
Your post is too partisan and too cynical. This was a good day, and the system worked.
Of course Congress will hold hearings and some will complain loudly-- it is a controversial and major decision-- but there is no mechanism for Congress to overturn this action...it is up to the courts, the law, and the economists, as designed.
I'm honestly interested into why you consider yourself a very happy T-Mobile customer. I'm in DC and have T-Mobile and they are god awful. Dropped calls, reception in my studio's living room but not in the kitchen, 3+ hours downtime after earthquake. Obviously the only thing they have going on for them is their low prices.
Anecdotally, there are lots of very happy T-Mobile customers (I'm one of them in Minneapolis). I love their prices, service, and what they allow me to do with my phone (in comparison with other carriers). I was also very unhappy with the potential merger with AT&T and have a long, negative past with them that included me filing complaints with the MN Attorney General and the Better Business Bureau. I've sworn never to go back to them again, and if T-Mobile is consumed by them, I'll have to go to Sprint or Verizon, both of which are much more expensive than T-Mobile is now.
If the acquisition moves forward, it definitely has a significant impact on the level of competition in the mobile market.
Since you asked, I live in Chicago and coverage is wonderful here: very few dropped calls and great 3g service. When I leave town, admittedly, it gets more spotty. Coverage is a YMMV thing with any carrier.
T-Mobile also has great customer support and serves my unlocked Nexus S without a contract and with free tethering, something I'm sure AT&T will refuse to do.
PS: I used to have AT&T (actually cingular back then). Service in Chicago was atrocious. Any phone call over a few minutes would drop at least once, I'd have to stand in the window of my apartment to make phone calls, etc. Once again, YMMV.
In DC, all the services were down for about that long.
T-Mobile's coverage in DC is indeed quite spotty: at GMU where I work it's quite good. But at my home in Alexandria, it's far from hot.
But for me, there is one reason I use T-Mobile. The Nexus S. An unlocked, no-provider-junk, Google-updated phone which is updated 6 months before other phones and which has 3G support in Europe. [The last bit knocks out AT&T and Sprint's version of the phone, and it's a big deal for me]. Just wish T-Mobile would permit UMA on the phone.
The biggest reason I like t-mobile is the wifi hotspot; no matter how spotty their coverage is in an area, if you have wifi coverage, you have t-mobile coverage. At my parents' place in the mountains near aspen, or my girlfriend's mom's place in the desert outside sedona, there is no cell phone coverage by any provider, but as long as I have wifi, I can make calls. It goes a long way towards making up for their smaller network.
I'm in the DC suburbs and am happy with T-Mobile. At my house Verizon has NO signal at all. So clearly it's a location-dependent issue.
Carrier diversity does have its advantages in other ways. I was in NYC during the earthquake and had no problems with text or data immediately afterwards, even took an incoming voice call. Everyone around me with iPhones on AT&T or Verizon couldn't do a thing.
Im in Chicago with T-mobile. Crazy HSPA speeds, no dropped calls, and cheaper than AT&T. Just the thought of being forced to endure AT&T would send me off to Verizon.
Not to mention, having only one GSM carrier in the US is stupid.
I was with T-Mobile from 2003-2009 and have been with AT&T since, and the biggest reasons I gave in to switching over were the iPhone, T-Mobile's spotty coverage and the fact that a large portion of my friends(and girlfriend) were on AT&T.
I had a great deal while on T-Mobile and it was very hard to quit them. Personally, I believe that competition equals innovation which is better for consumers, and we need more of it. The situation for mobile service is quite sad here in the States with the collusion of the big two(not counting T-Mobile and Sprint, I suppose) on pricing and such, and having AT&T get even bigger wouldn't help the situation.
I was with Att before it became Cingular, and stayed with them through the transition back to being called Att. I lost plan features (device replacement insurance, competitive sms rates, etc.) and suffered rate increases both times the company restructured.
My company offers iPhones, so I really only keep a non-business cell for sms and an occasional call. So far, T-mobile has been great for that (in Houston), and I am confident my monthly price would increase - perhaps even double - under Att.
3+ hours seems like a very short time. Everyone nukes the tower trying to call after a disaster, not to mention there might have been actual damage to their equipment.
Reception has been somewhat poorer since I switched from AT&T, but price and customer service and much, much better. In particular I appreciate being off contract.
Here in Denver they're pretty good. There is a bad spot in Downtown (that I used to live in), but other than that one block... it was great. I was about to switch back (I had moved to Verizon for other reasons) until they announced the merger.
In my personal experience they have the best customer service I have experienced with a cell carrier. THAT is why I stick with T-Mobile, they have earned it due to the way they treat me.
well the fact of the matter is that it is typically going to be business as usual, because of the fact that AT&T and T-Mobile are both businesses even if you have crummy service or really good service it shouldn't change anything, if your on a good plan then it is going to be ATT's obligation to honor that as a "grandfathered" plan so therefore, this is not as bad as you would think
The DOJ may be using its leverage to get better concessions out of AT&T. Basically, because AT&T set such a big cancellation fee for itself, the DOJ can bargain up to just less than that amount. It's saying, "shape up or we'll seriously make you eat that $7 billion fee!" I actually think the huge cancellation fee means the deal is more likely to happen because AT&T will tolerate a lot of regulatory arm twisting before walking away.
Exactly what AT&T will need to do I'm not sure. AT&T will probably be forced to sell any T-Mobile operations that overlap with AT&T's existing service just like in the Verizon-Alltel merger a couple years ago. Presumably this will be to small regional carriers so choice is preserved for people in those areas. AT&T will probably need to agree to some kind of consumer price protection at the very least to keep AT&T prices at current levels or lower for a number of years and protect existing T-Mobile customer contracts. AT&T might also have to sell or spin off its TV and home internet operations. The issue of ridiculous text messaging fees might come up, but nothing will be done about them.
I hope not. The concessions from the SBC-ATT merger five years ago dried up pretty quickly, but the lack of choice in local DSL providers is as fresh as the day the papers were signed.
The deal may get blocked, but your argument and thinking are completely wrong.
Just like in any criminal or civil trial in the United States both sides can settle and the plaintiff (i.e. the DOJ) can drop the suit. Once the plaintiff drops the suit the trial is done. The judge and court are immediately removed from the equation.
Also, the DOJ just filed the suit. A lot of preparation needs to happen before a judge even decides if the court will hear the case. Much less actually go to trial and reach a decision.
While the trial moves forward AT&T will desperately try to reach a settlement with the DOJ to get them to drop the suit. Taking a case all the way to a judge or jury decision is the least desirable for both sides. It costs way more in legal fees, mountains more at this level, and the trial could drag on for months or years. Then there is the appeals process. Horrifyingly expensive and time consuming and in the end AT&T could still end up losing.
The DOJ has AT&T by the balls so if it wants something there's a good chance AT&T will agree to it now that the suit is in motion. And the only reason the DOJ got AT&T in this position is because it initiated this lawsuit. Without the lawsuit the DOJ had zero leverage. AT&T has enough skin in the game it might try to fight to the end, but it could be almost as bad as giving up and paying the fee if it won and twice as bad if it ended up losing.
What is interesting is that AT&T is saying the DOJ didn't ask for concessions before filing the suit. Or maybe it did and AT&T didn't think the negotiations were going this badly. Either way, the DOJ probably wants more than it thought it would get with or without more leverage.
There are at least a few problems with that happening from what I'm aware.
1) That would require Verizon's cooperation and it isn't the company under scrutiny. For all Verizon cares AT&T's merger can fail and those guys can get stuffed with the breakup bill.
2) Verizon and AT&T use almost completely different LTE frequencies. Although they are both in the 700mhz band, they have separate subsets between 700mhz and 800mhz that don't overlap much.
3) Verizon and AT&T currently only use LTE for data. Voice is still carried over the existing 3G network until some future date. Even then, whose network would these hybrid phones be designed to fall back on in the absence of LTE? All the hardware to support multiple network standards isn't free in terms of financial cost or design constraints.
4) If the US government really wanted spectrum to be shared in this way it would have enforced it when it freed up the 700mhz spectrum a few years ago instead of auctioning bits of it off to individual companies for virtually exclusive use.
Absolutely. Device portability would add real competition to the market, but in reality, AT&T would never agree to that because their whole rationale for the merger is to reduce competition (per the leaked memo).
Verizon would also take major issue with this and most likely not allow any such AT&T devices on their network... and if VZW did certify a device, they would only permit the most crippled hardware from AT&T on their network.
True competition between the two telco giants is an exciting proposition though, hopefully this is eventually accomplished. Just look at what it did to the long-distance market: http://video.wttw.com/video/1949293907/ (this is a PBS documentary on MCI breaking up AT&T premiering this weekend--good timing!)
If there has ever been an obvious need to prevent a merger it's this one. I really hope that common sense outweighs AT&T's ability to purchase bureaucrats this time.
“AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market,” the U.S. said in its filing.
That is an obvious need. There's too little real competition in the wireless space as it is. We don't need to be down to a single nationwide GSM provider.
Cricket's apparently smaller than US Cellular and MetroPCS, neither of whom I even knew existed anymore.
Boost is an MVNO. I'm not sure if they really count in this discussion since they don't own their own network. They're really at the mercy of whomever they lease their capacity from.
I feel like this is kind of like making a case against the DOJ/Microsoft lawsuit in the late 90s by saying, 'it's ok if Apple exits the computer market, because there are still competitors out there like Amiga and Compaq.'
They just resell Sprint and Verizon service with shittier phones. A reseller isn't really competition. Spring and Verizon can shut them down whenever they please.
Your argument doesn't fly - in the link you claim that wireless service is expensive because we're building multiple redundant networks when we really only need one.
It's a nice theory that works on paper, but doesn't stand up to scrutiny outside of the USA, where people do have incredibly affordable (and quality) cell service in an environment with many players.
Beefman's argument is of the "who you gonna believe me or your own eyes" variety supplemented by an appeal to authority via some link. It's not just an argument I disagree with but an unfortunate style of argument.
Meanwhile, the size of the U.S. may be a red herring. Most of the region between Boston and Washington is as densely populated as most of Europe and the UK. So is the California coast between San Francisco and San Diego. And so is the region of the Midwest centered on Chicago. Those areas are home to about a quarter of all Americans. In other words, we live in a big country, but a lot of it is relatively empty space.
Loop unbundling is perfectly consistent with my argument, and indeed, the FCC enacted a loop unbundling rule this past April.
The article makes several other oversights. First, the big US carriers do not have regional pricing, and so the population density of the entire country is relevant.
Second, it neglects to mention that CDMA deployment was forbidden by law in many EU countries.
Finally, it neglects to mention that NIMBYism is a major driver of cellular network cost in the US, and differences in the legal climate around tower deployment can account for large differences in costs.
How many European operators have regional pricing? There is certainly no regional pricing in Norway, where half the population lives in about 15% of the land area and the rest is pretty much empty space (a lot of empty space)
Norway (pop density 12.5), Sweden (20.6) & Finland (16), all have better wireless service and are all much less densely populated than the US (pop density 33.7).
When I joined, downvoting was not used as much, and wasn't used to show disagreement (and this was considered good reddiquette for a long time). The community here has changed a lot though, and I sincerely do feel new and want to learn how to best contribute.
There can be little "real competition" in wireless space given that every player in wireless space competes using a government-granted monopoly on the spectrum they're using.
Now, the government has (at least implicitly) chosen to attain a degree of price rationality through creating artificial competition in the wireless market via allowing multiple carriers to operate in single area. Whatever the pluses or minuses of this approach, lets not pretend that the Att merger would involve things attaining the "natural" condition of the wireless market - such a beast ipso facto doesn't exist given the whole arrangement is artificial (created hypothetically for "society's benefit" - which would normally presume is the consumer's benefit).
You are on purpose making a weak contrarian post when it is obvious that there are strong feelings in this thread. You then immediately start complaining when people react against it. Feels a little trolish.
I came here to have a discussion about wireless infrastructure policy. I didn't know I'd be downvoted for disagreeing with "strong feelings", but I did begin by asking a sincere question and tried to maintain a non-confrontational tone.
Your current posts are being downvoted because you're complaining about downvoting.
Your original post, i.e. "What is this obvious need?" is (IMHO correctly) perceived as a leading question. You want to make a point, but you're asking a disingenuous question instead. You're leading the other poster so you can tear him a new one - as evidenced by the fact that you seem to have a lot of stuff to say about this topic.
As a rule I (and much of HN, apparently) dislike questions that aren't genuine. Feigned ignorance as an argumentative crutch is pretty lame.
If you have a point, make it, this isn't some juvenile youth parliament or model UN, there are no victories here.
I wasn't asking a leading question. Nor am I being snarky, sarcastic, or disingenuous, despite that several responses here have been quite rude. Again, I came here to discuss infrastructure policy, not be embroiled in some kind of power struggle. If you read the entire thread, you'll see very immature behavior on the part of commenters here, as well as very pretentious canned one-liners like "looks good on paper but" from people who obviously have no idea what they're talking about.
Nor have I complained about being downvoted, though it does seem obvious that some moderators here are totally high on power.
Making posts to inquire about why one got downvoted seem to throw fuel on the fire, resulting in yet more downvotes. At least, this is what I've observed time and time again here.
The obvious need in my mind is that if we get down to a single national GSM provider, a lot of people are going to be stuck. The only alternative for T-Mo customers that don't want to use AT&T would be to sell their phone and get a new CDMA phone. The concern for me is mainly over a complete monopoly on national GSM; a duopoly is bad enough.
T-Mobile would clean up on this deal if the US Government succeeds. Look at that breakup fee: $3 billion in cash and another $4 billion in non-monetary benefits.
Included in the "non-monetary benefits", T-Mobile would receive access to certain AT&T spectrum (it actually reads as if AT&T would simply have to hand it over)...
This shared spectrum is something that has been sorely lacking in the U.S. and has been terrible for the consumer -- government granted monopolies are auctioned off to single companies and most devices will only work in a single company's spectrum band, however, if the spectrum T-Mobile gets is in the LTE band, this would have a significant positive impact on their service quality.
I thought it was a sliding scale. It links to the amount of divesture required of AT&T. At some point, the breakup fee goes to naught. (source: I thought I heard this on CNBC this morning ... don't see any articles online that confirm this. Maybe I was dreaming?)
I'm not happy with the prospect of this merger, but I honestly don't understand why spectrum matters here. If all 4 companies used the same spectrum, would you then be OK with it?
There is a strong incentive for me to use a GSM phone over a CDMA phone because the former works in the majority of the rest of the world. So if all the GSM phones sold in the States were sold by AT&T, it is likely that I would be getting a worse deal then I would otherwise.
It's just one way in which AT&T and Verizon do not sell directly substitutable goods.
Yes. The carriers currently certify and subsidize devices for their network that are designed to work only on the spectrum that they own. This creates customer lock-in because (i) devices are expensive and (ii) if you want a subsidy, you sign a two year agreement.
Another reason is that (iii) available spectrum in finite. If a single device could work with all four carriers on the same shared spectrum, then they would need to compete for your business on price and customer service quality. When each carrier has spectrum independent of the others, they also compete on who owns rights to the best spectrum band, who has the best infrastructure built-out and who has the best devices.
Spectrum is a sparse and valuable asset that isn't easy to acquire control of - you generally never want one company in complete control of such assets, especially when it can be used for anti-competitive means. I believe having ATT control all GSM spectrum (control is loosely equivalent to 'own' here -- technically ATT doesn't 'own' it but for all practical purposes it does) would be disastrous if other wish to acquire/use spectrum for services related to what ATT offers.
True. And I'd agree that GSM is probably more valuable than CDMA as it is what most of the rest of the world uses, as has been pointed out too. Thanks for that.
I wonder now if people would be equally as upset by a Verizon/Sprint merger as it would effectively reduce the CDMA ownership to one company in the same way.
This is great news. I'm a happy T-Mobile customer and I've had bad experiences with AT&T and its predecessor, BellSouth, in the past. I don't want to be forced into AT&T.
Question: What can we do to support the government's efforts? Write our congressmen? Write the DoJ?
I love my T-Mobile plan, the customer service, the T-Mobile store down the street from my work, I love the whole company, and I hate the thought of all of that disappearing down AT&T's gaping black hole of a company. I really hope this deal doesn't go through, I'd love to be able to stick with T-Mobile for another 10 years or more.
Same sentiments here. So glad they are fighting this. I really don't want to send my monthly payments to AT&T. After being screwed over by them so many times, T-Mobile really is a breath of fresh air.
I love T-Mobile too. The coverage may be spotty at times, but for $50 I get unlimited everything with no contract requirement. Nobody else offers that, and I'm confident that if the merger happens, nobody else ever will. Add to that their amazing customer service (at least in my experience) and I'd be really sad to see them be consumed by the evil that is AT&T.
From the article:
"Should regulators reject the transaction, AT&T would pay Deutsche Telekom $3 billion in cash. It would also provide T-Mobile with wireless spectrum in some regions and reduced charges for calls into AT&T’s network, for a total package valued at as much as $7 billion, Deutsche Telekom said this month."
I don't get it, I thought this would happen if the deal went through. What is this $7 bn package in the event that the deal is blocked?
How did AT&T not expect there to be a potential violation of anti-trust law? That's the first thing I was wondering when I even heard about this merger. Agreeing to a breakup fee without an exception clause for government intervention in this case is the most ridiculous thing I've ever heard.
They were hoping to BS their way through congress. The thing is, cell phone vendors are personal, tangible aspects of people's lives. People typically* have much stronger feelings about their cell vendors than they do economic, foreign, or gasp copyright policy.
* Not that I know, I'm pulling this out of my ass, but it sounds good. Possibly even correct.
That's because neither are cell phone carriers. As long as people feel like they can jump to another service to watch their precious American Reality Dancing Survivor Fear Idol (say by ditching the wires and going satellite or vice versa), then they don't too much care about cable and entertainment companies.
Now, if NBC suddenly stopped making its programming available to anyone except Comcast cable subscribers, you'd start seeing public backlash. Until it happens, people can't fathom or choose not to acknowledge something like that happening.
> "Now, if NBC suddenly stopped making its programming available to anyone except Comcast cable subscribers"
Comcast is already playing games with NBC-competing networks in direct violation of the terms they agreed to, when the merger was rubber-stamped. (e.g. The Bloomberg TV/CNBC channel kerfuffle)
Also, most Americans have more freedom to choose a competing cell service provider than a competing cable provider. If a choice between two-to-three viable options is sufficient for them to not care about cable, why would they care about cell service being reduced to two-to-three viable options?
Also, everyone knows someone who has strong feelings against AT&T, even regulators and legislators probably have at least one friend or family member who has been screwed over by them.
AT&T is trying to paint themselves as a struggling underdog in the cut-throat and 'highly competitive' American telecom market. If you read some of the documents they've put forward you'd think they're about to go bankrupt. I wish I lived in this fictional market, maybe then there would be contractless plans and one phone line wouldn't be a ridiculous $70 a month.
It's possible that they expected the massive breakup fee to have an effect on the regulators in a way that a smaller one wouldn't. Just imagine the teary-eyed AT&T executive testifying in front of the TV cameras about how the evil government is forcing them to give $7G to a competitor.
Well, when was the last time a telecom merger got blocked?
Heck, AT&T itself has already reconstituted half of the companies created after it was broken up in the 80s (SBC, Bellsouth, Ameritech, etc). And look at what Verizon's been able to get away with.
Great question! It is for the same reason that Google agreed to a really high breakup fee with motorola. It signals its willingness to fight the lawsuit up to the cost of the breakup at the least. Therefore it signals to regulators that they won't be a pushover.
That means a lot to agencies that are severely underfunded. They would rather not even start something that will last half a decade or more, like the msft case
It's a common example in game theory of how agreeing to ridiculous terms benefits the agent
AT&T is confident enough that they agreed to a breakup fee that is roughly 7.5% of total purchase price -- this is more than double the typical 3% breakup fee on M&A deals.
Think about it this way: the way things happened with the breakup fee, they could spend USD3b paying off Congress to make this happen and still come out ahead.
The breakup fee may be what T-Mobile was looking for all along since Deutsche Telekom AG has said it's not willing to invest more in the venture. $3 billion isn't chump change and I'm sure they'll take full advantage of those agreements (e.g. spectrum rights, etc) should the deal fall through.
In 2000, the DOJ sued to block what would've been the largest merger in American history if it had gone through, a ~$120b combination of Sprint and WorldCom.
Thanks. I couldn't find a list of the largest blocked mergers, just of the largest successful ones (topped by AOL/TimeWarner). Pretty amazing how many of the large mergers turned out. WorldCom tanked two years later, so that would have been another combined failure.
I wonder if this gloriously epic lawyer-fail had anything to do with the DOJ's call? http://bit.ly/oGKw2x [Leaked AT&T Letter Demolishes Case For T-Mobile Merger]
The extraordinary high breakup fee is important here, and it's there despite the many reasons we and the DOJ itself are citing.
It seems that they breach everything - it;s a terrible deal for consumers.
So why are AT&T and their investment bankers pushing so hard for this deal? There is certainly an agency cost - the execs at AT&T want to do a deal and run a bigger company, and their lawyers and bankers want the deal to go ahead so they van get paid. However T-Mobile has to spend money on lawyers and bankers as well, and so some of that breakup fee will be used to pay them, as well as T-Mobile itself.
AT&T were banking on a compliant DOJ, and to be fair over the last decade there was very little push-back from any of the regulators. Since the GFC we would hope that they look over business dealing a bit more firmly, and this seems to be the case.
In Australia, NZ and the UK there is a Commerce Commission or Monopoles Regulator that can just say no to deals like this. It's sad that the DOJ has to do so via an expensive lawsuit. Your taxes at work.
A lot of good points, but one I didn't see is what will T-mobile do if the deal falls through?
$7bn IS chump change compared to what T and VZ spend annually on infrastructure.
Unless DT wants to step up their game, T-mob will muddle along as #3 or #4 until a merger with someone goes through.
And if the DOJ blocks T, they'll (probably) VZ, which leaves Sprint. Good luck with that...
Yes! I'm glad to see the government is taking a stance against it. Cell phone bills are expensive enough, I could only imagine what this merger would have done to them. I just pray they hold strong. This could be a really good thing for Tmob. Could seriously help level the playing field.
T-Mobile has horrible service and horrible data plans. I'm sick of them and wish they would get sucked into the black hole that is ATT. Where I still will have horrible service and bad data plans.
I'm trying to understand why comments on Hacker News and Reddit are so uniformly against this merger. Is it because T-mobile has better customer service than AT&T (and most other carriers), and people are upset this will probably be lost?
When T-mobile came to the US, I was under the (perhaps incorrect) impression that they licensed their towers from AT&T (then Cingular). But my impression is that they, by now, have their own towers which will extend AT&T's network. Surely folks realize that mergers are badly needed in the wireless industry - that they are the solution to many of most onerous problems with wireless service today - and that artificially dividing infrastructure, as the FCC did, is tremendously wasteful.
> they are the solution to many of most onerous problems with wireless service today
We disagree with what is the most onerous problem with wireless service today. The most onerous problem with wireless service today is carriers promising things that they can't deliver, then finding ways to up-charge their customers for features that were originally promised.
> The most onerous problem with wireless service today is carriers promising things that they can't deliver, then finding ways to up-charge their customers for features that were originally promised.
In my opinion these are symptoms of the REAL problem: telecos overcommit to investment in wireless infrastructure, then under-deliver every single time. Afterwards, they use non-sequiturs (iPhone customers keep us from investing! or we want to roll out 4G!) for what is obviously bean-maximizing behavior.
Funny that the CWA touts that the deal "will create" 96,000 jobs, not mentioning that that number is the high side estimate resulting from a promise by AT&T to invest $8B in infrastructure. I'll leave it as an exercise for the reader to estimate how much of that would become reality.
In part: because the U.S. cell ecosystem has severe problems, and eliminating an independent competitor (particularly on GSM) sets us back rather than moving us towards an affordable, sane wireless economy.
I think you have it backwards. What would happen if car companies also owned the roads, and each brand of car could only be driven on the corresponding roads?
There are obvious disanalogies, but if the options are between several competing companies with their own roads and cars, and having only one or two companies that collectively control all the roads and all the cars, the former is still better.
At the moment, those are the options on the table -- throwing our mobile infrtastructure out and starting over with a clean slate is not something practically achievable.
> if the options are between several competing companies with their own roads and cars, and having only one or two companies that collectively control all the roads and all the cars, the former is still better
No, it isn't. It's why infrastructure is usually owned by government, or given protected monopoly status. Where infrastructure is defined as anything too expensive to build redundantly (starting with the military and its natural monopoly, which we call government).
Your wireless coverage is not affordable because you are paying to build 75% of each of three redundant mobile phone networks. Independent networks would never exist in a free market - only the FCC licensing process brought them about. And despite that, the vacuum is so strong it produced several mergers so far (Cingular + ATT, Sprint + Nextel, and of course, the remerger of the bells into Verizon and SBC/ATT).
But wireless infrastructure is not owned by the government or companies with protected monopolies. Until they do, blocking this merger is the best course.
Taking the infrastructure into government control is political suicide, no one is going to do it. I'm not interested in giving a protected monopoly without a stronger interpretation of anti-trust law similar to United States v. Paramount Pictures, Inc.
Specifically, a company with a natural monopoly on distribution (wireless, cable, POTS, or fiber telecom companies) should not be able to operate or have exclusivity deals with companies in production or exhibition markets. No Sprint only phones and no Comcast owned television channels, or I'll do everything in my power to at least make sure they have plenty of healthy competitors who can keep them in check, even if it means I pay a premium.
Where I live (Australia) we have 3 independent and redundant wireless networks (Telstra, Optus & Vodaphone). Each has their own infrastructure. The case is even more extreme in Africa, where there are huge numbers of small cellular carriers with redundant infrastructure.
During the early 90's many telecom companies either had protected monopoly status or were government owned. Neither worked well, because disruptive technology meant that they were undercut in price by newer competitors which were also able to offer new, innovative services that the incumbents could not - or would not - match.
Cellular network infrastructure isn't like roads, pipes or train tracks where you build it and then maintain it forever. It requires constant investment in new technology, and it isn't at all clear to me that government ownership of protected monopoly status would be beneficial to the consumer.
I'm not following your logic. I see your point that AT&T can absorb T-Mobile's existing infrastructure and thus provide wider coverage to their customers. What I don't follow is how a single provider will result in said provider putting more resources into infrastructure enhancement and lower prices. Please explain how.
The problem is, as an AT&T customer (a company I loathe BTW... in another tab I'm about to pay a $450 bill from them) I cannot use a Verizon tower. (There has been limited benefit to pursuing both the CDMA and GSM technology paths towards a wireless broadband network.) I assume I can't use a T-mobile tower either (there ought to be a Coase equilibrium between GSM carriers, but it would involve billing costs that a true merger could avoid). Thus, I have to pay AT&T, and you T-mobile, for coverage in the same area.
Now, coverage in some highly-populated areas is bandwidth-limited. In other words, there are often enough customers of each carrier in a place to saturate the corresponding antennas. But any time the T-mobile antenna is not saturated and the AT&T antenna is over capacity, there is waste. This waste shows up on both our bills (forgive me for assuming you're a T-mobile customer for the sake of argument).
Obviously, competition is a good thing, but its benefits are easily overwhelmed by infrastructure costs. Electric utilities generally operate very efficiently with government-sanctioned monopolies (and subsidies). The trading requirements enacted in the late '90s to promote "competition" on the grid are widely considered to have failed to improve utility service, and are implicated in things like the 2001 California energy crisis. Since colonial times, the Crown granted molopolies for expensive things like colonizing India...
You're completely ignoring that in many rural areas, there are only one or two providers. When I visit my parents in rural northeast Ohio, there are only AT&T and Alltel (now Verizon) towers. My T-mobile phone roams (free to me) on the AT&T towers and works just fine. The companies can work out roam-exchange agreements among themselves that allow for sharing of infrastructure.
> they are the solution to many of most onerous problems with wireless service today
As far as I can tell, the most onerous problems with wireless service today are terrible customer service, high prices, ridiculous contracts, telco-limited innovation, and jerking customers around through pricing that ratchets ever more in favor of the vendor.
All of those are symptoms of insufficient competition, something a merger will make worse.
I'm not looking to debate this at all, but I'm not sure how program designed to prevent the insolvency of a major portion of US assets and the anti-competitive practices of one company are related or why you're singling out Republicans in both your metaphor or in relation to AT&T.
He's referring to bribes. Typically with Republicans you buy a few of the important ones and the rest fall in line pretty quickly, however with Democrats you have to buy each one individually but generally at a cheaper price. Admittedly it is hard to say which way is more expensive on the whole, but there is something more admirable about a whore who plies his or her own trade, than a pack of them where the only one with any sense at all is the one in charge.
I don't understand this at all. There's no direct bribing because of the ramifications, but there is a lot of post-office job offer and campaign contribution gamesmanship, as everyone recognizes. However, I'm not sure where you're drawing your data from. Could you enlighten me? My anecdotal perception is that the "required" donations operate largely the same between parties. As per data compiled by the reputable OpenSecrets, of the top contributing organizations from 1989-2010, most of them donate strongly to Democratic candidates (this I assume would be the amounts used to "bribe" politicians).[1] Regardless of this fact, I still don't see an analogy between a flip-flop vote (I don't know the vote numbers, so that phrasing might not be true) on TARP by the Republicans (while I don't know numbers, as I recall, the Democrats also voted heavily against a "bailout" package before voting for it) and the way that AT&T might use political clout to push through this merger.
EDIT: Interesting to note, however, that AT&T is third on the list of all time donors and on the fence for Dem/Rep support. If the justice department wasn't full of appointments or hires as opposed to elected officials, this could strongly weaken the likely outcome of this suit. In any case, will be interesting to note the effect in upcoming elections that this has on AT&T's donation patterns.
Eh, theres always Verizon. AT&T cant get out of its own way anyway. If the govet wanted to block something, they should have stopped Google from buying youtube...
Why?
Are you aware that the only reason for Youtube's success the infrastructure of Google is?
This is also the only reason why there is no real competitor.
YouTube was tiny in comparison when Google bought them. They did an admirable job scaling to where they did, but it wasn't easy and it was still jut the beginning. They served ~100M videos a day and today serve over 3B videos a day (many in HD, which wasn't supported in 2006, the videos then were much lower quality). The amount of incoming video has also grown exponentially.
The YouTube we know today is because of Google and their technical chops.
OK, but the only reason (as per the post I was responding to originally)?
Those ~100M videos a day were about 99M (I'm guessing here) more than Google Video was doing at the time.
I believe you that Google's technical prowess was a necessary condition to get YouTube to where they are today, but I find it hard to believe that YouTube did nothing whatsoever to warrant becoming the original name brand of web video in the first place.
I'm a happy T-mobile customer, and I hate AT&T, but IMHO the government has no business blocking this deal. Maybe the law allows it to block on nebulous competition grounds, but if it does then the law is an ass.
Business should be allowed to screw over customers as they see fit, customers can and must be allowed to walk away. And I can still walk away to join Sprint/Verizon.
Yes, neither of these companies may be offering me the best deal possible, but unless they are colluding, the government should not be involved.
... and what of the fact that there will be one fewer major carrier and the cost of entry is significantly higher? Do you even have any idea how much it costs to start operating as a cell carrier, or how impractical it is in most regions, due to the lack of space to build new towers?
Blocking this deal makes sense, unless you truly believe that businesses should be allowed to screw over customers AND remove any choices they may have for competing products. Do you really want to defend a monopoly?
> Business should be allowed to screw over customers as they see fit, customers can and must be allowed to walk away. And I can still walk away to join Sprint/Verizon.
And when AT&T eats Sprint/Verizon?
I guess it's technically not a monopoly if one giant controls five nines of the market.
If you count GSM phones as a market, which anyone who does international travel would, then the deal would reduce the number of companies in the U.S. market from 2 to 1.
> Yes, neither of these companies may be offering me the best deal possible, but unless they are colluding, the government should not be involved.
It's interesting that you make a dichotomy between collusion - in which you think the government should intervene - and mergers - in which you think the government shouldn't intervene. What is the difference?
If you are such a free market proponent, why should the government intervene in collusion? Doesn't a merger just codify any such collusion?
I definitely understand the resistance to this merger, especially on Dan Hesse's part, but lets step back and think about what a "big two" would look like (Don't we live in a free-market?). A Verizon, AT&T dominated market is still going to drive innovation and maybe even more important an AT&T merger with T-Mobile will help to improve the quality of their service for their customers. As an AT&T customer myself, I'm all for it. One thing I know for sure; $7 Billion in failure is going to drive AT&T to do what it takes to make this happen ($3 billion breakup fee in cash an additional $3 to $4 billion in spectrum and services).
A Verizon, AT&T dominated market is still going to drive innovation and maybe even more important an AT&T merger with T-Mobile will help to improve the quality of their service for their customers.
You can't just trot out sentences straight from AT&T's playbook without expecting pushback, so please include supporting concepts for your bald-faced assertion that a merger will drive innovation and improve QoS. This is a serious question.
Also, can you name any similar (major market and/or market-reducing mergers) that have resulted in the benefits you describe? Ever?
Last serious question for Mr. New Account: do you work for AT&T, any of its subsidiaries, or vendors (including PR)?
> A Verizon, AT&T dominated market is still going to drive innovation
Why? Why wouldn't they just stop with "You take your half of the market, we'll take our half, and we'll push through a 5% price increase every year for more or less the same services."?
It works for the cable industry, and I can't see any reason that wireless players wouldn't be delighted with this approach. Heck, with only two real players, they might even be able to gang up on Apple and demand a larger share of the iPhone profits in the future and start forcing carrierware onto the iPhone, as with Android.
Exactly. We basically have a Verizon & AT&T dominated market now, with T-Mobile and Sprint being nothing more than an afterthought; I think Sprint more-so that Tmo, but I digress.
AT&T as put off putting up new towers to keep up with use for years. Ask New York iPhone users how well that's working out for them. Meanwhile, TMO decided to get serious in the US wireless game and has been spending a lot of money building out their next-gen network while at the same time reducing the prices of their plans (or at least giving you more for the same money). VZW seems to be the only other provider serious about rolling out a 4G network, and to my admittedly limited knowledge, ATT hasn't done anything in that regard, besides try to buy the network off TMO.
Why would you possibly think anything would be different if they suddenly became the #1 provider? Based on their past actions, what would happen is they would drop all of TMO's low price contract-less all-you-can-eat plans and most likely stop the 4G rollout and just rest on what's already built. I wouldn't be surprised to see some price bumps or at the very least airtime/data reductions in there either.
What have you seen that makes you think anything else would happen?
No, we do not, and certainly not like what you seem to be implying. Governments have the right and duty to step in when market actors are pursuing actions which are likely to have a deleterious effect upon the market as a whole. Dramatically decreased competition via acquisitions is one of those cases, especially in high cost-of-entry markets like wireless.
Come on now. They implement data caps at the same time, they implement higher costing texting plans at the same time. I find it hard to believe that you think a AT&T/Verizon controlled U.S. cell phone market would be good for the average U.S. citizen.
Are we pretending like the US mobile phone market drives innovation in anything but price-gouging? Most of my foreign friends' service has been strictly superior to mine for years.
There are differences. If you have a plan in California, it works in New York. But if you're in Europe, good luck getting your unlimited data from France to work in Germany.
But aren't the users who need cross-continental/cross-country service the edge case? I would gladly trade-off inferior quality on a national scale for superior quality locally.
I guess if you enjoy getting off a plane and having no way to contact anyone, find a map to your hotel, and so on, this is a good tradeoff. For me, it's a terrible tradeoff.
Dont get me wrong I love having the capability you describe, but outside of the HN community I have to believe that the greater majority of users do not travel enough to justify national plans.
http://www.politicususa.com/en/att-democracy
My guess is that Boehner will announce a bill to "defund" it shortly. That seems to be their favorite way to control the executive currently.
As a very happy T-Mobile customer, I nearly punched my monitor when I saw the announcement that it was going to be consumed by the Death Star. I did not have faith that the justice department had the cajoles or the honesty to actually try and stop it. I still have little faith that the government will be able to stop it, given that Congress has dropped all pretense of being anything other than available to the highest bidder.