So apparently AT&T is looking to buy out T-Mobile. A while back I wrote that the cellphone industry was actually a good example of mergers benefiting the customer. Having four national carriers is better than having a whole bunch of regional ones with roaming fees and spottier coverage. Jack Shafer makes a similar argument in favor of the merger:
Before you start howling—”Now there will be just three wireless companies to screw me instead of four”—calm down long enough to read this July 2010 57-page report published by the Government Accountability Office. It found that a decade of industry consolidation had brought lower prices to consumers—”approximately 50 percent less than 1999 prices”—and better coverage. Also, the GAO found, consolidation provided “smoother, more uninterrupted service” in some areas and reduced roaming fees for many customers.
Plus, today’s wireless devices can do things the 2000 versions couldn’t dream of. Over the past decade, as the industry winnowed itself down through mergers and acquisitions, wireless phones became all-purpose devices, able to run thousands of applications and make speedy connections to the Internet. Many smartphones stowed in consumers’ pockets and purses are more powerful than the desktop computers of just a few years ago, making them so popular that Deloitte predicted last year that sales of smartphones in 2011 would just about equal those of desktop and laptop PCs. The appeal of fancy handsets—not underlying networks—drives competition in the wireless industry now, the GAO study states.
And yet… and yet… I still can’t bring myself to viewing it as a pretty bad idea.
Pursuant to my previous post on the matter, I’m still not opposed to mergers. Arapaho is actually getting a boost as AT&T buys out one of the regional carriers. AT&T will be able to offer better service at an equivalent price. It’ll be a win, as far as I am concerned, as AT&T customers will be have more access to the state of Arapaho and Galaxy’s customers will get to be a part of a national network. But AT&T and T-Mobile are both national networks. Two of the only four. The only two GSM carriers. If T-Mobile users wanted to be a part of AT&T’s network, by and large they can simply join AT&T. If AT&T customers want cheaper plans, they may have the option of switching to T-Mo if they’re in an applicable area.
Given the nature of the business, it’s a lot to ask for if you want more than a handful of major competitors. But for markets to work, you need choices. More than two. More than three if possible. And in this case, it is possible. T-Mobile is making money.
On the other hand, here are some reasons I might be wrong:
- While the consolidation used to be good for the nationalizing of networks, it could be good now due to spectrum scarcity. AT&T has the nation covered, but they (like Verizon and the others) will be upgrading to 4G. That, combined with more users, may mean that there isn’t really as much room for four as I would have guessed.
- The government could lean on AT&T to make some much needed changes about contracts and phone carriage agreements that could be for the betterment of the industry.
- Though pretty much everybody is saying that this dooms Sprint, they could end up a winner in all this. They’d be the only national discount carrier standing. If they can get out from under their customer service reputation, it could me three major carriers rather than two major, one B-minor, and one C-minor national carriers, which is what we have now.
- It gives me another reason to hate Apple and the iPhone.