DOJ's Plan To Make Dish the Fourth Major Carrier Has a Fatal Flaw (arstechnica.com) 34
An anonymous reader quotes a report from Ars Technica: When the Department of Justice approved T-Mobile's purchase of Sprint, the DOJ's antitrust officials insisted that an unusual remedy could replace the competition lost in the merger. Sprint will no longer exist as a separate entity if the DOJ's plan is finalized, reducing the number of major nationwide mobile carriers from four to three. But the government agency is simultaneously requiring T-Mobile and Sprint to sell some of their assets to Dish Network in what amounts to a government attempt to micromanage the mobile industry. Dish, the government-selected replacement for Sprint, will create its own mobile service from its existing assets and spare parts the DOJ is requiring T-Mobile and Sprint to sell off. The DOJ acknowledged that T-Mobile buying Sprint "would eliminate head-to-head competition" and threaten the "lower prices and better service" created by that competition. But the department also claimed that the required divestitures will let Dish replace Sprint as a viable fourth carrier.
But will propping up Dish actually replace the lost competition? The answer in the short term is clearly no, because the merger remedies won't result in Dish building a nationwide network overnight. It will take at least a few years, and consumers will be stuck with three major carriers during that time. Even in the long run, Dish isn't likely to become a full-fledged nationwide competitor because Dish's plan only calls for covering 70 percent of the US population by June 2023. That could leave 100 million Americans without the option of a fourth carrier.
But will propping up Dish actually replace the lost competition? The answer in the short term is clearly no, because the merger remedies won't result in Dish building a nationwide network overnight. It will take at least a few years, and consumers will be stuck with three major carriers during that time. Even in the long run, Dish isn't likely to become a full-fledged nationwide competitor because Dish's plan only calls for covering 70 percent of the US population by June 2023. That could leave 100 million Americans without the option of a fourth carrier.
Incentivizing what behavior exactly? (Score:1)
Buyouts are troubling and unfortunately common in the cellular market, yet alternatives that inspire low cost competition seem to invariably crop up. Att&T bought Xfinity Mobile (Verizon Network) Unreal Mobile (AT&T Network) Mint Mobile (T-Mobile Network) Google Fi. Straight Talk Wireless. Simple Mobile. Red Pocket Mobile. Cricket Wireless.
additionally, Verizon bought out Alltel & more, and the Sprint/Tmobile group have bought out smaller competitors. It's the way market share domination attempt
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So now the establishment cabal, owns the communications cartel and corporate censorship of all communications is not only allowed but preferred by the government. What a fucking mess the USA will become.
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From a "national security" viewpoint, say if AT&T's cellular network was knocked off-line by a worm then this also takes down all their Mobile Virtual Network Opera
Fatal flaw is simpler than that. (Score:2)
Why is T-Mobile buying Sprint in the first place, and why is Sprint selling? Because T-Mobile feels it needs to scale up to be viable, and Sprint feels this is more lucrative than trying to scale up to be viable. So, given that, what possible argument can be made for a smaller and less viable network? I mean, if there were some secret ingredient involved, sure, an outlier could take a tilt at the industry, but otherwise it feels like the DOJ's argument is something along the lines of "What is happening r
Re:Fatal flaw is simpler than that. (Score:4, Insightful)
It has nothing to do with the size of the mobile networks. Shareholders of large organizations expect large organizations to continue to grow at the same percentage rate even though it becomes harder and harder to do. It's a lot easier for a $100M company to grow at 10% a year than it is a $100B company. Unfortunately many shareholders, and especially analysts, will punish a large company if it starts slowing down based on a percentage growth basis.
The easiest way for these companies to continue to grow once they get to a certain size is to buy other companies or merge with other large ones. That's why T-Mobile is buying Sprint. The executives want to keep the shareholders happy so that they can keep their jobs and bonuses. There's no other reason. Both companies are large enough to have economies of scale. There will be some duplicate work, and employees, that will be reduced but it will be because there are fewer data centres, mobile cell towers, etc, and not because people are more productive.
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Why is T-Mobile buying Sprint in the first place, and why is Sprint selling?
Doesn't T-Mobile use GSM and Sprint CDMA? If so, a merger gives them both and, in addition, I think CDMA is more prevalent in the US while GSM is elsewhere. Also a merger expands the coverage area to that of the combined providers.
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Sprint feels this is more lucrative than trying to scale up to be viable. So, given that, what possible argument can be made for a smaller and less viable network?
More lucrative? Sprint has had positive net income in only one of the past five years. The options are either T-Mobile buys them out, or pummels them into the ground though competition.
Dish, like US Cellular, could fill a profitable nice by supplying mobile access to rural areas, where competition is lacking.
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Dish, like US Cellular, could fill a profitable nice by supplying mobile access to rural areas, where competition is lacking.
How is Dish supposed to do that? The equipment cost to fill in the coverage holes in rural areas is gonna be more than Dish can afford or pay for with the number of customers that they would get in those areas.
I am frequently in rural areas with no coverage from any mobile phone providers. In most of the places that I have been where one provider has coverage, it is Verizon. If Verizon can't make filling in the holes work, Dish can't either.
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this is not flamebait, it's just the simple truth.
they even have to get legislation for video games now.
The proper control to free-market capitalism is Consumer Activism. Things like boycotts and creating new startups to challenge incumbent businesses. But we can't have this if everyone thinks the only solution to things is to call a liar politician. It's how we got Trump! He is not the problem, but a symptom of it!
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How do you boycott when every product on the market is owned by one or two companies and there simply isn't a viable alternative? How do you create a new startup when the barrier to entry is insurmountable and the established players exist only because of massive public subsidization of their costs and public funding?
The merger will neither fixed nor break anything. (Score:5, Insightful)
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I switched from AT&T to T-Mobile last year. There are places where I once had coverage that I now have no coverage. When the power at the house goes out (a frequent occurrence here) and my phone can't jump on WiFi, I have to walk around the neighborhood to get coverage. But, particular when the phone can jump on WiFi, but other areas around here as well, it works much better than AT&T and I have coverage that I didn't have before.
Re:The merger will neither fixed nor break anythin (Score:4, Informative)
Yes. That's what is misleading about the summary. Much of the country doesn't have 4 viable carriers now. Some places barely have two. If Sprint and T-Mobile combine, that will create a 3rd carrier that is closer to nationwide.
A note on competition (Score:5, Insightful)
Dear government regulators, if you can count the major competitors without taking your shoes off, you don't have enough to make market forces work.
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How do intend to create 8 more major nationwide mobile carriers?
We have 2 now. T-Mobile is getting there, but they are far from nationwide. Sprint is failing and will likely have a declining service area without the merger.
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We have 2 now.
The initial cellular system was designed to have just two competitors. The initial spectrum auctions allowed two licensees per region. I don't recall a huge outcry that we had to have 8 licensees then.
We've since added a lot of bands and a lot more licensing opportunities. The only way to prevent the incumbents from bidding and winning the new licenses is to prohibit them from participating. That will result in smaller competitors grabbing up licenses for cheap (since the big competitors can't bid), and a
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How do intend to create 8 more major nationwide mobile carriers?
We have 2 now. T-Mobile is getting there, but they are far from nationwide. Sprint is failing and will likely have a declining service area without the merger.
Simple. Nationalize the infrastructure, and make all the carriers into MVNO style service operators. You can now have an infinite number of carriers, even regional ones that have mandatory roaming structure in place.
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Yes. This has always been the solution. The state owns the infrastructure, the businesses are free to offer service over it.
There's a reason we don't have Ford roads and Chevy roads.
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Nationalize the infrastructure, and make all the carriers into MVNO style service operators.
If you are going to count MVNOs as providers after you confiscate all the existing wireless infrastructure, then you need to count them now. That means there are a lot more than 2 carriers in almost every location.
You also need to plan for a Department of Wireless Technology Services that will become an absolutely huge part of the government just to deal with the existing infrastructure, much less all the new 5G and future enhancements. Car analogies seem common, so imagine if ALL of the city, county, and
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It may or may not be feasible. If not, it also means letting the market decide isn't feasible for mobile communication and that a strongly regulated industry (including price) is necessary.
Another possibility is changing spectrum allocation so that co-ops and similar community efforts are feasible (that will include forcing the major carriers to co-operate with such small efforts), It isn't necessary for each region to have the SAME more than 10 carriers as long as mutual cooperation is enforced so that peo
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Either way, keeping the status quo and claiming market forces will take care of things...
I understand. If "market forces" don't produce a perfect outcome that works ideally for everyone, that justifies whatever arbitrary meddling anyone wants to do. When that meddling also doesn't produce good results, it will be the market's fault again. Infinitely high standards for markets, zero standards or accountability for problems caused by totalitarian meddling.
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No, when the market is somehow broken (for example, the pre-conditions such as adequate competition are not met), it can't work. It doesn't take a genius to understand that broken things don't work.
You want to drive to the store, but the car won't start. It doesn't matter how sincerely you make vroom vroom noises and move the wheel like you're driving, you will not end up at the store. You either need a new plan or you need to fix the car first.
You should read Smith's An Inquiry into the Nature and Causes o [gutenberg.org]
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Does Theory Tell Us How Much 3 vs 4 Matters? (Score:2)
Obviously, there is a huge difference in consumer welfare in markets that have only 1 provider and those that have at least 2. However, it's far from clear to me how much better 4 provider markets serve the consumer than 3 provider markets. Or even if they do.
It's not like the extra provider increases social welfare by somehow letting consumers pick a plan that better reflects their wireless needs. The worry has to be that somehow, as a result of this consolidation, the companies will be less likely to c
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There are a couple of measures used to determine how dominant those major players are. The general principle, and I have worked at two places where this was true in practice, is that when there are only a handful of large competitors they stop aggressively competing on price because they know their competitors obvious response would be to decrease price and then all firms lose prof
B4 mobile telecom (Score:1)
Except that (Score:1)
This ignores the fact that part of the proposal requires not a sale of assets to Dish but an agreement to enable Dish to use T-Mobile's wireless infrastructure for the next seven years while they build out their own network. So, from day one, Dish will have a reach equal to that of T-Mobile. As noted, Dish expects to build out their own network to 70% coverage by 2023 but those 100 million customers without a fourth option will still have an option through Dish's unrestricted access to the T-Mobile network.
DiSH Network already owns S-band spectrum (Score:2)
DiSH Network has already owned spectrum above and below SiriusXM in the S-band for many, many years and has done exactly nothing with it.
Also, in recent years DiSH bought two blocks in the defunct AWS 600 MHz bands and a part of the 1900 MHz PCS bands.
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