Mobile carrier consolidation has been one of the major failures of antitrust regulators. Looking back to the Sprint/Nextel merger, plans and pricing both declined in customer value severely in the months after the merger closed, with in-plan minutes going from the thousands down to the hundreds for the same price.
I would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned. It's fine to merge to consolidate infrastructure, but the unfair aspect of market power is derived from the natural scarcity of spectrum.
The hardware cost of launching a mobile carrier in an urban environment is falling rapidly, so only spectrum scarcity is preventing upstarts from disrupting the most lucrative urban markets.
If competition or "customer value" were actually a goal of FCC, they would open more unlicensed space, on more useful frequencies, rather than auctioning, or re-auctioning more rigidly regulated spectrum. This "natural scarcity" is a property of the deployed technology, not of the universe.
[EDIT:] To clarify, the problem isn't so much the portion of the spectrum designated for mobile phone use, as the terms under which that portion is so designated. More of that portion should be available on an unlicensed basis, or at the very least on a non-exclusive licensed basis. The tiny fractions of the spectrum that have been available on those terms in recent history have seen more innovation and less artificial scarcity than more strictly licensed frequencies have.
Basically, the argument is that interference (as understood in spectrum policy) is a myth. The channel capacity of a frequency band is a limit between two distinct physical points--it's not some global (or even local) limit. If you put two pairs of broadcasters and receivers in the same room using the same band, the laws of nature don't require that the available capacity to each pair be cut in half. It's the same as it was before for each pair; any reduction in throughput is merely a limitation of their particular technology. As sensitivity improves; as algorithms improve; as processing power increases; you can asymptotically approach your original (uncontended) throughput even as more transmitters join the fray.
The above articles are fairly old, but their arguments have born out, and the fundamental science isn't contested. MIMO, beamforming, software defined radio, and other approaches are now widespread and have permitted orders of magnitude more _aggregate_ throughput for the same geographical area, even as the number of transmitters has dramatically increased. And things will only continue to improve for the foreseeable future.
It's not literally true that interference is a myth. And there are fundamental physical limitations that we'll eventually bump up against. But those fundamental limits are beyond the horizon. In the context of historic and contemporary spectrum policy, interference is indeed a myth.
The above technologies have come to fruition slower than free spectrum proponents argued. But their argument has always been that as long as government treats spectrum as scarce and grants legally protected monopoly rights, there's less market incentive to develop those technologies.
The fundamental argument isn't that we need to add more bands to mobile, but that we need to remove (or at least loosen) the regulations which artificially constrain contention. If market participants had to deal with more band contention, there'd be more incentive to improve their technology to restore the service quality. As long as you don't have malicious people intentionally trying to disrupt the system, the argument is that market incentives alone would spur technological improvements at least as fast as contended usage grew.
Of course, for the deployed technology at any particular point in time, more spectrum is better. But the argument here is about optimal long-term policy, not about the best way to ensure first responders can communicate 6 months from now.
This is an interesting argument. I'm aware of it but wasn't aware that the other person was referring to it in his post.
I certainly think it would be interesting to have the FCC allocate a band that could be used in a less regulated way such as you describe.
It's a very interesting area of SDR and game theory and I've actually put a bit of thought into how such an ecosystem might work after hearing a talk about the DARPA Spectrum Challenge.
So I don't disagree with your point at all, and think that the FCC should allocate some spectrum to this sort of deregulated scenario. Perhaps if it also required that all protocol and modulation approaches be open sourced that would help participants to coordinate usefully.
I think that we are far from the limits of physics across most of the network, but there are likely some congestion patterns in dense areas that create complex intermod scenarios that would make a system like this somewhat brittle until the ecosystem evolved to find a cooperative equilibrium of some sort.
In addition to MIMO, I'm interested in things like using TDM and awareness of harmonic and intermod characteristics to create various emergent latency "contracts" that correlated with different frequency ranges and time slices, so that participants that did not need low latency could create significantly less interference than they otherwise would, and participants could cooperate based on the data rate and latency requirements of other nearby nodes.
why would it be different than wifi's 2.4 and 5 ghz bands? those are open, but don't penetrate far because they are high freq. it works but there's tons of things making it unreliable.
WiFi works in part because it doesn’t carry very far. The unclicensed band strictly limits output power, which limits range which limits the potential for interference.
There is a rational talking point relating to a higher noise floors causing smaller range and higher bit error rates. For CDMA network P/N solution is a real thing.
>> It's not literally true that interference is a myth. And there are fundamental physical limitations that we'll eventually bump up against. But those fundamental limits are beyond the horizon. In the context of historic and contemporary spectrum policy, interference is indeed a myth.
> Technology may help, and the technological effects mentioned in the articles do happen but there is a fundamental limit
> Basically, the argument is that interference (as understood in spectrum policy) is a myth.
The FCC deals with the world as it is, not with theory. When over the air television was designed, you couldn’t put the computational power into a TV to do true kind of interference rejection a modern WiFi system can do. Heck, even a more modern system like HDTV has miserable interference rejection. Transmit something else on the same frequency as a TV channel and see how much of a myth interference is.
You’re right of course that the FCC’s model of splitting uses by frequency band treats the issue as one dimensional, while in reality there are opportunities for spatial and temporal reuse. But you need computational horsepower to take advantage of that, and the necessary computational horsepower is really just now becoming available.
If you weren't doing licensing, you'd still need to do coordination, and give the coordinators teeth to go after people who don't follow the rules - in effect licensing by another name.
you can't really have two carriers, operating on the same spectrum, in the same place, and have an expectation that anyone is providing reliable service.
The FCC is limited by the technology that’s available. LTE networks of the capacity and scale we have today couldn’t be deployed in an uncontrolled, unlicensed environment. The technology probably exists today to build something like LTE that can work in an uncontrolled environment (though, it certainly didn’t 10-15 years ago when the FCC started down this path). But the FCC’s job isn’t to develop technology, it’s to figure out how to let people deploy the technology that exists in the market.
I think in the long run the technology is getting to the point where the FCC can get out of the business of spectrum allocation and let cognitive radios mediate spectrum access amongst themselves. We’re not there yet, though, and the FCC’s current approach is quite reasonable as a stop gap.
I hate to bring politics into this but I will: how is it some people moan about the "growth of government" while left and right we see merger after merger without the government doing a thing to stop these mergers? Where is the over-regulation I keep hearing about?
Well, in this case what we are seeing is the growth of a regulatory state that exists mainly to help select firms generate profit.
This is known as "regulatory capture" and infrastructure services that the government can justify regulating for any reason are vulnerable to it.
I'd say that you are correct in the broader observation that both parties strongly favor big government that helps their pet industries avoid competition.
And along similar lines, both parties are perfectly happy with mobile carrier consolidation, which is too bad, because the poor spend disproportionately on mobile services and are most likely to be victimized by misleading plans or deceptive sales tactics (which are extremely common).
"Where is the over-regulation I keep hearing about?"
It's baked into the cake, as grandalf noted. More regulations benefit larger players, who can afford the parasitic staff of lawyers, accountants, and other compliance people to deal with it.
While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though.
> "While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though."
Regulation can exist for good reasons though. Take the pharmaceutical industry as an example, do we want to ensure the drugs that are on the market have gone through clinical trials, even if doing so limits the group of companies that can afford to pay for these trials?
If by reducing regulations we increase drug deaths but also decrease deaths from newly treatable illness, not to speak of the benefits of cheaper drugs, it seems the calculus can come out against the regulations depending on how the numbers shake out.
That is to say, the regulations should be subject to a cost-benefit analysis and only those with a positive ROI should remain in place.
At the very least we should be allowing drugs to be sold that have been trialed and approved in other first world markets.
> " the regulations should be subject to a cost-benefit analysis"
Not everything related to pharmaceuticals boils down to a cost-benefit analysis. If companies sell a drug with known side effects, but cover it up to make a profit, that might make business sense to its shareholders, but it's not something that benefits society at large.
To give an example, Bayer knowingly sold products that were known to give people hepatitis C and HIV.
"Contaminated haemophilia blood products were a serious public health problem in the late 1970s up to 1985.
These products caused large numbers of haemophiliacs to become infected with HIV and hepatitis C. The companies involved included Alpha Therapeutic Corporation, Institut Mérieux (which then became Rhone-Poulenc Rorer Inc., and is now part of Sanofi), Bayer Corporation and its Cutter Biological division, Baxter International and its Hyland Pharmaceutical division. Estimates range from 6,000 to 10,000 haemophiliacs in the United States becoming infected with HIV."
"Recently unearthed documents show that the drug company Bayer sold millions of dollars worth of an injectable blood-clotting medicine -- Factor VIII concentrate, intended for hemophiliacs -- to Asian, Latin American, and some European countries in the mid-1980s, although they knew that it was tainted with AIDS.
The company stopped selling the drug in the United States in 1984, but continued to sell it overseas for an additional year."
Reducing government regulation of drug companies increases the chances of similar underhand practices, as companies can claim they were following the laws they were intended to comply with.
> "At the very least we should be allowing drugs to be sold that have been trialed and approved in other first world markets."
That still limits the pool of companies that can afford it to a select few. It's very expensive to bring a new drug to market, even if you limit the trials to a single market.
To give an idea of how much these clinical trials cost...
"Therapeutic area was an important determinant of clinical trial costs by phase. The average cost of a Phase 1 study conducted at a US site ranged from US$1.4 million (pain and anesthesia) to US$6.6 million (immunomodulation), including estimated site overhead and monitoring costs of the sponsoring organization. A Phase 2 study cost from US$7.0 million (cardiovascular) to US$19.6 million (hematology), whereas a Phase 3 study cost ranged from US$11.5 million (dermatology) to US$52.9 (pain and anesthesia) on average. Across all study phases and excluding estimated site overhead costs and costs for sponsors to monitor the study, the top three cost drivers of clinical trial expenditures were clinical procedure costs (15%–22% of total), administrative staff costs (11%–29% of total), and site monitoring costs (9%–14% of total)."
Many have argued that the regulatory incentives are skewed with respect to pharmaceuticals.
1) Company A's drug is approved, but causes 10,000 people per year to suffer sudden death.
2) Company B's drug is not approved, even though it would have saved 10,000 lives per year.
The problem here is that scenario #1 makes the regulatory agency look bad, while #2 generally does not. Those patients (and even their doctors) usually won't know that there was a treatment available.
a market is broken. you can message 'we need to control this market' or 'its only broken because the stupid government has its fingers where they don't belong'.
which story plays better with the incumbents? ignore any rational discussion of outcomes.
>I would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned.
I think this overall is good for consumers, and good for business.
Sprint is woefully under capitalized, neither T-Mo or Sprint have as much PCS Spectrum (read, they don't have enough) in the largest markets as either AT&T or T-Mobile. Because of this (and some other factors relating to economy of scale) neither T-Mo or Sprint is really truly competitive (on performance) with either AT&T or Verizon outside of a few selected markets.
Our Mobile Phone networks are expensive in the US - but thats largely a function of how much coverage you have to provide to places where (nearly) no-one lives.
Figure a cell site costs $1000+ a month to keep it on the air - and Sprint alone had 20,000 cell sites when I was inside their network last in 2015 - so 20 million a month just to keep the sites on, that doesn't cover backhaul, CO's, trunking, staffing or any of the other costs to keep a network up. Verizon and AT&T each have more coverage than sprint does, and 2-3 times the sites - they also have many more sites that on a good day might see 2-3 subs roam thru.
I don't think it's that unpopular. Sprint needs the help. By any measure, T-Mobile has been improving drastically last few years. Seems like this would actually increase competition with big V and AT&T.
tmobile doesn't need this. it's not going to make the us market better for anyone, other than maybe sprint customers, and probably better for verizon and at&t
That is certainly the best case scenario. And I'm not saying it won't happen, but it does give me pause. T-Mobile has been doing a pretty great job in recent years of expanding coverage while keeping prices relatively low, and I can't help but worry that a Sprint merger complete with two different cellphone technologies will end up being a huge distraction that'll slow both of them down for years.
the differing technologies thing isn't a big of a hurdle as you'd think - the future is LTE, not CDMA or GSM - and their respective LTE networks are fully compatible.
The future is indeed LTE, but there's a long tail of people out there with old devices they have little intention of replacing. It would be interesting to see how they'd handle that.
Also, are they on the same LTE bands? Even that matters. I know a lot of phones don't use T-Mobile's band 12.
CDMA is unique, thankfully in this case - you can put up a single CDMA carrier on a shared frequency in a market and cover the whole of the market - CDMA works fine when doing a same channel/same channel handover. Essentially, with say, 2.5 MHz you could cover a whole market with a single CDMA carrier, and 1-2 GSM carriers, the sprint equipment at least is designed to do both CDMA and LTE with one hardware set - the gear that t-mobile uses is more modular, so it's even easier to leave the legacy bearers up for the long tail.
They're big companies that can afford to invest in Sprint's network and could bundle wireless service with other products. And most importantly it doesn't let the industry consolidate from 4 to 3 players.
How is one big communications company substantively different then another big communications company? I trust a merged Magenta/Yellow combo then I'd trust comcast.
> Our Mobile Phone networks are expensive in the US
No they're not. Cell phone bills are one of the only two deflationary categories in the basket used to determine rate of inflation by the federal bank, iirc.
That aside, I agree with your view. No one uses Sprint if they have a choice, it's their (previously) cheaper rates that locked people in (via contract or via simple inertia).
that cell phone bills are not expensive because they've been deflationary is an odd leap to make because it's just not enough information to make that determination.
you could just as easily say that costs went from extortionary to merely exhorbitant. there's no way to pin it down without some comparative information.
if they've indeed been deflationary, my guess (and it's only a guess) is that capital expenditures (like building/upgrading cell sites) are slowing down now that increased capacity and speed are not the great differentiators that they once were, and a trickle of that cost savings is reaching the consumer (without diminishing returns to shareholders of course).
I've just checked online and this is what I'd take https://www.walmart.com/ip/Prepaid-GSM-SIM-Card-Unlimited-Te... at $9/mo (t-mobile network), it's only marginally more expensive than what I'd pay in Thailand, Malaysia or Vietnam. Enough for my emails, whatsapp, occasional web browsering. Doesn't seem a bad deal. I think those that want a subsided jesus phone with the payment rolled into the monthly or insane amount of data are the ones paying $60+ month.
Cellphone bills only became deflationary after the government blocked the T-Mobile-At&t merger. With this merger, and a new administration, they stand to "correct that mistake" and you can bet that cellphone bills will return to their previous trend.
I'm comparing us to Europe - which is a popular trope on HN - people don't understand that for example Finland is about the size of Colorado - so they wonder how you can build a national network and sell a high use low rate plan in Europe, when the equivalent thing here is 2-3x as much - and its simply the sheer size of the geography to be covered - if I only had to cover Colorado, I could probably make 20 bucks a month for unlimited everything work too.
Even then, Sprint would somehow end up running the merged entity due to SoftBank ownership (?) so they’ll have more spectrum but the same everything else.
This might sort of work if T-Mobile gets to run the thing.
My understanding is that SoftBank has been very unimpressed with Sprint’s pre-acquisition talent and was set back by having to staff up with competent managers from outside. If that’s true, then I would expect T-Mobile’s team to have a decent chance post-merger and Sprint incumbents should be very worried about the purge.
Edit: This article confirms my suspicions[1]. SoftBank appointed a Chief Strategy Officer to Sprint who I believe is looking to arrange a best-case exit for SoftBank after the leadership in Kansas completely failed to step up. Also, SoftBank has always wanted TMobile as part of their original strategy, but the Obama administration blocked them in 2014.
> I think this overall is good for consumers, and good for business
It's an oligopoly in a market that does not expand much anymore. So the only way what you write can be true is if the combination is going to be awful bad for business for the other two telcos. Is that what you mean?
An interesting fact about Oligopolies is that they often degrade into very low margin businesses. Price collusion is one way companies attempt to counter this trend. For example, OPEC is legal price collusion of oil producers to keep margins as high as possible. Price collusion is not legal in the US but some industries (i.e. airlines) have virtual collusion because they move prices in lock-step. In some ways, the US mobile phone business is like the airlines. When one carrier offers an "unlimited" plan at a specific rate, the others rush to offer something similar. This virtual price collusion falls apart when one of the companies in the oligopoly gets greedy (they almost always do).
Downward price pressure is created when one company is willing to operate on lower margins short term to take market share from the others. Lower prices are good for consumers. No small company can afford to enter the market because the barriers to entry are expensive and the margins are low. The existing carriers end up in a race to the bottom that resembles a perfect competition market. The risk is that one of the companies will become large enough to become a monopoly or near monopoly and gain pricing power to raise prices without consequences.
> An interesting fact about Oligopolies is that they often degrade into very low margin businesses
If the oligopoly fails, then the result will be low-margin businesses for everyone due to market forces.
If an oligopoly is successful then tautologically the participants won't have low margins because they will be able to suppress what JP Morgan called "ruinous competition" between them.
One of the reasons that Sprint is undercapitalized is that for the last six years, "everyone" has assumed that they will merge or otherwise be acquired. Putting more money in is only interesting to keep Sprint going until that happens.
TMobile doesn't need Sprint. They've been growing great and adding users for years, and just bought nearly all of the 600mhz spectrum.
Sprint has, by any objective metrics, the worst coverage and speed. It had been an awful company who keeps taking wrong steps, is outdated, and not making much investment. I'd rather the merger not to happen, as competition is good, TMobile doesn't need Sprint, and Sprint by some miracle still has a fair amount of customers.
Sprint is well setup spectrum wise for densification in urban areas with all the 2.4 GHz spectrum they have (from Clearwire) - if you look at eithers coverage map compared to say, Verizon, neither has wide area rural coverage worth writing home about
Yes, and have already said prior their plan is microcell deployments. I happen to believe that would be a costly mistake, compared to say, 600mhz blasting far distances.
I agree that this sounds terrible. Tmobile is revializing the mobile world. I love love love all the things that tmobile as been doing. They've not bought all that low frequency tv white spaces spectrum, there's a good chance they will continue to force the other major players to improve and lower prices.
They have been ending the horrible contract system, taking customers with their innvoation. I love being able to use my phone internationally. I don't see how much good can come of this. sprint is just going to be an anvil around their feet, with debt service to paying off the sprint owners holding tmobile back. This is what at&t and verizon want probably.
This is a cultural/incentive problem with big companies. They don't know how to innovate and are afraid to give up control. So they spend their time and resources on financial engineering, clinging to the old way of doing business. Restructuring and mergers are the only way they see forward, because they would rather increase profits by replacing employees and removing choice for consumers than by innovating.
I’m curious how this would work technically as the two networks use different technology. Plus there must be a ton of overlap in the networks in metro areas
I’d rather the big two were broken up but this merger will give T-Mobile and sprint all the incentive to price just like the incumbents but give them the resources to maybe get to network parity so that regardless of what carrier you’re on you will have the same coverage. Once that’s the case then you could really put the three against one another and get decent rate in your phone bill. I’d rather competition did that as well by having many smaller players but the system isn’t healthy.
What effect would such a merger have on cross-carrier solutions like Project Fi, which uses both Sprint and T-mo networks? I'm worried that the new T-Sprint masters would deem Fi to be undesirable competition to whatever internal scheme they're mulling to join the networks.
I’m curious what Deutsche Telekom will do if this happens. They’ve spent most of their time in the US market signaling that they want to leave, but maybe it would be a different story when they’re not in distant 4th.
T-Mobile haven't been distant fourth for a while. They have been the clear third for a few years now. Germans wanted out badly before their recent winnings.
If a deal goes through, it'll be a merger for sure. But also it'll be T-Mobile as the bigger of the two companies. T-Mobile stock has tripled in the past 5 years. They have a healthy PE ratio. Sprint has more or less remained around the same spot. Which is now half the market cap of T-Mobile. Sprint is also having a hard time being profitable.
funny how life is. in 2012 Sprint wanted to acquire T-Mobile. Deal goes bust. T-Mobile gets free funds. Funds expansion. Now T-Mobile in a position to acquire Sprint.
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[ 2.9 ms ] story [ 129 ms ] threadI would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned. It's fine to merge to consolidate infrastructure, but the unfair aspect of market power is derived from the natural scarcity of spectrum.
The hardware cost of launching a mobile carrier in an urban environment is falling rapidly, so only spectrum scarcity is preventing upstarts from disrupting the most lucrative urban markets.
[EDIT:] To clarify, the problem isn't so much the portion of the spectrum designated for mobile phone use, as the terms under which that portion is so designated. More of that portion should be available on an unlicensed basis, or at the very least on a non-exclusive licensed basis. The tiny fractions of the spectrum that have been available on those terms in recent history have seen more innovation and less artificial scarcity than more strictly licensed frequencies have.
Which spectrum do you think should be reallocated to mobile use?
> This "natural scarcity" is a property of the deployed technology, not of the universe.
What frequencies do you think should be used for mobile voice and data that are not already?
The above articles are fairly old, but their arguments have born out, and the fundamental science isn't contested. MIMO, beamforming, software defined radio, and other approaches are now widespread and have permitted orders of magnitude more _aggregate_ throughput for the same geographical area, even as the number of transmitters has dramatically increased. And things will only continue to improve for the foreseeable future.
It's not literally true that interference is a myth. And there are fundamental physical limitations that we'll eventually bump up against. But those fundamental limits are beyond the horizon. In the context of historic and contemporary spectrum policy, interference is indeed a myth.
The above technologies have come to fruition slower than free spectrum proponents argued. But their argument has always been that as long as government treats spectrum as scarce and grants legally protected monopoly rights, there's less market incentive to develop those technologies.
The fundamental argument isn't that we need to add more bands to mobile, but that we need to remove (or at least loosen) the regulations which artificially constrain contention. If market participants had to deal with more band contention, there'd be more incentive to improve their technology to restore the service quality. As long as you don't have malicious people intentionally trying to disrupt the system, the argument is that market incentives alone would spur technological improvements at least as fast as contended usage grew.
Of course, for the deployed technology at any particular point in time, more spectrum is better. But the argument here is about optimal long-term policy, not about the best way to ensure first responders can communicate 6 months from now.
I certainly think it would be interesting to have the FCC allocate a band that could be used in a less regulated way such as you describe.
It's a very interesting area of SDR and game theory and I've actually put a bit of thought into how such an ecosystem might work after hearing a talk about the DARPA Spectrum Challenge.
So I don't disagree with your point at all, and think that the FCC should allocate some spectrum to this sort of deregulated scenario. Perhaps if it also required that all protocol and modulation approaches be open sourced that would help participants to coordinate usefully.
I think that we are far from the limits of physics across most of the network, but there are likely some congestion patterns in dense areas that create complex intermod scenarios that would make a system like this somewhat brittle until the ecosystem evolved to find a cooperative equilibrium of some sort.
In addition to MIMO, I'm interested in things like using TDM and awareness of harmonic and intermod characteristics to create various emergent latency "contracts" that correlated with different frequency ranges and time slices, so that participants that did not need low latency could create significantly less interference than they otherwise would, and participants could cooperate based on the data rate and latency requirements of other nearby nodes.
Technology may help, and the technological effects mentioned in the articles do happen but there is a fundamental limit
> Technology may help, and the technological effects mentioned in the articles do happen but there is a fundamental limit
Parent mentioned exactly that in their comment.
And that is the part I disagree
Especially when you have a large amount of people in the same place (stadium, busy street, etc) Or even your office wifi
There is a fundamental limit and we are at it in many scenarios and we've been for a very long time.
Bits of data delivered at or above minimum tolerable latency per hz of RF bandwidth per second?
The FCC deals with the world as it is, not with theory. When over the air television was designed, you couldn’t put the computational power into a TV to do true kind of interference rejection a modern WiFi system can do. Heck, even a more modern system like HDTV has miserable interference rejection. Transmit something else on the same frequency as a TV channel and see how much of a myth interference is.
You’re right of course that the FCC’s model of splitting uses by frequency band treats the issue as one dimensional, while in reality there are opportunities for spatial and temporal reuse. But you need computational horsepower to take advantage of that, and the necessary computational horsepower is really just now becoming available.
I think in the long run the technology is getting to the point where the FCC can get out of the business of spectrum allocation and let cognitive radios mediate spectrum access amongst themselves. We’re not there yet, though, and the FCC’s current approach is quite reasonable as a stop gap.
This is known as "regulatory capture" and infrastructure services that the government can justify regulating for any reason are vulnerable to it.
I'd say that you are correct in the broader observation that both parties strongly favor big government that helps their pet industries avoid competition.
And along similar lines, both parties are perfectly happy with mobile carrier consolidation, which is too bad, because the poor spend disproportionately on mobile services and are most likely to be victimized by misleading plans or deceptive sales tactics (which are extremely common).
It's baked into the cake, as grandalf noted. More regulations benefit larger players, who can afford the parasitic staff of lawyers, accountants, and other compliance people to deal with it.
While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though.
Regulation can exist for good reasons though. Take the pharmaceutical industry as an example, do we want to ensure the drugs that are on the market have gone through clinical trials, even if doing so limits the group of companies that can afford to pay for these trials?
That is to say, the regulations should be subject to a cost-benefit analysis and only those with a positive ROI should remain in place.
At the very least we should be allowing drugs to be sold that have been trialed and approved in other first world markets.
Not everything related to pharmaceuticals boils down to a cost-benefit analysis. If companies sell a drug with known side effects, but cover it up to make a profit, that might make business sense to its shareholders, but it's not something that benefits society at large.
To give an example, Bayer knowingly sold products that were known to give people hepatitis C and HIV.
https://en.wikipedia.org/wiki/Contaminated_haemophilia_blood...
"Contaminated haemophilia blood products were a serious public health problem in the late 1970s up to 1985.
These products caused large numbers of haemophiliacs to become infected with HIV and hepatitis C. The companies involved included Alpha Therapeutic Corporation, Institut Mérieux (which then became Rhone-Poulenc Rorer Inc., and is now part of Sanofi), Bayer Corporation and its Cutter Biological division, Baxter International and its Hyland Pharmaceutical division. Estimates range from 6,000 to 10,000 haemophiliacs in the United States becoming infected with HIV."
https://articles.mercola.com/sites/articles/archive/2006/08/...
"Recently unearthed documents show that the drug company Bayer sold millions of dollars worth of an injectable blood-clotting medicine -- Factor VIII concentrate, intended for hemophiliacs -- to Asian, Latin American, and some European countries in the mid-1980s, although they knew that it was tainted with AIDS.
The company stopped selling the drug in the United States in 1984, but continued to sell it overseas for an additional year."
Reducing government regulation of drug companies increases the chances of similar underhand practices, as companies can claim they were following the laws they were intended to comply with.
> "At the very least we should be allowing drugs to be sold that have been trialed and approved in other first world markets."
That still limits the pool of companies that can afford it to a select few. It's very expensive to bring a new drug to market, even if you limit the trials to a single market.
To give an idea of how much these clinical trials cost...
http://journals.sagepub.com/doi/abs/10.1177/1740774515625964...
"Therapeutic area was an important determinant of clinical trial costs by phase. The average cost of a Phase 1 study conducted at a US site ranged from US$1.4 million (pain and anesthesia) to US$6.6 million (immunomodulation), including estimated site overhead and monitoring costs of the sponsoring organization. A Phase 2 study cost from US$7.0 million (cardiovascular) to US$19.6 million (hematology), whereas a Phase 3 study cost ranged from US$11.5 million (dermatology) to US$52.9 (pain and anesthesia) on average. Across all study phases and excluding estimated site overhead costs and costs for sponsors to monitor the study, the top three cost drivers of clinical trial expenditures were clinical procedure costs (15%–22% of total), administrative staff costs (11%–29% of total), and site monitoring costs (9%–14% of total)."
1) Company A's drug is approved, but causes 10,000 people per year to suffer sudden death.
2) Company B's drug is not approved, even though it would have saved 10,000 lives per year.
The problem here is that scenario #1 makes the regulatory agency look bad, while #2 generally does not. Those patients (and even their doctors) usually won't know that there was a treatment available.
This creates an incentive for non-approval.
which story plays better with the incumbents? ignore any rational discussion of outcomes.
That's a really good suggestion!
I think this overall is good for consumers, and good for business.
Sprint is woefully under capitalized, neither T-Mo or Sprint have as much PCS Spectrum (read, they don't have enough) in the largest markets as either AT&T or T-Mobile. Because of this (and some other factors relating to economy of scale) neither T-Mo or Sprint is really truly competitive (on performance) with either AT&T or Verizon outside of a few selected markets.
Our Mobile Phone networks are expensive in the US - but thats largely a function of how much coverage you have to provide to places where (nearly) no-one lives.
Figure a cell site costs $1000+ a month to keep it on the air - and Sprint alone had 20,000 cell sites when I was inside their network last in 2015 - so 20 million a month just to keep the sites on, that doesn't cover backhaul, CO's, trunking, staffing or any of the other costs to keep a network up. Verizon and AT&T each have more coverage than sprint does, and 2-3 times the sites - they also have many more sites that on a good day might see 2-3 subs roam thru.
Also, are they on the same LTE bands? Even that matters. I know a lot of phones don't use T-Mobile's band 12.
http://www.fiercewireless.com/wireless/sprint-talks-comcast-...
No they're not. Cell phone bills are one of the only two deflationary categories in the basket used to determine rate of inflation by the federal bank, iirc.
That aside, I agree with your view. No one uses Sprint if they have a choice, it's their (previously) cheaper rates that locked people in (via contract or via simple inertia).
you could just as easily say that costs went from extortionary to merely exhorbitant. there's no way to pin it down without some comparative information.
if they've indeed been deflationary, my guess (and it's only a guess) is that capital expenditures (like building/upgrading cell sites) are slowing down now that increased capacity and speed are not the great differentiators that they once were, and a trickle of that cost savings is reaching the consumer (without diminishing returns to shareholders of course).
Even then, Sprint would somehow end up running the merged entity due to SoftBank ownership (?) so they’ll have more spectrum but the same everything else.
This might sort of work if T-Mobile gets to run the thing.
Edit: This article confirms my suspicions[1]. SoftBank appointed a Chief Strategy Officer to Sprint who I believe is looking to arrange a best-case exit for SoftBank after the leadership in Kansas completely failed to step up. Also, SoftBank has always wanted TMobile as part of their original strategy, but the Obama administration blocked them in 2014.
[1] https://www.bizjournals.com/kansascity/news/2017/06/06/sprin...
It's an oligopoly in a market that does not expand much anymore. So the only way what you write can be true is if the combination is going to be awful bad for business for the other two telcos. Is that what you mean?
Downward price pressure is created when one company is willing to operate on lower margins short term to take market share from the others. Lower prices are good for consumers. No small company can afford to enter the market because the barriers to entry are expensive and the margins are low. The existing carriers end up in a race to the bottom that resembles a perfect competition market. The risk is that one of the companies will become large enough to become a monopoly or near monopoly and gain pricing power to raise prices without consequences.
If the oligopoly fails, then the result will be low-margin businesses for everyone due to market forces.
If an oligopoly is successful then tautologically the participants won't have low margins because they will be able to suppress what JP Morgan called "ruinous competition" between them.
It's a self-fulfilling prophecy.
Sprint has, by any objective metrics, the worst coverage and speed. It had been an awful company who keeps taking wrong steps, is outdated, and not making much investment. I'd rather the merger not to happen, as competition is good, TMobile doesn't need Sprint, and Sprint by some miracle still has a fair amount of customers.
They have been ending the horrible contract system, taking customers with their innvoation. I love being able to use my phone internationally. I don't see how much good can come of this. sprint is just going to be an anvil around their feet, with debt service to paying off the sprint owners holding tmobile back. This is what at&t and verizon want probably.
I feel like once again this project has become another "walking dead" project :(
If a deal goes through, it'll be a merger for sure. But also it'll be T-Mobile as the bigger of the two companies. T-Mobile stock has tripled in the past 5 years. They have a healthy PE ratio. Sprint has more or less remained around the same spot. Which is now half the market cap of T-Mobile. Sprint is also having a hard time being profitable.