Carrier Verizon signaling that it favors Sprint takeover of T-Mobile

[EbookReader]

http://www.fiercewireless.com/story...dish-about-any-deals/2014-05-20#ixzz32GnzeUg6

Speaking of wireless consolidation, McAdam was sanguine and said Verizon could continue to compete no matter the industry structure. "We can certainly compete in a four-player market," but he said Verizon could compete in a three-player market as well. He added that typically, three-player are markets are more stable but that "whatever the regulators decide, they decide."

Why 3 players mean less competition and more profits for the 3 players:

http://www.chicagotribune.com/business/sns-rt-us-softbank-son-oligopoly-20140423,0,2375556.story
Japan attack on wireless 'oligopoly' awkward for SoftBank's U.S. plans

So it must be galling to hear regulators in Tokyo chide his SoftBank Corp , along with NTT DoCoMo , Japan's mobile industry leader, and No.2 KDDI Corp , for lack of competition in the domestic smartphone market.

"You could say the mobile market is an oligopoly of the three big companies," Communications Minister Yoshitaka Shindo said at a regular news conference this month.

"SoftBank used to be a competition driver," said a communications ministry official, who spoke on condition of anonymity. "But now it's completely spoiled by the three-company oligopoly."

Canadian regulators probably say the same thing since its market is another classic example of three-company oligopoly. High prices for customers and high profits for the 3 dominant carriers (Telus, Rogers and Bell).

No actual competition = higher profits.



An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers.

With few sellers, each oligopolist is likely to be aware of the actions of the others. The decisions of one firm therefore influence and are influenced by the decisions of other firms.Strategic planning by oligopolists needs to take into account the likely responses of the other market participants.


Example of three-company oligopoly from Canada

http://www.iphoneincanada.ca/carriers/rogers-telus-bell-price-hikes/
March 17th, 2014

Rogers, Telus and Bell Explain $5/month Wireless Price Hikes

This past weekend Canada’s incumbent wireless carriers increased monthly plan prices by $5/month across the board, specifically Rogers and Bell. Telus first hiked their prices in January and Rogers and Bell to their nationwide voice and shareable data plans, with prices starting at $80/month for 500MB from all three carriers.

Nothing the government can do about it since they can't prove that these 3 companies colluded together to bring about this $5 price hike. Tacit collusion at its best.

Manitoba and Saskatchewan are two provinces in Canada where these 3 carriers didn't raise the $5/month. That is because that these 2 provinces has strong regional competitors in SaskTel and MTS. Raising the $5 will make these 3 national carriers less competitive there.

 

[EbookReader]

http://www.bloomberg.com/news/2014-...bile-bid-after-pushing-banks-for-funding.html

Sprint Chief Financial Officer Joe Euteneuer and Treasurer Greg Block met with six banks to ensure the lenders would be ready with financing structures when Sprint decides to pursue a takeover, said three of the people, asking not to named because the discussions are private.

 

[EbookReader]

http://www.fiercewireless.com/story...dish-about-any-deals/2014-05-20#ixzz32GnzeUg6

Speaking of wireless consolidation, McAdam was sanguine and said Verizon could continue to compete no matter the industry structure. "We can certainly compete in a four-player market," but he said Verizon could compete in a three-player market as well. He added that typically, three-player are markets are more stable but that "whatever the regulators decide, they decide."

For wireless carriers, the less is better since there is much more profits in being three-company oligopoly.

Why compete by lowering prices when you don't compete and get higher profits through charging customers higher prices.



Canadian version of DOJ has this to say about its 3-company oligopoly:

http://benklass.wordpress.com/2014/03/17/wireless-carriers-high-flying-prices/comment-page-1/

During this process the Competition Bureau raised eyebrows with a strongly worded submission, which pointed out that:

“In the Bureau’s view, mobile wireless markets are characterized by high concentration and very high barriers to entry and expansion. Furthermore, Canadian mobile wireless markets are characterized by other factors that, when combined with high concentration and very high barriers to entry and expansion, create a risk of coordinated interaction in these markets.”

The Competition Bureau notes that those other factors include “the ready availability to market participants of information regarding prices, rival firms and market conditions”.

If 3-company oligopoly becomes a reality in the USA, the stock prices of AT&T, Verizon and Sprint will increase by a good margin.

 

[CEmajr]

Of course Verizon favors the merger, as AT&T likely does as well. It eliminates their most annoying competitor and leaves a combined Sprint/TMO that would be an uncompetitive, indebted, mess or various incompatible frequencies and phone technologies. Sprint already has a ton of debt and would be taking on upwards of $30 billion more in order to acquire T-Mobile. Then AT&T/VZW can get back to business as usual and laugh at Sprint all the way to the bank.

People forgot that when Sprint merged with Nextel it was already about the same size as Cingular (AT&T) and Verizon. Due to how poorly that played out, fast forward to today and they each are about twice the size of Sprint/Nextel. This T-Mobile thing would likely play out the same way.

What makes it even worse is that the combined carrier would own so much spectrum that Sprint would be forced to sell some to Verizon/AT&T and also face restrictions in the 600mhz auction next year. It's just an all around disaster waiting to happen. I don't see who would benefit from it other than the telcos themselves in terms of profits.

At the end of the day whether or not they're allowed to merge likely depends on politics. The vote would be along party lines with the Dems voting against and and GOP in favor.

 

[EbookReader]

Of course Verizon favors the merger, as AT&T likely does as well. It eliminates their most annoying competitor and leaves a combined Sprint/TMO that would be an uncompetitive, indebted, mess or various incompatible frequencies and phone technologies. Sprint already has a ton of debt and would be taking on upwards of $30 billion more in order to acquire T-Mobile. Then AT&T/VZW can get back to business as usual and laugh at Sprint all the way to the bank.

People forgot that when Sprint merged with Nextel it was already about the same size as Cingular (AT&T) and Verizon. Due to how poorly that played out, fast forward to today and they each are about twice the size of Sprint/Nextel. This T-Mobile thing would likely play out the same way.

What makes it even worse is that the combined carrier would own so much spectrum that Sprint would be forced to sell some to Verizon/AT&T and also face restrictions in the 600mhz auction next year. It's just an all around disaster waiting to happen. I don't see who would benefit from it other than the telcos themselves in terms of profits.

At the end of the day whether or not they're allowed to merge likely depends on politics. The vote would be along party lines with the Dems voting against and and GOP in favor.

Even if the FCC is in favor of it (which is not the case), the DOJ can sue to block it like it did with AT&T/T-Mobile.



http://www.reuters.com/article/2014/05/10/us-deutsche-telekom-idUSBREA4900M20140510

Deutsche Telekom seeks breakup fee of over $1 billion on T-Mobile-Sprint deal: WSJ

Could be an easy $1 billion for T-Mobile if Sprint decides to go ahead.

 

[2298754]

Of course, they're in favor of it. A Sprint/TMo merger would be a colossal mess when it comes to network integration.

AT&T and VZW already provide networks that are leagues superior to Sprint and T-Mobile. Integrating the two worst networks in the business won't magically make them a VZW/AT&T killer

 

[Applejuiced]

Hope it never goes through.
We need more competition and more carriers for opportunities to serve the consumer better and provide better prices and service.
Not less options so the 2-3 carriers can charge whatever they want.

 

[CEmajr]

Of course, they're in favor of it. A Sprint/TMo merger would be a colossal mess when it comes to network integration.

AT&T and VZW already provide networks that are leagues superior to Sprint and T-Mobile. Integrating the two worst networks in the business won't magically make them a VZW/AT&T killer

For once I totally agree with you.

 

[yeah]

Of course, they're in favor of it. A Sprint/TMo merger would be a colossal mess when it comes to network integration.

AT&T and VZW already provide networks that are leagues superior to Sprint and T-Mobile. Integrating the two worst networks in the business won't magically make them a VZW/AT&T killer

And do you know why AT&T's and Verizon's networks are "vastly superior"?

One reason: Low-frequency spectrum.

Well I have news for you: The two "worst networks" are going to get a ton of 600 MHz spectrum (aside from Sprint's 800 MHz SMR and T-Mobile's 700A MHz) and kick the duopoly's a**.

By the way, T-Mobile beat your precious AT&T to VoLTE.

 

[eyoungren]

People forget that companies aren't looking out for the customer. Companies exist solely to make profit. Either for the owner(s) or for the shareholders. Granted, customer relations and service can boost the bottom line and improve profit margins, but ultimately it's not about the customer.

Let's not forget that when Masayoshi Son bought Sprint there was no mention of also buying T-Mobile. The whole plan as presented was that Softbank would further fund an already paid for upgrade of the network. Sprint had already paid for the upgrades so Softbank was only bringing in improved cash flow. In this plan, T-Mobile was not even a consideration.

So, going after T-Mobile is a later plan, or at least a plan that was revealed AFTER the Softbank/Sprint merger.

None of this benefits T-Mobile or Sprint customers. But again, that isn't the point. It's all about profit for the stockholders. It's already been mentioned that less competition benefits the carriers and not the customer and this is exactly what a SprinT-Mobile merger would do.

I'm sure somewhere in there is probably a certain satisfaction of gaining back all the customers Sprint has lost to T-Mobile as well.

 

[scaredpoet]

Of course Verizon favors the merger, as AT&T likely does as well. It eliminates their most annoying competitor and leaves a combined Sprint/TMO that would be an uncompetitive, indebted, mess or various incompatible frequencies and phone technologies. Sprint already has a ton of debt and would be taking on upwards of $30 billion more in order to acquire T-Mobile. Then AT&T/VZW can get back to business as usual and laugh at Sprint all the way to the bank.

This, exactly. Sprint and AT&T aren't interested in having three competitors... they want two, and ONLY because having two (seemingly) prevents an outright, blatant monopoly and all the unwanted scrutiny that goes with that.

Let's face it: Sprint bought Nextel, destroyed any chance that network had of being viable, and nearly ruined themselves in the process. Now Softbank proposes to make Sprint buy another incompatible carrier which is doing quite fine on its own... to what end? I don't think either network will survive this, and we'll see a failed combined Sprint/T-Mobile in five years or less, leaving just AT&T, Verizon, and a handful of regionals that probably won't last too long either.

My bigger question is, what the heck is going through Masayoshi Son's head right now? He's the CEO at Softbank who is spearheading this, and I don't get how he can possibly think this will be good in any way.

 

[eyoungren]

My bigger question is, what the heck is going through Masayoshi Son's head right now? He's the CEO at Softbank who is spearheading this, and I don't get how he can possibly think this will be good in any way.

Honestly, I think he's finding out the enormity of what he's bought into.

The neurotic CYA culture at Sprint is deeply rooted and I don't think he either saw that or had any idea about how deep it runs. Historically, as well, Sprint has an inability to execute. I also don't think he anticipated just how much of a cluster he got. If Sprint can find any way to fail and snatch defeat from victory, Sprint will. It's automatic, no one even has to think about it – it just happens.

I believe he's dealing with it, but it's kind of like bringing a garden hose to a firestorm. You knew there was going to be a fire, you just weren't anticipating it to be a wildfire requiring hundreds of people to fight that you weren't prepared to bring.

 

[2298754]

And do you know why AT&T's and Verizon's networks are "vastly superior"?

One reason: Low-frequency spectrum.

Ahh, this excuse again. How typical...

VZW/AT&T are running far denser networks across the US. Not to mention, they actually have service that works in most shopping centers, stadiums, etc because they're willing to pay to get on the DAS systems. T-Mobile/Sprint aren't. Celtics/Bruins games here, only VZW/AT&T have usable service.

If low-freq was the reason for their superior networks, then why are VZW/AT&T doing so well in areas where they don't own enough sub-1ghz spectrum? (PHX, parts of NH, etc.) They kick Sprint/TMo's ass, even in high-freq areas.

Well I have news for you: The two "worst networks" are going to get a ton of 600 MHz spectrum (aside from Sprint's 800 MHz SMR and T-Mobile's 700A MHz) and kick the duopoly's a**.

Keep dreaming. The restrictions are in place only for certain areas. Where there are no restrictions, watch VZW/AT&T outbid Sprint-Mobile by a good margin.

By the way, T-Mobile beat your precious AT&T to VoLTE.

Cool. They beat AT&T by one whole day! The horror. AT&T has deployed VoLTE in far more areas (Seattle is the only TMo market right now) and LTE-A is already up.

T-Mobile needs to worry about densifying their network. Not deploying VoLTE. TMo's HD Voice is already fantastic.

 

[scaredpoet]

Well I have news for you: The two "worst networks" are going to get a ton of 600 MHz spectrum (aside from Sprint's 800 MHz SMR and T-Mobile's 700A MHz) and kick the duopoly's a**.

That's nice. Except: Sprint has had "low" frequency allocations every since they bought Nextel, and even more "low" frequency allocations since they bought Velocita Wireless. Only, they failed for a very long time to do absolutely anything meaningful with that spectrum.

By the way, T-Mobile beat your precious AT&T to VoLTE.

That's nice. Oh, except for: when I was traveling last week from Philly to Raleigh-Durham North Carolina, most of my drive wasn't in LTE. It wasn't even in 3G/fake 4G. My T-Mobile device was on EDGE the whole time, while my AT&T iPhone had LTE the majority of the trip and fake 4G in the rare non-LTE spots.

So, good luck making USE of that VoLTE. On a phone which the carrier hasn't implemented support yet for it, no less.

Look, I want lesser-tier carriers to succeed. I hate the current duopoly situation. But sitting like a fanboy and giddily talking about how X-carrier is gonna kick Y-carrier's a** is outright childish, and totally blind to the reality of the current situation. It actually hurts consumers, because the Big 2 can now point to fanboys like you and say "See? Everything is just fine. The consumer wants things to be the way they're going." And then idiotic mergers like Sprint/T-Mobile can go forward, killing both. And then we'll see who's a** is really kicked. (Spoiler alert: ours, the consumers who pay the phone bills.)

T-Mobile is not your friend. Neither is Sprint, nor Verizon, nor AT&T. All of them have profit motives; some are a little less competent in making that happen than the others. None of them are actually looking out for you, the customer, so they really don't deserve your chest-thumping. It's time to wake up to that fact and stop being a cheerleader for any of them; and seriously and cynically look at their actions and the motives behind those actions.

 

[CEmajr]

I think Son would've been better off buying T-Mobile first. That way it would've been easier for him to prove that Sprint would be near insolvent without him also purchasing them.

I guess looking at the market when he initially purchased Sprint, I could see why he may have thought it to be the better starting point. They had more customers and far more spectrum holdings. In hindsight he's probably kicking himself right about now. It's an uphill climb trying to convince regulators that a carrier who's outpacing the Big 2 in subscriber growth needs to be purchased by him in order to compete.

 

[Newtons Apple]

I feel sorry for T-Mo!

 

[eyoungren]

I feel sorry for T-Mo!

Don't feel too bad. Deutsche-Telekom, which is the German cell carrier, that owns T-Mobile is demanding a $1 billion breakup fee.

If Masayoshi Son agrees to that and the merger doesn't happen T-Mobile can cry all the way to the bank.

 

[jrswizzle]

At the end of the day whether or not they're allowed to merge likely depends on politics. The vote would be along party lines with the Dems voting against and and GOP in favor.

Not necessarily.....take the Comcast-Time Warner merger for instance. Comcast execs have been HUGE supporters of Dems including Obama. That likely makes it through....

Not all of corporate america panders to the GOP. Plenty of pandering to Dems too...

 

[yeah]

That's nice. Except: Sprint has had "low" frequency allocations every since they bought Nextel, and even more "low" frequency allocations since they bought Velocita Wireless. Only, they failed for a very long time to do absolutely anything meaningful with that spectrum.



That's nice. Oh, except for: when I was traveling last week from Philly to Raleigh-Durham North Carolina, most of my drive wasn't in LTE. It wasn't even in 3G/fake 4G. My T-Mobile device was on EDGE the whole time, while my AT&T iPhone had LTE the majority of the trip and fake 4G in the rare non-LTE spots.

So, good luck making USE of that VoLTE. On a phone which the carrier hasn't implemented support yet for it, no less.

Look, I want lesser-tier carriers to succeed. I hate the current duopoly situation. But sitting like a fanboy and giddily talking about how X-carrier is gonna kick Y-carrier's a** is outright childish, and totally blind to the reality of the current situation. It actually hurts consumers, because the Big 2 can now point to fanboys like you and say "See? Everything is just fine. The consumer wants things to be the way they're going." And then idiotic mergers like Sprint/T-Mobile can go forward, killing both. And then we'll see who's a** is really kicked. (Spoiler alert: ours, the consumers who pay the phone bills.)

T-Mobile is not your friend. Neither is Sprint, nor Verizon, nor AT&T. All of them have profit motives; some are a little less competent in making that happen than the others. None of them are actually looking out for you, the customer, so they really don't deserve your chest-thumping. It's time to wake up to that fact and stop being a cheerleader for any of them; and seriously and cynically look at their actions and the motives behind those actions.

I do understand that these companies are looking for profits, but do you know why I am rooting for T-Mobile?

Because they are actually CAUSING industry change in the wireless industry.

Just look at their past Un-Carrier moves and tell me that they are not changing the crippled wireless industry.

Consumers are going to T-Mobile in droves, and that's a drastic turn-around for the [now #3] carrier in the US.

 

[CEmajr]

T-Mobile isn't number 3 yet. That article was about them being #3 in terms of smartphone subscribers. Sprint still has more overall customers.

T-Mobile could be number 3 by late 2014 or early 2015 if current trends continue though.

 

[scaredpoet]

I do understand that these companies are looking for profits, but do you know why I am rooting for T-Mobile?

Because they are actually CAUSING industry change in the wireless industry.

A temporary blip if the Sprint/T-Mobile merger goes through, sadly.

 

[EbookReader]

T-Mobile could be number 3 by late 2014 or early 2015 if current trends continue though.

I believe T-Mobile is about 4-5 million behind Sprint.

But T-Mobile is growing very fast:

T-Mobile

1Q of 2013: 0.6 million net customers
2Q of 2013: 1.1 million net customers
3Q of 2013: 1 million net customers
4Q of 2013: 1.65 million net customers
1Q of 2014: 2.4 million net customers


Total: 6.75 net customers in the last 15 months

T-Mobile could surpass Sprint in about 2-3 quarters.

 

[I7guy]

If they(tmobile) continue to lose money, their operation will be unsustainable.

 

[EbookReader]

http://www.nytimes.com/2014/06/06/business/sprint-and-t-mobile-say-deal-adds-competition.html

“Antitrust enforcers fantasize in the middle of the night about disruptive forces that can spur competition,” Mr. Balto said. “T-Mobile has been aggressive beyond any enforcer’s fantasies. It’s going to take a lot to convince them that a merger would make it more disruptive.”

One thing is certain, however. The F.C.C. and the Justice Department are happy about the effects of their refusal to permit AT&T to buy T-Mobile in 2011. “Competition in the wireless sector has flourished, and consumers have benefited” since regulators blocked that merger, William J. Baer, the head of the Justice Department’s Antitrust Division, told a group of antitrust lawyers this year.

Similarly, Tom Wheeler, chairman of the F.C.C., told reporters this year that the existence of four competitors in the national wireless market was “an important and driving force in the competitive nature of that market.”