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AT&T Uneasy with Clearwire Portion of Sprint-Softbank Deal

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Top message:  Good by stevelvl   Oct 18, 2012, 12:18 PM

Replying to:  Re: Good by newfoneguy   Oct 18, 2012, 1:10 PM

Re: Good

by vikes0115    Oct 18, 2012, 3:59 PM

newfonguy... you missed the point of his comment completely. It was not a pro-Verizon swipe at AT&T, rather it was regarding the current state of the wireless industry in the US and the pricing power jointly exerted by AT&T and Verizion.

I believe that you must understand this as the only portion of the comment you elected to not quote was the following portion which made this clear:

stevelvl said:
The duopoly of ATT-Verizon sets the stage of the entire US wireless market. Any thing that would weaken that has great potential to benefit the consumer by creating greater competition between the carriers.


Your comment reveals that you are a kool-aid drinking AT&T fanboy, who can't be taken any more seriously than those who believe Verizon can do no wrong.

The problem with a monopoly (or a duopoly) is that you don't have competition setting a market price for the services provided. For this reason your car analogy is faulty.

I would agree with you that on its own the similar pricing would not demonstrate monopolistic price control. Rather in this case the escalation of cost much more clearly demonstrates this lack of competition impacting prices.

Technology generally brings costs down as markets mature. If you look at the prices of landline service, the price of home internet service, etc. you will find prices that have held steady or declined over the last several years. Even if you were to look at cable and satellite television costs, if you were to split that cost between their cost of content (which is paid to unrelated third parties) and the rest of your monthly rate which would generally account for the cost of the cable/satellite provider to provide the service, you'd find that cost of service component is also trending downward.

The US Cellular phone market is quite unique in the tech sector in the average charge per user increasing over this same time. While a portion of this is due to additional services (data) being provided, it is to a much greater extent due to the level of price controls. Each successive new plan that is supposed to "enhance the customer experience", such as the shared data plans, have all been constructed in a way to ensure that the customer is paying more each month than they would have under the previous iteration. The choice of phones, etc. are also working to push customers into these higher priced (and higher margin) plans.

In a normal market competitive factors would force prices down as new start up companies come into the market and offer lower pricing. Small players have little chance because of the market entry barriers of needing to outbid the deep pockets of AT&T and Verizon for spectrum (which they can afford to just sit on in order to keep their monopoly in place) and the need to either purchase that spectrum on a national level and immediately build out a national network or the need to strike an agreement with either AT&T or Verizon to use their national network.

Rather than this Softbank deal showing the "competitive condition of the US market" in a positive light, I would argue that this transaction instead proves that there is a lack of competition in this market. It is only because Softbank sees the artificially high rates charged to US consumers as a key reason this transaction, and entering the US market, is a very attractive option.

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