Back-Off

 AT&T should back off of the mobile phone deal, should it be approved. And, after the Bush administration pattern, you would expect it to be signed off by both the FCC and the Justice Dept., with of course stipulations. The stipulations is what should scare off AT&T.

  AT&T, like much modern business, have myopic vision. It’s the here and now, or maybe just around the corner. They understand and follow things like quarterly reports, etc. But, a more concentrated market tends to rule out effective competition and all the fringe benefits of a competitive market. That’s trouble for everybody. The deal would give AT&T and Verizon 80% market share. A duopoly of this market penetration would have been unthinkable in the old days. But, for believers in powerful central government, it would be a plum indeed. The 80% by only two companies would demand that the government regulators run the show. Ostensibly, to protect the consumer !

  If you believe in government management more than a free and competitive market, why should it matter how many competitors you have ?

  There is a spectrum issue in this case, but it is a side issue, as space can be handled in different ways without choking the market.

  Experience tells us the advantage goes to the big players. AT&T is a big player. They have few peers as investors in politicians. Of course, Congress is hamstrung on this deal, as this is an agency decision and ultimately the courts. Congress can hold hearings, but they can hold hearings on flea powder. None the less, recent history has taught us that the big money gets it’s way.

  The Obama administration promised a more active and citizen-minded anti-trust policy. We are still waiting for that discipline in the big deals. An active anti-trust  policy would look at the dominance of the 4 wireless carriers and explore why we don’t have 8 carriers for the same amount of customers. Then, we could have a truly competitive industry, with prolific innovation. Where would we be today; speaking of innovation, if Ma Bell had never been broken up ?