Tuesday, March 22, 2011

sweN xoF

http://www.foxnews.com/scitech/2011/03/22/att-t-mobile-return-ma-bell/  I was surprised to read an article by a Fox News tech guy that criticized free market forces. Am I dreaming?
"Of course you'll hear plenty of other cliches as Wall Street attempts to defend the acquisition -- from which it will glean hefty profits -- including that AT&T had to "buy it or build it." That's a telltale phrase used by companies to defend an overpriced acquisition. Unfortunately, you may be paying for it in the future."
How did this guy get on the Fox News website? When did profits become bad in our free market system? Clearly the underlying cause cannot be a lack of government regulation or any flaw in the free market.

AT&T needs T-Mobile for more network infrastructure (as well as the sliver of bandwidth T-Mobile owns) to help it's customers with their bandwidth problems on their Apple products, and to get more coverage in rural areas. Having to compete with Verizon's newly successful push into smart phones makes this takeover of T-Mobile a good thing to do for AT&T. It's just a lot easier to provide services and goods to customers if a company is bigger. A company usually can also provide customers better services if the competition is trampled or annexed. What does this Fox techie want, the government to step in and stop this acquisition?

I'm being mostly facetious. The Fox guy is correct. Less competition will mean higher prices down the road for consumers. The stock price for Verizon went up, not down. Why?  Less competition from little guys and Verizon has effectively shown it can compete with AT&T. So, now, Verizon can have a better chance of raising prices with the competition thinning out. Also, this means that the third true big guy, Sprint, might be looking to further thin out the competition to build itself up to become an effective player with the new bigger guys on the block.

Smart phones shook up the cell phone market a great deal and the little companies, they just can't keep up with the big ones. Capitalism usually leads toward monopoly, it is one of my never punctured beliefs. Government regulation will probably help lessen the impact of this consolidation of companies by imposing requirements for AT&T before the acquisition can be finished. They might have to divest themselves of some customers, or something, to satisfy the FCC. These will be small enough concessions for AT&T to handle while keeping their eyes on the prize -- less competition, more power to compete with Verizon. Having lost their monopoly on the Iphone while at the same time encountering stiff competition from Verizon's Android : http://www.informationweek.com/news/smb/mobile/showArticle.jhtml?articleID=229000356

AT&T suddenly buys T-Mobile. AT&T is very familiar with monopolies, whatever their flavor.