Lots of news on the AT&T–T-Mobile mega-merger. First, from Internet guru (and former ICANN board member) Susan Crawford, we learn that the Justice Dept. is suing to block the merger deal itself:
Right now [August 31], DOJ’s Sharis Pozen is holding a press conference to announce that DOJ is suing to block the merger. This is great news that shouldn’t be surprising. It was a terrible deal in a host of ways.The Bloomberg story is here. AT&T and T-Mobile are already giants, as any cell phone customer knows. That deal should be blocked.
We also learn that New York AG Eric Schneiderman, who apparently has some spare time, is also looking — separately — at the merger (my emphasis):
Antitrust Bureau Chief of the New York Attorney General’s Office Richard L. Schwartz today issued the following statement regarding the U.S. Department of Justice’s lawsuit to block the proposed merger of AT&T and T-Mobile:If Schneiderman is looking for his own purposes at stifled competition, that might be bad news for more than just this merger, and good news, finally, for wireless consumers.
“Attorney General Schneiderman looks forward to reviewing the Department of Justice’s complaint to determine the best course forward on behalf of New York consumers and businesses.
“Since March, Attorney General Schneiderman has played a major role in the review of the proposed AT&T, T-Mobile merger. Working in close partnership with the Department of Justice, this office has played a leadership role in a group of 26 states conducting interviews and gathering evidence central to this investigation. We have conducted numerous interviews of business enterprise customers throughout New York State and throughout the country to assess whether the merger would result in harm to competition to the business enterprise market, and closely analyzed the parties' claims that the merger would lower costs and improve service to consumers.
“Attorney General Schneiderman remains particularly concerned that the proposed merger would stifle competition in markets that are crucial to New York's consumers and businesses. This includes concerns about vulnerable upstate communities, where concentration in some markets is already very high, and the impacts on New York City’s information-intensive economy, which is particularly dependent on mobile wireless services. Simply put, the impacts of this proposed merger on wireless competition, economic growth, and technological innovation could be enormous.”
For why, here's more from Susan Crawford (again, my emphasis):
[E]ven without the deal we still have a problem. Here’s why:And she knows whereof she speaks. Not only was she a board member of ICANN, but she was Obama's Special Assistant for Science, Technology, and Innovation Policy before leaving to return to law school teaching.
• The suggested merger shed light on the fact that we are heading towards – and may already have – a duopoly in the market for wireless access, with a yawning, insurmountable gap between the two big wireless carriers and everyone else;
• Even without the merger, there are insufficient protections in place for innovation in connection with these wireless networks. The existing unregulated duopoly will have ample incentive and ability to keep profit margins as high as possible by discriminating against uses and services these companies believe are undermining their business plans. The mere threat of this discrimination casts a cloud over investment in new ideas and new ways of making a living for all Americans.
Society reaps increasing economic returns from the existence of ubiquitous high-speed communications infrastructure, and it is appropriate to incentivize and support the creation of this infrastructure. But those social returns come because the benefits of ubiquitous, general-purpose, nondiscriminatory communications infrastructure spill over to all of us, not just to a few large companies. The complete discretion already enjoyed by AT&T and Verizon to capture economic rents and choose winners and losers from among the companies that use their networks to launch businesses of their own – and to raise their prices and set the terms and locations of their services at will – means that their private incentives are already not necessarily aligned with our nation’s social incentives.
It's a scandal that the U.S. wireless market has consolidated around giants in the two main technologies: GSM (which uses SIM cards) and CDMA (which doesn't). AT&T and Verizon are trying to swallow the rest. (Note that AT&T and T-Mobile are both SIM card–type networks.)
But the competitive situation is already bad. For example, the U.S. consumer pays up to five times as much for cellular service as many Europeans.
That's what Crawford meant by "capture[d] economic rents" and why I bolded the phrase. It's a rentier's world in so many ways, a world of dinosaurs and rabbits. The deathgrip of Rentier Rule, and rebellion against it, is an obvious explanation for the world-wide "troubles" we have been seeing — and will continue to see, I'm afraid.
GP
