T-Mobile US now seems to have changed the rationale for its proposed merger with Sprint. Where once the argument was “more competition” in the mobile market, now the argument appears to be “more competition in the fixed network internet access” business.
“New T-Mobile’s business plan is to become the disruptive ‘Un-wired’ and ‘Un-cabled’ in-home broadband provider,” T-Mobile US says in a new filing with the Federal Communications Commission, which also has again paused the merger review clock.
That might suggest policymakers are not yet convinced the Sprint merger with T-Mobile US is really in the public interest. And T-Mobile’s new rationale also suggests the earlier story has not been convincing.
Initially, the claim was that the merged company would be a stronger competitor to AT&T and Verizon, which is true as far as it goes. A much-bigger company with much-greater scale--in a scale business--should do better.
Ignore for the moment the fact that no equity analyst I ever have heard from thinks “lower prices” are an outcome. Instead, they believe higher prices are the outcome. That is not to say market concentration and prices are related is a simple and obvious way.
Still, most might agree the merger is better for Sprint and T-Mobile US. It is not so clear it is good for consumers , at least in terms of the amount of price competition in the U.S. mobile market. That noted, it remains unclear how much competition the U.S. mobile market can sustain, long term.
But some of us would argue the answer is yet unknown, as Comcast, Charter and possibly other large entities with scale could be big forces. The U.S. market arguably is big enough, with enough ways to create new business models blending app, services and access, that the “best” answer might not be “two or three” pure-play mobile service providers.
Someday, we might find that mobile access is something that is part of the core value proposition for bundles of vale that bridge apps, services, devices and network services. We just do not know where the larger business is headed, except to note that “access alone” is getting to be a dangerously-thin way to earn revenue on a sustainable basis.
I’ve argued in the past that among the most-sustainable outcomes is for Comcast and Charter to combine assets with T-Mobile and Sprint, for example, pairing one mobile firm with one cable leader. Other combinations might be proposed, but none seem to have the clean “we provide access services” rationale as well as cable-plus-mobile.
That is the analogy to AT&T and Verizon’s operation as entities with mobility and fixed assets.
The filing leads with the argument that “new” T-Mobile will challenge the cable operator “monopoly” of fixed network internet access. “New T-Mobile will not only raise the performance bar and enhance competition for mobile wireless services, but also enter into and disrupt in-home broadband,” the document says. Some of us believe that is a reasonable or plausible claim.
But it strays from the basic argument that new T-Mobile actually is good for mobile consumers. And that suggests T-Mobile believes it has not won that argument. Some of us have argued the deal would face a high bar because the U.S. mobile market already is concentrated.
In the mobile business, as well as the fixed business, competition is going to occur in different ways, in the future. So both T-Mobile US and Sprint are long-term asset sellers, if this merger is not approved. Some might argue that would be better for both innovation and competition, long term.
“New T-Mobile’s business plan is to become the disruptive ‘Un-wired’ and ‘Un-cabled’ in-home broadband provider,” T-Mobile US says in a new filing with the Federal Communications Commission, which also has again paused the merger review clock.
That might suggest policymakers are not yet convinced the Sprint merger with T-Mobile US is really in the public interest. And T-Mobile’s new rationale also suggests the earlier story has not been convincing.
Initially, the claim was that the merged company would be a stronger competitor to AT&T and Verizon, which is true as far as it goes. A much-bigger company with much-greater scale--in a scale business--should do better.
Ignore for the moment the fact that no equity analyst I ever have heard from thinks “lower prices” are an outcome. Instead, they believe higher prices are the outcome. That is not to say market concentration and prices are related is a simple and obvious way.
Still, most might agree the merger is better for Sprint and T-Mobile US. It is not so clear it is good for consumers , at least in terms of the amount of price competition in the U.S. mobile market. That noted, it remains unclear how much competition the U.S. mobile market can sustain, long term.
But some of us would argue the answer is yet unknown, as Comcast, Charter and possibly other large entities with scale could be big forces. The U.S. market arguably is big enough, with enough ways to create new business models blending app, services and access, that the “best” answer might not be “two or three” pure-play mobile service providers.
Someday, we might find that mobile access is something that is part of the core value proposition for bundles of vale that bridge apps, services, devices and network services. We just do not know where the larger business is headed, except to note that “access alone” is getting to be a dangerously-thin way to earn revenue on a sustainable basis.
I’ve argued in the past that among the most-sustainable outcomes is for Comcast and Charter to combine assets with T-Mobile and Sprint, for example, pairing one mobile firm with one cable leader. Other combinations might be proposed, but none seem to have the clean “we provide access services” rationale as well as cable-plus-mobile.
That is the analogy to AT&T and Verizon’s operation as entities with mobility and fixed assets.
The filing leads with the argument that “new” T-Mobile will challenge the cable operator “monopoly” of fixed network internet access. “New T-Mobile will not only raise the performance bar and enhance competition for mobile wireless services, but also enter into and disrupt in-home broadband,” the document says. Some of us believe that is a reasonable or plausible claim.
But it strays from the basic argument that new T-Mobile actually is good for mobile consumers. And that suggests T-Mobile believes it has not won that argument. Some of us have argued the deal would face a high bar because the U.S. mobile market already is concentrated.
In the mobile business, as well as the fixed business, competition is going to occur in different ways, in the future. So both T-Mobile US and Sprint are long-term asset sellers, if this merger is not approved. Some might argue that would be better for both innovation and competition, long term.
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