News

Keeping Competition Alive

9/05/2011 12:01 AM Eastern

In strongly nixing AT&T’s merger
with T-Mobile, the government has shown that,
at least sometimes, it’s serious about preserving
competition for telecom and TV consumers.

And Charlie Ergen finally has some company
in the dashed-merger camp.

Ergen has lamented that his Dish Network’s
proposed hookup with DirecTV in 2001 was the
only major telecom merger to have been rejected
in Washington in the past decade. Not anymore.

Both satellite-TV providers are still healthy and
active competitors to cable TV. And Verizon and
AT&T have emerged as vibrant rivals from the telco
side.

Competition has been good for consumers in
TV innovation terms, if not necessarily on price. DVRs would
not likely be so omnipresent had it not been for DirecTV and
Dish. VOD wouldn’t be as good as it is (despite flaws) if it hadn’t
been cable’s edge against satellite.

Clearly, wireless voice and broadband is where the growth is
happening now and in the future. T-Mobile and Sprint are well
behind Verizon and AT&T, and now Deutsche Telekom-owned
T-Mobile is going to have to, as analyst Craig Moffett put it, “put
away their mothballs and go back to the market.”

But it’s not all dire for T-Mobile, as Moffett
also said. While the government analysis also
would appear to rule out a merger with Sprint,
T-Mobile could link up with cable providers
who currently are aligned with Sprint on mobile
broadband. T-Mobile also would get $3 billion
in cash plus other breakup-style benefi ts
from AT&T.

For Sprint, the news is not so good — but it
keeps advertising about the benefits of competition,
and its stock actually rose last week, so
investors must think Sprint has a better shot at
survival without AT&T absorbing T-Mobile.

Consumers clearly will benefit from keeping
more choices, especially if T-Mobile starts competing
on price. One commenter under a New York Times
online story last week said T-Mobile, unlike other providers,
has BlackBerry service that doesn’t require a data
plan. As someone shopping for a cheap talk-and-text plan
for a tween-age user, that’s essential info.

Viva competition, basically, and kudos to Justice and
FCC for stepping in to preserve it.

March