Virulent Word of Mouse

November 25, 2011

Mobile mergers and insider baseball conversations

Here is a fact. The FCC recently announced it would move to have a hearing about the AT&T and T-Mobile merger. In response, AT&T withdrew its application from the FCC, delaying the hearing indefinitely (or until AT&T resubmits the application).

What is that all about? At a procedural level it is just a detail — the FCC reviews mergers involving the transfer of licensing. The Department of Justice (DOJ) has a review process too, but just a different standard of review. The DOJ uses antitrust, while the FCC considers whether the merger is in the “public interest.” Even if the FCC delays its review, the FCC must continue to do its review. The first hearing in front of judge takes place in February.

Today’s post provides a little insider baseball about these reviews (The Wiktionary definition for insider baseball “Matters of interest only to insiders”), trying to explain the chess moves to a wider audience. Seemingly small procedural moves provide a window on the likely outcome of this merger. To paraphrase Robin Bienenstock and Craig Moffett of Bernstein Research, AT&T has not thrown in the towel, but they are acting like a firm who understands the odds of success are low. I prefer to think of it this way: economic substance does matter. This requires a brief explanation. (more…)

September 26, 2011

Should Google go Back to Only Organic?

Filed under: Internet economics and communications policy — Shane Greenstein @ 10:10 pm
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If you have a couple hours to burn on some political theater, go a watch the Senate hearings about Google. Here is a link.

Actually, as someone who foresaw the inevitability of this event, I was rather disappointed. This hearing was pretty anti-climactic. To find this interesting you have to be a serious junkie of antitrust policy in innovative industries.

There just were not many moments of drama. Rather, the hearing resembled the verbal equivalent of a tennis match that rarely left the baseline, volleying back and forth. There were long stretches between the high points, and those stretches did not contain much tension. Nothing kept an audience glued to their seat, as if they were concerned about missing some important moment.

Except once. But that moment came so unexpectedly, and after such a long stretch of nothing.

Actually, upon reflection, that moment illustrated what was wrong with the hearing. The hearing focused on the wrong issues. That is the point of this post. (more…)

September 20, 2011

Puzzling over big wireless carrier mergers: An Editorial

Filed under: Editorial,Internet economics and communications policy — Shane Greenstein @ 10:20 pm
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Let’s talk about AT&T proposal to merge with T-Mobile. Why do the parties involved still consider this merger viable?

Executives at AT&T seemed to think this merger was a good idea many months ago. For all I know, that might have been the right conclusion with the information they had then. But that was then, and this is now, and too much information has come to light to hold that conclusion any longer. Based on what we know now the proposal does not make business sense.

This blog post will argue what should be obvious to any close observer of events, and certainly to the management at AT&T. There is not a viable business case for this merger any longer.

This blog post also will argue that executives at T-Mobile should begin planning to run their business as a stand-alone entity. They always had a viable business,  but that holds even more so now, since they will get a reasonable infusion of cash from the break-up of this deal.

How did the executives at AT&T get into the present pickle? They took a strategic gamble with the US legal system and lost. In their own internal deliberations today they should be acknowledging the loss, and —  for lack of a better phrase — simply move on. That is what their business needs.

So I am puzzled. Why haven’t all the parties declared victory and gone home? This post will consider the question. (more…)

February 11, 2010

The Next Chapter at Google

Once upon a time, a couple of smart fellows perceived a technological and business opportunity. They founded a firm, leaving academic programs. They worked hard, caught a break, and began living an economic fairy tale. Their new company grew, making profits every year, even during difficult economic times. The firm hired with abandon, taking its pick from among the best talent.

After a dozen years, the firm’s hallways overflowed with a lively entrepreneurial spirit. Seasoned executives and sophisticated technical staff had ample cash to explore almost every ambitious idea.  For the next dozen years, the firm’s managers aspired to undertake something audacious and ambitious—to build the most innovative firm of all time.

Who does this economic fairy tale describe? It describes two firms: Google in 2010 and, by ticklish coincidence, Microsoft almost 20 years earlier.

Can history repeat itself? Surely not. Past events at Microsoft cannot forecast with precision what Google will do tomorrow.

It is tempting to scratch this itch, nonetheless. Comparing two leading firms at the crest of their teen years could generate insights into why (and how) Google’s fairy tale might or might not reach a happy ending. (more…)

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