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 20, 2011

Puzzling over big wireless carrier mergers: An Editorial

Filed under: Editorial,Internet economics and communications policy — Shane Greenstein @ 10:20 pm
Tags: , , ,

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…)

December 14, 2009

The evolution of value in smart phones, or “Why does my iPhone drop so many calls?”

Randall Stross writes the Digital Domain in the Sunday New York Times. In a recent column he discusses the quality of iPhones and AT&T’s network. His point is obvious from the title of the column: “AT&T Takes the Blame, Even for the iPhone’s Faults.”

Much to Stross’ credit, he investigated common misconceptions about the quality of AT&T’s network. He concludes that AT&T’s network has done reasonably well with the  growth of traffic generated by the iPhone.

More to the point, Stross concludes that popular perceptions about AT&T’s network miss the mark, as do Verizon’s commercials.

I recommend this piece even though I thought it was incomplete.

Let me say that more sympathetically. Stross gets only 800 words, which allows for only one major point. It is no surprise that Stross does not say many things.

Specifically, he does not say that the iPhone’s success foreshadows a large transformation in the flow of value within the market for mobile handsets. He does not say that this transformation coincides with an irreversible change from old rules and new rules in the structure of the value chain supporting the cellular phone market.

But if he had had more space he could have said it.

So let me be blunt. I think I understand the rules of the old game and the rules of the new. I think I understand what game Apple is playing. If I had to bet, I also would bet against AT&T.

These are the points of this post.

(more…)

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