The Coming of a New Duopoly

For a very long time, detractors of UTOPIA have pointed to the wireless market as a shining example of how the private sector provides superior competitive choice and great consumer benefit. Now we’re watching as that example starts to look a whole lot like the wireline business, locked up in relatively few choices with little product differentiation between them. Once AT&T completes its purchase of T-Mobile (and nobody seriously expects the deal to fall through), two companies will control over 65% of wireless lines in the United States, both of which are nasty players in the wireline duopoly business. This is just the beginning.

Sprint’s CEO Dan Hesse, who I’ve admired for both turning around Sprint and taking a bold lead on both network investment and flat-rate pricing, has hinted that this consolidation could lead to his company being purchased by CenturyLink, now the third-largest ILEC in the country. This would mean that all of the largest wireless carriers would also be the largest wireline carriers and would no doubt use their combined assets to drive smaller providers out of business. After all, they control almost all of the transport options to towers, and they are sitting on a horde of unused wireless spectrum that a potential competitor can’t even get at.

We’re already seeing the first salvos of this anti-competitive landscape playing out. Sprint is the lone holdout amongst the big four to not buck unlimited data usage. ETFs on phones have skyrocketed, often totaling more than the subsidized handsets. Not content with locking a phone to a specific carrier, many now prevent you from installing applications that interfere with their business model. Does this sound like a market responding to consumer demand, or one that knows they have you over a barrel?

If the consolidation in the wireless space continues, it will be just as bad, if not worse, than the telco and cableco duopoly currently plaguing wireline service. Unfortunately, regulators are all too used to rubber-stamping proposals and demanding very little in return. The mergers will be approved, the unused public spectrum will continue to be squandered, and the free market loses another round.

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2 Responses to The Coming of a New Duopoly

  1. Ronald D. Hunt says:

    Almost wish they would finish consolidating just so we could regulate them properly, I suppose that is a bit of an assumption tho!

    New RFQ on utopia’s site with new maps of building plans!

  2. Rupert Marshall says:

    I am imploring all of you to email ten of your closest friends and anyone you know at Comcast to lobby Comcast to purchase Sprint. I hate to say it but 3 telecoms is better than two.

    Rupert M

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