4 ms·

Sorry but you are wrong here. In the case of TMUS and S, and any other publicly traded company the imperative is to maximize shareholder value. Sprint especial

Sorry but you are wrong here. In the case of TMUS and S, and any other publicly traded company the imperative is to maximize shareholder value. Sprint especially is on the ropes. Investors worry a lot about a bankruptcy in the next couple of years. It has every incentive to change the status quo, and is cutting rates across the board to bring in subscribers. It's not irrational if T-Mobile and Sprint believe they can eventually turn a profit, and probably compress the margins of T and VZ due to greater competition. Sprint hasn't invested in its network in part due to cost-cutting. All of the carriers have to market. They are retail consumer facing. I am not saying we should feel sorry for them, merely that the likelihood of collusion from Sprint especially is very low.

jacquesm 10y ago
On the contrary, it would seem that Sprint has more to gain from collusion in such a situation because it allows them to use their network for bigger margins even if they don't upgrade. See, there is no downside to collusion for parties, only upside. And it even 'maximizes shareholder value'. Sprint cutting their rates is a bit like pissing in your pants, as the Finnish say, it will only keep you warm for so long. In the meantime, all carriers not being created equal, there may be some re-shuffling of name-tags and call signs but as long as carriers can get away with charging for thin air (SMS, Air Time) they've always done so, I see absolutely no reason to assume goodwill on their part without some pretty strict oversight. And of course they have to market, just like everybody else that wishes to sell a product. But just like everybody else that wishes to sell a product, if there is no margin there will be no marketing, and if there is a way to improve the margin then surely it will taken. Maybe Sprint is the exception, and they are really doing as bad as you say (a bankruptcy in the next couple of years does not sound like a huge threat to me, usually a bankruptcy in the next 3 months is the kind of thing you'd worry about) then maybe Sprint will go under and its assets and subscribers will end up with one of the other parties. Such is the nature of doing business. But that says absolutely nothing about whether or not there is a profit to be made for all players by placing caps on data plans and by colluding to keep prices for data plans artificially high.
- harryh 10y ago
  > See, there is no downside to collusion for parties, only upside. The downside is that collusion preserves market share status quo. For those hoping to gain market share (like Sprint and T-Mobile) collusion gets in the way of that goal.
  - jacquesm 10y ago
    You're missing the point. You are presuming the market is functioning, my point is that if it does not the only losers will be the consumers all else being equal. It is perfectly possible to compete for market share while at the same time colluding on the price of a part of your offering. All the parties competing will come out ahead in that scheme at the expense of the consumers. You can compete on the kind of handsets you offer, your marketing message and the various demographic selectors. You can compete on coverage of the market, availability of the service, quality and so on.
    - harryh 10y ago
      Sprint & T-Mobile both aggressively compete on price.
      - nitrogen 10y ago
        They may market based on price, but that doesn't mean that the prices are going down / bandwidth caps going up as fast as they should, or at all.
        tcoppi 10y ago
        Yeah, and they actually aren't dropping all that much. T-Mobile's prices have gone up the past year or two for new single/two person accounts with the same amount of data. Family prices seem to have dropped slightly but not very much. Sprint's situation is similar.
    - rayiner 10y ago
      He's not. Economic theory tells us that in a market with multiple competitors, collusion is inherently unstable: while in the short run companies may be able to keep it up, in the long run there is a strong incentive to break the collusive pact because whichever company does so will rapidly gain market share at the expense of the others. Your argument to the contrary is based on piling speculation on top of speculation. Not only are we to assume--without evidence--that the carriers are colluding, we must also ignore what we know about T-Mobile's and Sprint's incentives to break the collusion and grab market share because they are, in fact, making tons of money but hiding it through clever accounting. It's not that collusion isn't a possibility in cellular markets in the abstract. It's that it's highly unlikely in a market where one of the alleged colluders is bleeding money and customers and faces bankruptcy.

jacquesm 10y ago

On the contrary, it would seem that Sprint has more to gain from collusion in such a situation because it allows them to use their network for bigger margins even if they don't upgrade. See, there is no downside to collusion for parties, only upside. And it even 'maximizes shareholder value'. Sprint cutting their rates is a bit like pissing in your pants, as the Finnish say, it will only keep you warm for so long. In the meantime, all carriers not being created equal, there may be some re-shuffling of name-tags and call signs but as long as carriers can get away with charging for thin air (SMS, Air Time) they've always done so, I see absolutely no reason to assume goodwill on their part without some pretty strict oversight. And of course they have to market, just like everybody else that wishes to sell a product. But just like everybody else that wishes to sell a product, if there is no margin there will be no marketing, and if there is a way to improve the margin then surely it will taken. Maybe Sprint is the exception, and they are really doing as bad as you say (a bankruptcy in the next couple of years does not sound like a huge threat to me, usually a bankruptcy in the next 3 months is the kind of thing you'd worry about) then maybe Sprint will go under and its assets and subscribers will end up with one of the other parties. Such is the nature of doing business. But that says absolutely nothing about whether or not there is a profit to be made for all players by placing caps on data plans and by colluding to keep prices for data plans artificially high.

harryh 10y ago
> See, there is no downside to collusion for parties, only upside. The downside is that collusion preserves market share status quo. For those hoping to gain market share (like Sprint and T-Mobile) collusion gets in the way of that goal.
- jacquesm 10y ago
  You're missing the point. You are presuming the market is functioning, my point is that if it does not the only losers will be the consumers all else being equal. It is perfectly possible to compete for market share while at the same time colluding on the price of a part of your offering. All the parties competing will come out ahead in that scheme at the expense of the consumers. You can compete on the kind of handsets you offer, your marketing message and the various demographic selectors. You can compete on coverage of the market, availability of the service, quality and so on.
  - harryh 10y ago
    Sprint & T-Mobile both aggressively compete on price.
    - nitrogen 10y ago
      They may market based on price, but that doesn't mean that the prices are going down / bandwidth caps going up as fast as they should, or at all.
      - tcoppi 10y ago
        Yeah, and they actually aren't dropping all that much. T-Mobile's prices have gone up the past year or two for new single/two person accounts with the same amount of data. Family prices seem to have dropped slightly but not very much. Sprint's situation is similar.
  - rayiner 10y ago
    He's not. Economic theory tells us that in a market with multiple competitors, collusion is inherently unstable: while in the short run companies may be able to keep it up, in the long run there is a strong incentive to break the collusive pact because whichever company does so will rapidly gain market share at the expense of the others. Your argument to the contrary is based on piling speculation on top of speculation. Not only are we to assume--without evidence--that the carriers are colluding, we must also ignore what we know about T-Mobile's and Sprint's incentives to break the collusion and grab market share because they are, in fact, making tons of money but hiding it through clever accounting. It's not that collusion isn't a possibility in cellular markets in the abstract. It's that it's highly unlikely in a market where one of the alleged colluders is bleeding money and customers and faces bankruptcy.