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Mobile carrier consolidation has been one of the major failures of antitrust regulators. Looking back to the Sprint/Nextel merger, plans and pricing both decli

Mobile carrier consolidation has been one of the major failures of antitrust regulators. Looking back to the Sprint/Nextel merger, plans and pricing both declined in customer value severely in the months after the merger closed, with in-plan minutes going from the thousands down to the hundreds for the same price. I would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned. It's fine to merge to consolidate infrastructure, but the unfair aspect of market power is derived from the natural scarcity of spectrum. The hardware cost of launching a mobile carrier in an urban environment is falling rapidly, so only spectrum scarcity is preventing upstarts from disrupting the most lucrative urban markets.

jessaustin 9y ago
If competition or "customer value" were actually a goal of FCC, they would open more unlicensed space, on more useful frequencies, rather than auctioning, or re-auctioning more rigidly regulated spectrum. This "natural scarcity" is a property of the deployed technology, not of the universe. [EDIT:] To clarify, the problem isn't so much the portion of the spectrum designated for mobile phone use, as the terms under which that portion is so designated. More of that portion should be available on an unlicensed basis, or at the very least on a non-exclusive licensed basis. The tiny fractions of the spectrum that have been available on those terms in recent history have seen more innovation and less artificial scarcity than more strictly licensed frequencies have.
- grandalf 9y ago
  > would open more unlicensed space, on more useful frequencies Which spectrum do you think should be reallocated to mobile use? > This "natural scarcity" is a property of the deployed technology, not of the universe. What frequencies do you think should be used for mobile voice and data that are not already?
  - wahern 9y ago
    Required reading: https://spectrum.ieee.org/telecom/wireless/the-end-of-spectrum-scarcity https://www.salon.com/2003/03/12/spectrum/ Basically, the argument is that interference (as understood in spectrum policy) is a myth. The channel capacity of a frequency band is a limit between two distinct physical points--it's not some global (or even local) limit. If you put two pairs of broadcasters and receivers in the same room using the same band, the laws of nature don't require that the available capacity to each pair be cut in half. It's the same as it was before for each pair; any reduction in throughput is merely a limitation of their particular technology. As sensitivity improves; as algorithms improve; as processing power increases; you can asymptotically approach your original (uncontended) throughput even as more transmitters join the fray. The above articles are fairly old, but their arguments have born out, and the fundamental science isn't contested. MIMO, beamforming, software defined radio, and other approaches are now widespread and have permitted orders of magnitude more _aggregate_ throughput for the same geographical area, even as the number of transmitters has dramatically increased. And things will only continue to improve for the foreseeable future. It's not literally true that interference is a myth. And there are fundamental physical limitations that we'll eventually bump up against. But those fundamental limits are beyond the horizon. In the context of historic and contemporary spectrum policy, interference is indeed a myth. The above technologies have come to fruition slower than free spectrum proponents argued. But their argument has always been that as long as government treats spectrum as scarce and grants legally protected monopoly rights, there's less market incentive to develop those technologies. The fundamental argument isn't that we need to add more bands to mobile, but that we need to remove (or at least loosen) the regulations which artificially constrain contention. If market participants had to deal with more band contention, there'd be more incentive to improve their technology to restore the service quality. As long as you don't have malicious people intentionally trying to disrupt the system, the argument is that market incentives alone would spur technological improvements at least as fast as contended usage grew. Of course, for the deployed technology at any particular point in time, more spectrum is better. But the argument here is about optimal long-term policy, not about the best way to ensure first responders can communicate 6 months from now.
    - Aloha 9y ago
- Aloha 9y ago
  If you weren't doing licensing, you'd still need to do coordination, and give the coordinators teeth to go after people who don't follow the rules - in effect licensing by another name.
  - mcny 9y ago
    No it is not the same because there is no exclusivity.
    - Aloha 9y ago
      you can't really have two carriers, operating on the same spectrum, in the same place, and have an expectation that anyone is providing reliable service.
- rayiner 9y ago
  The FCC is limited by the technology that’s available. LTE networks of the capacity and scale we have today couldn’t be deployed in an uncontrolled, unlicensed environment. The technology probably exists today to build something like LTE that can work in an uncontrolled environment (though, it certainly didn’t 10-15 years ago when the FCC started down this path). But the FCC’s job isn’t to develop technology, it’s to figure out how to let people deploy the technology that exists in the market. I think in the long run the technology is getting to the point where the FCC can get out of the business of spectrum allocation and let cognitive radios mediate spectrum access amongst themselves. We’re not there yet, though, and the FCC’s current approach is quite reasonable as a stop gap.
noobermin 9y ago
I hate to bring politics into this but I will: how is it some people moan about the "growth of government" while left and right we see merger after merger without the government doing a thing to stop these mergers? Where is the over-regulation I keep hearing about?
- grandalf 9y ago
  Well, in this case what we are seeing is the growth of a regulatory state that exists mainly to help select firms generate profit. This is known as "regulatory capture" and infrastructure services that the government can justify regulating for any reason are vulnerable to it. I'd say that you are correct in the broader observation that both parties strongly favor big government that helps their pet industries avoid competition. And along similar lines, both parties are perfectly happy with mobile carrier consolidation, which is too bad, because the poor spend disproportionately on mobile services and are most likely to be victimized by misleading plans or deceptive sales tactics (which are extremely common).
- Turing_Machine 9y ago
  "Where is the over-regulation I keep hearing about?" It's baked into the cake, as grandalf noted. More regulations benefit larger players, who can afford the parasitic staff of lawyers, accountants, and other compliance people to deal with it. While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though.
  - ZenoArrow 9y ago
    > "While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though." Regulation can exist for good reasons though. Take the pharmaceutical industry as an example, do we want to ensure the drugs that are on the market have gone through clinical trials, even if doing so limits the group of companies that can afford to pay for these trials?
deleted 9y ago
[deleted]
dnautics 9y ago
>I would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned. That's a really good suggestion!

jessaustin 9y ago

If competition or "customer value" were actually a goal of FCC, they would open more unlicensed space, on more useful frequencies, rather than auctioning, or re-auctioning more rigidly regulated spectrum. This "natural scarcity" is a property of the deployed technology, not of the universe. [EDIT:] To clarify, the problem isn't so much the portion of the spectrum designated for mobile phone use, as the terms under which that portion is so designated. More of that portion should be available on an unlicensed basis, or at the very least on a non-exclusive licensed basis. The tiny fractions of the spectrum that have been available on those terms in recent history have seen more innovation and less artificial scarcity than more strictly licensed frequencies have.

grandalf 9y ago
> would open more unlicensed space, on more useful frequencies Which spectrum do you think should be reallocated to mobile use? > This "natural scarcity" is a property of the deployed technology, not of the universe. What frequencies do you think should be used for mobile voice and data that are not already?
- wahern 9y ago
  Required reading: https://spectrum.ieee.org/telecom/wireless/the-end-of-spectrum-scarcity https://www.salon.com/2003/03/12/spectrum/ Basically, the argument is that interference (as understood in spectrum policy) is a myth. The channel capacity of a frequency band is a limit between two distinct physical points--it's not some global (or even local) limit. If you put two pairs of broadcasters and receivers in the same room using the same band, the laws of nature don't require that the available capacity to each pair be cut in half. It's the same as it was before for each pair; any reduction in throughput is merely a limitation of their particular technology. As sensitivity improves; as algorithms improve; as processing power increases; you can asymptotically approach your original (uncontended) throughput even as more transmitters join the fray. The above articles are fairly old, but their arguments have born out, and the fundamental science isn't contested. MIMO, beamforming, software defined radio, and other approaches are now widespread and have permitted orders of magnitude more _aggregate_ throughput for the same geographical area, even as the number of transmitters has dramatically increased. And things will only continue to improve for the foreseeable future. It's not literally true that interference is a myth. And there are fundamental physical limitations that we'll eventually bump up against. But those fundamental limits are beyond the horizon. In the context of historic and contemporary spectrum policy, interference is indeed a myth. The above technologies have come to fruition slower than free spectrum proponents argued. But their argument has always been that as long as government treats spectrum as scarce and grants legally protected monopoly rights, there's less market incentive to develop those technologies. The fundamental argument isn't that we need to add more bands to mobile, but that we need to remove (or at least loosen) the regulations which artificially constrain contention. If market participants had to deal with more band contention, there'd be more incentive to improve their technology to restore the service quality. As long as you don't have malicious people intentionally trying to disrupt the system, the argument is that market incentives alone would spur technological improvements at least as fast as contended usage grew. Of course, for the deployed technology at any particular point in time, more spectrum is better. But the argument here is about optimal long-term policy, not about the best way to ensure first responders can communicate 6 months from now.
  - Aloha 9y ago
Aloha 9y ago
If you weren't doing licensing, you'd still need to do coordination, and give the coordinators teeth to go after people who don't follow the rules - in effect licensing by another name.
- mcny 9y ago
  No it is not the same because there is no exclusivity.
  - Aloha 9y ago
    you can't really have two carriers, operating on the same spectrum, in the same place, and have an expectation that anyone is providing reliable service.
rayiner 9y ago
The FCC is limited by the technology that’s available. LTE networks of the capacity and scale we have today couldn’t be deployed in an uncontrolled, unlicensed environment. The technology probably exists today to build something like LTE that can work in an uncontrolled environment (though, it certainly didn’t 10-15 years ago when the FCC started down this path). But the FCC’s job isn’t to develop technology, it’s to figure out how to let people deploy the technology that exists in the market. I think in the long run the technology is getting to the point where the FCC can get out of the business of spectrum allocation and let cognitive radios mediate spectrum access amongst themselves. We’re not there yet, though, and the FCC’s current approach is quite reasonable as a stop gap.

noobermin 9y ago

I hate to bring politics into this but I will: how is it some people moan about the "growth of government" while left and right we see merger after merger without the government doing a thing to stop these mergers? Where is the over-regulation I keep hearing about?

grandalf 9y ago
Well, in this case what we are seeing is the growth of a regulatory state that exists mainly to help select firms generate profit. This is known as "regulatory capture" and infrastructure services that the government can justify regulating for any reason are vulnerable to it. I'd say that you are correct in the broader observation that both parties strongly favor big government that helps their pet industries avoid competition. And along similar lines, both parties are perfectly happy with mobile carrier consolidation, which is too bad, because the poor spend disproportionately on mobile services and are most likely to be victimized by misleading plans or deceptive sales tactics (which are extremely common).
Turing_Machine 9y ago
"Where is the over-regulation I keep hearing about?" It's baked into the cake, as grandalf noted. More regulations benefit larger players, who can afford the parasitic staff of lawyers, accountants, and other compliance people to deal with it. While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though.
- ZenoArrow 9y ago
  > "While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though." Regulation can exist for good reasons though. Take the pharmaceutical industry as an example, do we want to ensure the drugs that are on the market have gone through clinical trials, even if doing so limits the group of companies that can afford to pay for these trials?

deleted 9y ago

[deleted]

dnautics 9y ago

>I would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned. That's a really good suggestion!