It should be no surprise that a laissez-faire U.S. regulatory environment has allowed so many mergers in the last 10 years that its current Mobile Industry looks like a virtual anti-competitive duopoly without sufficient competition. With Verizon at the top with 104 million customers and AT&T 2nd at 98 million, current economies of scale for these operators are so dominate that competitors are virtually locked out of any significant market entry incentives. See (Grading the top 10 U.S. carriers in the First Quarter of 2011)
That is, even the most dominate players in broadband like Comcast, with billions in capital and deep pocketed partners in the broadband industry including Time Warner Cable, Bright House Networks and others cannot make a sensical business plan to enter the Mobile arena. Such a revelation is, while not a condemnation of the free market system, does highlight the ongoing problem of special interest groups lobbying and donating huge to affect legislation benefiting a few. In essence, this type of political arrogance cannot serve the greater public good but only puts up significant barriers to smaller entrants into large industries, or even large entrants such as the Cable Industry.
Recently, in an effort to compete in the mobile markets, Comcast and other cable companies struck a deal with Verizon to market and sell each company services. This seemed to be the only way cable operators could compete on a large scale with the now dominate players which now control the industry. If large capitalized broadband operators with huge infrastructures cannot make a go of it, reference Cox’s shut-down of its mobile service, then how can anyone else enter the market? Since the down fall of the AT&T-T-Mobile Merger companies may be seeing it’s easier for regulators to approve a marketing agreement rather than a merger. See (Comcast and Verizon Merge without Merging)
Even though cable operators will now have a quad-play for their customers to pay for all-in-one technology needs with one company, eventually, operators will be able to offer new incentives for bundling which has always been an attractive alternative to A La Carte services. The bottom line is how consumers will fair with the proposed agreement.
“While consumers could eventually see their cable television, Internet, home phone and cellphone services on a single monthly bill, some antitrust experts are worried about deal. They are especially concerned that Verizon, in its push to dominate wireless services and its new obligation to promote other cable companies, will lose interest in FiOS altogether. That business has about 14 percent of U.S. households, but it has been expensive to build.” See (Verizon’s deal with cable rivals may transform entertainment, communications)
Maybe the regulatory environment is changing, at least that was the signal for AT&T-T-Mobile, but it is certainly too early to surmise the intentions of regulators on future cases which will come before them. And the marketing agreement put forth by Verizon and Comcast will have to pass muster as well, trying to side-step the horizontal market grab of AT&T with its costly ramifications. The regulatory sword can cut both ways, leaving too little completion or creating regulations that impede competition. There is a fine balance in creating healthy competition and robust economic success.