Award Winning Blog

Tuesday, October 27, 2020

NewTMobile and the Real World Reluctance to Spend Sleepless Afternoons Innovating and Competing

On a day when the FCC spews platitude after platitude in response to three substantive issues remanded to it by a reviewing court (see RIF Order on Remand), I am reminded of the Keep It Simple Stupid (“KISS”) principle. Banks get robbed, because that’s where the money is.  Firms merge, because they perceive opportunities to make more money.

It’s that plain and simple, no matter how many millions of dollars are spent explaining how reducing competitive numbers will spur innovation, lower prices, increase employment, etc. Remarkably, time after time, judges somehow ignore the obvious profit incentive and concentrate on lofty notions that mergers present a win/win proposition for the companies involved and the public.

Let’s take a look at Judge Victor Marrero’s approval of TMobile’s acquisition of Sprint: TMobile Sprint Merger Appoval.

   The Judge summarily rejected any assertion that NewTMobile will abandon its maverick, innovator and “uncarrier” mission.  He envisioned the company as bolstered and invigorated: a “company reinforced with a massive infusion of spectrum, capacity, capital, and other resources, and chomping to take on its new market peers and rivals in head-on competition.”

In reality, New TMobile presents itself primarily as the “best” 5G option with no reference to lower rates for subscribers, any innovation solely available from it and anything listed as a sure thing by Judge Marrero.  The Judge was extremely confident that “against a backdrop of T-Mobile's longstanding business strategy as the self-styled maverick and disruptive Un-carrier, it would be counter-productive, even self-defeating, for New T-Mobile soon after the merger to fail to invest, innovate, and improve network speed, capacity, and quality, or to refrain from offering products incorporating the most advanced technologies, enhanced content, and improved service plans, and ultimately to lower prices, as market dynamism would demand and more reliably predict.”

Where is the unleased multidimensional spurt of competitiveness?  TMobile’s advertisements and web page harken back to the time when carriers claimed you were the best, because they claimed to offer better odds for an uninterrupted connection and more signal strength bars in more places.

Typically, the conduit offered by a telecommunications carrier represents something largely fungible: there really is not much that a carrier can differentiate in terms of dial tone and  data link.  The difference lies in price and other ways to enhance the consumer value proposition like that offered by old TMobile: roaming without price gouging, carrying forward unused minutes and data, lower prices.

Bottom line: TMobile comes across as nothing better—and possibly less—than it was pre-merger.

“Same as it ever was.”