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Al Franken up in arms about the false concept of competition

Posted July 22nd, 2015 in Department of Justice, economy, edge providers, Facebook, Government Regulation and tagged , by Alton Drew

Multichannel News‘ John Eggleton today reported that Senator Al Franken, Democrat of Minnesota, is up-in-arms about Apple’s streaming service.  He believes that Apple is preventing competitors to its streaming service from communicating with consumers about similar streaming products.  According to the Multichannel News:

“Apple’s licensing agreements have prevented companies from using their apps to inform users that lower prices are available through their own websites, to advertise the availability of promotional discounts, or to complete a transaction directly with a consumer within their app,” he said. “These types of restrictions seem to offer no competitive benefit and may actually undermine the competitive process, to the detriment of consumers, who may end up paying substantially more than the current market price point.”

Subject to check, if the alleged snub is the result of a licensing agreement, then tough cookies for the app developers.  They didn’t have to sign the agreements. If terms agreed upon included a “no informing customers of your service because we are afraid of the competition clause, then the app developers are obligated to follow the agreement.

I’ve discussed before how unnerving the “it’s not fair. I can’t compete” argument is.  Unless you are admitting that consumers are pieces of capital just like land, labor, and air is, then competition for consumers needs to be a mantra that goes the way of the dodo bird.  Competing for the finite resources that go into making products for end-user consumption is a valid argument.  You need financial capital in order to purchase the labor and land resources necessary for creating and distributing a product so pushing against the bottlenecks to these resources is expected.

Applying the argument to end-users gets no points with me, however.  If your product is whacked and you can’t convince the consumer to buy it in an open market as we have here in the United States, then belly-aching how unfair it is that you can’t sell said product is noise wasted on closed ears.  America’s antitrust concept is weak for this reason.  No one is guaranteed success in our economic environment.

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Will the FCC have another mega merger to consider?

The Internet is blowing up not only with news of the sale of Apple’s iPhone 5, but also with the speculation that Sprint may be considering a little mischief in the mergers and acquisitions arena. One commentary on Seeking Alpha reports that Sprint CEO Dan Hesse may be considering buying a smaller carrier after the build-out of the company’s 4G LTE network.

Who might be the potential buys? They may include MetroPCS, Leap Wireless, or U.S. Cellular. Of course this is all speculation, but should Sprint make a move to purchase one of these carriers, I would hope that the Federal Communications Commission and the United States Department of Justice would have the good economic sense to let this merger go through.

First, such a move would satisfy the FCC’s alleged preference for competition and the benefits it brings to the consumer. An enlarged Sprint could reach more consumers and with the increased economies of scale, they would be able to serve those consumers at lower costs than with its current network.

Second, with a company like Leap Wireless in its portfolio, Sprint can not only continue providing unlimited data plans to consumers, but has another brand that can extend wireless broadband services into lower income markets. These would mean more consumers adopting wireless broadband and enjoying its benefits of connectivity.

Third, the FCC need not worry about a duopoly remaining in the wireless market after the transaction is completed. Sprint may end up a stronger third alternative to AT&T and Verizon.

But hey; what about T-Mobile? T-Mobile may be out of play simply because T-Mobile runs on a GSM network while Sprint CDMA network. Why incur the additional expense converting T-Mobile over to Sprint’s network when U.S. Cellular, MetroPCS, and Leap Wireless run on CDMA.

Finally, there is no reason for government interference in the making of a market in such an instance. Wireless carriers have naturally been expressing demand for spectrum especially since the introduction of the iPhone In 2007 began the onslaught on spectrum we see today.

Oh well, we’ll stay tuned.

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Channeling Ross Perot

Posted September 13th, 2012 in Broadband, FCC, Government Regulation, NTIA, spectrum and tagged , , , by Alton Drew

The great sucking sound you hear is the sound of spectrum being sucked up by Apple’s new iPhone. The federal government has created a bottleneck on spectrum, sitting on approximately 85% of it while regulating severely the transfer of spectrum licenses between those holding spectrum but not using it and those with large customer bases while staring down the pending spectrum doom.

The FCC and the NTIA need to streamline the process for getting this resource into the hands of people who need it.

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I would love to see Apple eat up Sprint

Does the word “communications” or “telecommunications” mean anything anymore? Communications refers to the act of imparting or interchanging thoughts, opinions, or information by signs, writing, or speech. A communication may be a document or message imparting news, views, or information.

If I talk to my son, I’m communicating (or trying to. Kids are hard headed.). If I call him on his cell phone, we are still communicating since the only thing happening is that electrons are moving up and down a wire and the message isn’t being changed by the phone company (But as parents we know the message is being changed in our kids’ heads…).

The reason I’m pondering the definition is because I’d love to see Apple, Google, or Facebook make a play for a wireless or even a wireline company. I don’t want to see them get bogged down by 20th century notions of what communications is, however. The FCC and a bunch of state regulatory commissions would love to get their hands on a piece of Apple’s, Google’s or Facebook’s cash flow.

With people using their smart phones as miniature and mobile information access terminals (I avoid using the term computer or phone when I can), maybe some type of separations cost scheme is needed, much like the separations mechanism used by the FCC and the states to share access revenues. That would really give Apple, Google, or Facebook an advantage by reducing their cost of entry into the wireless market while giving AT&T, Verizon, Sprint, and T-Mobile a run for their money.

I expect, given their truly nationwide network that AT&T and Verizon would do well. Deadweight companies like Sprint and T-Mobile would probably go the away like the wind, given their networks are not as large or as fast.

Let’s face it. Apple, Google, and Facebook are media companies. It’s only logical that they would want to secure the distributional channels for the information that they want to share, namely our information. It would be like AMC Studios owning movie theatres. They produce the flick, they sell the flick.

Can FCC follow policy that would keep them out of the way of a potential mega deal?

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Google and Sprint sounds like a logical play

Posted January 31st, 2012 in Broadband, Google, Sprint, T-Mobile USA, wireless communications and tagged , , , , by Alton Drew

A couple posts ago I shared the idea of Apple buying T-Mobile. What would really be an act of charity would be Google buying Sprint. Talk about putting a company out of its misery. Shares of Sprint have been falling for six months and this company needs a parachute. It waged a successful legal/regulatory campaign against the AT&T,T-Mobile merger, but looks like it may be in need of some help itself.

Here is a quote from an analysis by Morningstar:

“We believe this strategy is correct, but execution has failed thus far in one critical area: financing. That Sprint needs to raise capital isn’t a surprise, given the steady debt maturities it faces during the next few years. Sprint’s initial reluctance to clearly lay out its funding needs and continued uncertainty around Clearwire CLWR have caused the market to lose faith in management. Backed into a corner, the firm was forced to accept costly terms on its recent $4 billion debt offering. Sprint should now have the financial resources to work through Network Vision, but the firm still has little room for error.”

Google definitely has resources and could be Sprint’s white knight. In addition, keeping Sprint viable is good for public policy reasons because it keeps another choice for mobile broadband access in the game.