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CNN joins the five-myths club

Posted December 1st, 2011 in antitrust, AT&T, FCC, Government Regulation, T-Mobile USA and tagged , , , by Alton Drew

I guess when it’s time to pile on, it’s easier just to copy cat what’s already out there. CNN appears to be following the line started in a recent article about the alleged five myths surrounding AT&T, Inc.’s proposed takeover of T-Mobile USA. T-Mobile is a subsidiary of Deutsche Telekom.

CNN claims that it’s a myth that prices will not stay the same for T-Mobile’s old customers should the acquisition go through. Guess what? Prices should not stay the same into the future for any wirless provider. Why? Because the demand for wireless services, including voice and data is going up through the roof. Prices will eventually have to increase in order for wireless carriers to provide service.

What AT&T has offered is to take a temporary hit should it obtain T-Mobile’s old customers. By honoring the current T-Mobile pricing plans, AT&T is willing to pay a premium not only to keep T-Mobile’s customers happy, but to obtain a valuable reource–spectrum. AT&T is correct when it says that with greater capacity it should be able to provide services at a lower per unit cost. It is probably another reason the company can eat the lower prices because the acquisition will make it possible.

The truth that CNN does not provide in its piece is that barring some option where AT&T and T-Mobile pursue a joint venture, T-Mobile will likely hand over the $4billion breakup fee to its parent, Deutsche Telekom, and leave town. If that happens, expect to see all carriers jack up rates as they are expected to take on the new subscribers and see their spectrum and other resources come other increased strain.

Regarding job losses, there is a difference between the creation of new jobs and adding jobs to the existing AT&T and T-Mobile labor force. AT&T never promised that every job would not be destroyed. I would expect a company in a competitive market to minimze labor costs. If it didn’t, the inefficiencies from not properly managing labor would eventually leak into prices, giving every grass roots group this side of the Atlantic a reason to complain to the FCC about price gouging.

The tech sector continues to innovate. Programmers are out there building apps for hardware and other services. Technologists are learning everyday how to get one more mega cycle of bandwidth out of the air for use. These are some of the indirect jobs being created.

For the CNN article to characterize AT&T’s decision that it was “highly unlikely” there would be growth beyond 80% of coverage without T-Mobile as a lie is beyond the word, stretch. All business decisions are based on probabilities and contingencies. Should we really accept the FCC’s willingness to trump a going concern’s business judgment because of a lack of definitiveness? Come on, CNN. There is a reason certain costs associated wwith building out are referred to as variable costs.

CNN has also bought off on the FCC’s poor view of competition. In general, a competitive market does not guarantee success. Many a business has entered many a market only to end up in the graveyard of the free market. Besides, CNN should have taken the FCC’s price rise argument to its logical economic conclusion. If prices were to rise, new entrants would come knocking on the door. Whether they knock the door down should be left up to their entrepreneurial capabilities, not the desires of the FCC.

Finally, as AT&T’s economies of scale increases, its marginal cost for serving one additional consumer should approach zero.

CNN should either take a course in microeconomics or be more balanced in its assessment of a business decision.

Another reason for adopting broadband

Posted July 18th, 2011 in Broadband, cable television, Internet and tagged , , , , by Alton Drew

The Wall Street Journal is reporting that Time Warner Cable will make simulcast broadcast of CNN and HLN available on its website starting today. According to the Journal, the move is being made to stem the tide of cable cord cutting threatened by an allegedly growing number of consumers.

I admit for political news junkies like yours truly, this is exciting stuff. Being able to watch two news shows while commenting via social media on what is presented on both is a geek’s dream.

More importantly, for the media consumer, it’s another way of monitoring what competing voices are saying on the topics of the day and another reason for getting our homes hardwired for broadband.

Come on. How is Comcast stopping my message?

Critics of the proposed Comcast and NBC Universal joint venture have been making the argument that such an arrangement, between a large distributor of video programming and other content and a large content provider, would dampen our ability to fully participate in our great democracy.

I agree that the public should remain suspect of the media and its influence on our ability to keep government accountable. The traditional and major news sources also spend too much time being duplicative. ABC gives me the same old information that CBS gives me. I mean, how many times do I have to hear that the captain of the Enterprise got busted or that John Boehner is a cry baby. The information they provide does not appear very diverse.

And yes, there are a small number of large news organizations that appear to have a lock on the voices being heard on the airwaves. The alphabet soup includes CNN, MSNBC, FOX, CNBC, and Bloomberg.

But even with an apparent dearth of news outlets, am I ready to throw in the towel on democracy? Of course not.

There is no lack of information. There is a dearth of citizen accountability for going after information. We choose and find excuses for being spoon-fed. If we can’t get the news and a Katie Couric smile in 24 minutes, we move on to Facebook and end up spending more than 24 minutes on-line. Between the libraries of our state universities and our public libraries, we have access to lots of information about how our government runs.

With the information that we glean from alternative sources, we can resort to the tried and true methods of message transmission, letter writing, phone calls, and personal visits, to influence the policy decisions of our representatives. The hang-up that critics like Free Press have is really not with democracy. It’s with the use of one medium, namely the Internet, by content providers.

The Internet is sexy, and gets sexier with every new app, blog, and social media network that gets its hooks into it. It’s the fear of “gatekeepers” like Comcast relegating these content providers to the back of the bus and forcing them to pay to play that has critics scared. They could care less about our ability to impact our representative government as long as the pipes on the Internet are clear enough to allow them to send out their messages.

In an information society with access to probably too much information, the real threat to democracy is not whether Comcast will allow me to go to Color of Change’s website. It’s whether Americans will take the time to pursue good information, no matter the source of the content or distribution, and use it.