I came across an interesting ex-parte letter to the Federal Communications Commission on the Verizon-Spectrum Co. deal. In the letter Public Knowledge is addressing the FCC’s spectrum screen, a tool the FCC uses to document where available spectrum is located. In the letter, Public Knowledge describes the screen as a tool that can help the FCC “maximize wireless competition.”

Maximize wireless competition? A government agency? The FCC?

The U.S. Department of Justice through its antitrust division may try to ensure competition by addressing market concentration, but even it cannot maximize competition. That’s not its job or the FCC’s.

To maximize competition the FCC would have to take on a command-and-control posture, telling the wireless industry how and where to price services; requiring that all participants share all market, pricing, and consumer information with each other; lower all barriers to market entry; and writing rules that keep zero economic profits at bay for a long enough to ensure that some predetermined number of competitors are in the industry before those profits are allowed to fall to zero.
That’s a tall order, Public Knowledge.

Gus West, president of the Hispanic Institute, recently shared his thoughts on AT&T/T-Mobile in a column for The Tennessean. You can see the article here.

The gist of Mr. West’s argument in support of the acquisition is that prices for wireless service, in light of a number of mergers since the late 1990s, have been falling.

Given the economics of scale and the efficiencies brought on by evolving technology, this should not be surprising. Deployment of larger plant and facilities implement a greater economies of scale leading to lower per unit costs for producers.

Competition from other national and regional carriers help to keep national carriers “honest” by giving bigger carriers the incentive to pass on cost savings to consumers. Otherwise , profit margins would be a lot higher.

The minority consumers referenced in Mr. West’s article should benefit greatly from lower prices this merger should bring. Given the economy, as more minorities pursue entrepreneurship in order to survive, those considering incorporating the newest and best communications technologies to aid their business growth should be facing lowered costs brought on by scale and competition.

According to telecom consultant Keith Mallinson, the merger between AT&T and T-Mobile is about efficiency in the wireless market versus the congestion that can be generated in the distribution of wireless services by too many carriers.

Kind of reminds me of some old pictures from the late 1800s when America had multiple local providers in its cities. The real estate can only host so many carriers and spectrum is more finite than we think.

What I also found interesting in Mr. Mallinson’s piece was how he interwove competition in the application, content, and operations systems market into the imperfect competitive model of wireless services.

Bottom-line, the wireless market becomes more efficient with T-Mobile merging with AT&T or dropping out of the U.S. market altogether.

The Smith School at Oxford’s Robert Hahn, and the Milken Institute’s Peter Passell teamed up on an article for The Hill regarding AT&T‘s proposed purchase of T-Mobile.

I especially liked their reference to economist Joseph Schumpeter, who they cited as saying that concentration doesn’t have to be bad for consumers if the firms left standing, like MetroPCS, Sprint, Leaf Wireless, etc.,

While opponents of the acquisition harp valid concerns about potential impact of the acquisition on consumer prices, the issue is impact on competition. If prices were to increase for certain consumers, that alone should not be enough to stop the purchase.

Federal Communications Commission member Mignon Clyburn shared a few remarks today at the Internet2 Spring Member Meeting. Nothing new in terms of policy. Ms. Clyburn stated that “If we create incentives for more service providers to deploy networks in underserved areas, this should lead to competition.” She went on to add that competition should make services more affordable and that the affordability factor can encourage broadband adoption.

I think Ms. Clyburn is in a good position to show some independence when it comes to policymaking at the FCC. Right now what the FCC needs is some leadership, especially when it comes to ramping up broadband adoption in underserved and unserved communities.

Other commissioners give the obligatory lip service, but as the recent decision by the FCC to enforce its own anti discrimination rules for advertisement has shown, the FCC needs a commissioner that can push these issues in a more timely manner.

Yes, we need a more centrist attitude to compliment the conservatism of Commissioners Baker and McDowell and temper the ultra-liberal ranting of Chairman Genachowski and Commissioner Copps.