Monopolists harm America

A number of politicians (mostly Republican) have come out in support of the AT&T / T-Mobile merger. But their arguments do not make sense. Primarily, they cite benefits to America of competition in wireless before the merger. These very benefits would decrease if the merger goes through, despite false promises by AT&T.

These politicians are not in favor of the "free market." They are advocating a consolidation that would be bad for the market, and bad for America, while benefiting a monopolist in an industry where freedom is vital for economic security.

America has had to act against monopolists and oligopolies in the past. It needs to be vigilant again, and do what it must to preserve competition in the market place. Like railroads and the oil companies two centuries ago and AT&T itself in the last century, a merger between AT&T and T-Mobile would result in less innovation, higher prices, and less freedom of information. This process is common when new technologies foster a consolidation of power.

In fact, we need more communication companies in America, not fewer. We need more competition, not less. Much of the innovation in America's communications industry came after AT&T was broken up last time.

AT&T and T-Mobile both run on the GSM technology, most common in much of the world. The other two major carriers, Sprint and Verizon, run via CDMA. By allowing only one major player on the GSM side, there will be no one to challenge AT&T if a technological innovation comes to GSM.

AT&T would be the sole buyer of GSM technology in the U.S., giving it monopolist power over cell phone makers and software providers, to the detriment of consumers.

It is extremely expensive to build out a new cell network, acquire customers and put in place a cell phone company, and nearly impossible to acquire radio spectrum on which cell phones communicate.

In economics speak, the "barriers to entry" into the market are extremely high, and would be more so if dominated by a company is as well-heeled and politically powerful as AT&T.

Communications and information flow are the life blood of our nation, and becoming more critical every day. Control should not be allowed to slide toward fewer and fewer companies, especially when vertical integration may allow them to control what we see, how we see it, what we can buy and how easy it might be to find it.

It is naive to think that AT&T in that position would not use its power to fill its coffers at the expense of anyone and everyone. It would be its duty, in fact. We expect companies to make the highest profit allowable under the law.

For these reasons, government must preserve the free market in any way it can, and right now, the best way to do so is to deny the AT&T and T-mobile merger. The alternative, over the long run, is some form of regulation, which would have fewer benefits and higher cost.

If T-Mobile is to be sold, it should go to another company -- Google or Apple come to mind, though there may be issues there. Berkshire-Hathaway, perhaps. But its independence should be preserved.

In a market as difficult to foster competition as mobile communications, a market as critical to our future, America can not afford to allow monopolists to gain control.

Net neutrality and Republican pandering

It appears that Republican knee-jerk support of giant corporations over the rights of ordinary people remains intact.

In an article from BBC News (read it here), it was noted that six Republican senators have introduced legislation to punish the Federal Communications Commission for keeping oligopolies from choking off access to the Internet.

Oh, they dress it up. They say there is no apparent problem.

Yeah, there is no apparent problem when the door is open and the horses are still in the barn. There is no apparent problem because the handful of companies which own mobile access to the Internet haven't yet figured out how to turn their oligopoly into a powerful force.

It is as if three or four companies owned all the interstate highways in America. They get to decide who gets on, how fast everyone should go, and perhaps they charge their friends less than they charge the average driver. Which enriches their friends, who kick back money to the highway owner, who then buys himself a politician, who resists any attempt to make sure everyone can drive on the roads.

Folks, regulation is not by itself a bad thing. Monopolistic oil companies had to be broken up. AT&T had to be broken up. Once you could only buy a telephone from AT&T. A good argument can be made that much of the innovation we saw in communication was due to the competition caused by the break up of AT&T.

Don't equate corporate pandering by the Republican Party with being pro business. Regulation can assist business when it fosters competition by preventing a concentration of power in the hands of a few.

Greed and power will always exist, and one role of government is to make sure that consumers and businesses get a level playing field.