SoftBank Close to Announcing Merger Deal for Sprint, T-Mobile
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I would strongly prefer that any consolidation such as this be allowed only if one of the firms return all of its spectrum licenses to the FCC to be re-auctioned. It's fine to merge to consolidate infrastructure, but the unfair aspect of market power is derived from the natural scarcity of spectrum.
The hardware cost of launching a mobile carrier in an urban environment is falling rapidly, so only spectrum scarcity is preventing upstarts from disrupting the most lucrative urban markets.
[EDIT:] To clarify, the problem isn't so much the portion of the spectrum designated for mobile phone use, as the terms under which that portion is so designated. More of that portion should be available on an unlicensed basis, or at the very least on a non-exclusive licensed basis. The tiny fractions of the spectrum that have been available on those terms in recent history have seen more innovation and less artificial scarcity than more strictly licensed frequencies have.
Which spectrum do you think should be reallocated to mobile use?
> This "natural scarcity" is a property of the deployed technology, not of the universe.
What frequencies do you think should be used for mobile voice and data that are not already?
https://spectrum.ieee.org/telecom/wireless/the-end-of-spectrum-scarcity
https://www.salon.com/2003/03/12/spectrum/
The above articles are fairly old, but their arguments have born out, and the fundamental science isn't contested. MIMO, beamforming, software defined radio, and other approaches are now widespread and have permitted orders of magnitude more _aggregate_ throughput for the same geographical area, even as the number of transmitters has dramatically increased. And things will only continue to improve for the foreseeable future.
It's not literally true that interference is a myth. And there are fundamental physical limitations that we'll eventually bump up against. But those fundamental limits are beyond the horizon. In the context of historic and contemporary spectrum policy, interference is indeed a myth.
The above technologies have come to fruition slower than free spectrum proponents argued. But their argument has always been that as long as government treats spectrum as scarce and grants legally protected monopoly rights, there's less market incentive to develop those technologies.
The fundamental argument isn't that we need to add more bands to mobile, but that we need to remove (or at least loosen) the regulations which artificially constrain contention. If market participants had to deal with more band contention, there'd be more incentive to improve their technology to restore the service quality. As long as you don't have malicious people intentionally trying to disrupt the system, the argument is that market incentives alone would spur technological improvements at least as fast as contended usage grew.
Of course, for the deployed technology at any particular point in time, more spectrum is better. But the argument here is about optimal long-term policy, not about the best way to ensure first responders can communicate 6 months from now.
I certainly think it would be interesting to have the FCC allocate a band that could be used in a less regulated way such as you describe.
It's a very interesting area of SDR and game theory and I've actually put a bit of thought into how such an ecosystem might work after hearing a talk about the DARPA Spectrum Challenge.
So I don't disagree with your point at all, and think that the FCC should allocate some spectrum to this sort of deregulated scenario. Perhaps if it also required that all protocol and modulation approaches be open sourced that would help participants to coordinate usefully.
I think that we are far from the limits of physics across most of the network, but there are likely some congestion patterns in dense areas that create complex intermod scenarios that would make a system like this somewhat brittle until the ecosystem evolved to find a cooperative equilibrium of some sort.
In addition to MIMO, I'm interested in things like using TDM and awareness of harmonic and intermod characteristics to create various emergent latency "contracts" that correlated with different frequency ranges and time slices, so that participants that did not need low latency could create significantly less interference than they otherwise would, and participants could cooperate based on the data rate and latency requirements of other nearby nodes.
Technology may help, and the technological effects mentioned in the articles do happen but there is a fundamental limit
> Technology may help, and the technological effects mentioned in the articles do happen but there is a fundamental limit
Parent mentioned exactly that in their comment.
And that is the part I disagree
Especially when you have a large amount of people in the same place (stadium, busy street, etc) Or even your office wifi
There is a fundamental limit and we are at it in many scenarios and we've been for a very long time.
Bits of data delivered at or above minimum tolerable latency per hz of RF bandwidth per second?
The FCC deals with the world as it is, not with theory. When over the air television was designed, you couldn’t put the computational power into a TV to do true kind of interference rejection a modern WiFi system can do. Heck, even a more modern system like HDTV has miserable interference rejection. Transmit something else on the same frequency as a TV channel and see how much of a myth interference is.
You’re right of course that the FCC’s model of splitting uses by frequency band treats the issue as one dimensional, while in reality there are opportunities for spatial and temporal reuse. But you need computational horsepower to take advantage of that, and the necessary computational horsepower is really just now becoming available.
I think in the long run the technology is getting to the point where the FCC can get out of the business of spectrum allocation and let cognitive radios mediate spectrum access amongst themselves. We’re not there yet, though, and the FCC’s current approach is quite reasonable as a stop gap.
This is known as "regulatory capture" and infrastructure services that the government can justify regulating for any reason are vulnerable to it.
I'd say that you are correct in the broader observation that both parties strongly favor big government that helps their pet industries avoid competition.
And along similar lines, both parties are perfectly happy with mobile carrier consolidation, which is too bad, because the poor spend disproportionately on mobile services and are most likely to be victimized by misleading plans or deceptive sales tactics (which are extremely common).
It's baked into the cake, as grandalf noted. More regulations benefit larger players, who can afford the parasitic staff of lawyers, accountants, and other compliance people to deal with it.
While the big guys don't like regulation, as such, as long as the regulation is applied evenly across the board it doesn't really affect them that much (they just raise prices). It does do a wizard job of discouraging upstart competition, though.
Regulation can exist for good reasons though. Take the pharmaceutical industry as an example, do we want to ensure the drugs that are on the market have gone through clinical trials, even if doing so limits the group of companies that can afford to pay for these trials?
That is to say, the regulations should be subject to a cost-benefit analysis and only those with a positive ROI should remain in place.
At the very least we should be allowing drugs to be sold that have been trialed and approved in other first world markets.
Not everything related to pharmaceuticals boils down to a cost-benefit analysis. If companies sell a drug with known side effects, but cover it up to make a profit, that might make business sense to its shareholders, but it's not something that benefits society at large.
To give an example, Bayer knowingly sold products that were known to give people hepatitis C and HIV.
https://en.wikipedia.org/wiki/Contaminated_haemophilia_blood...
"Contaminated haemophilia blood products were a serious public health problem in the late 1970s up to 1985.
These products caused large numbers of haemophiliacs to become infected with HIV and hepatitis C. The companies involved included Alpha Therapeutic Corporation, Institut Mérieux (which then became Rhone-Poulenc Rorer Inc., and is now part of Sanofi), Bayer Corporation and its Cutter Biological division, Baxter International and its Hyland Pharmaceutical division. Estimates range from 6,000 to 10,000 haemophiliacs in the United States becoming infected with HIV."
https://articles.mercola.com/sites/articles/archive/2006/08/...
"Recently unearthed documents show that the drug company Bayer sold millions of dollars worth of an injectable blood-clotting medicine -- Factor VIII concentrate, intended for hemophiliacs -- to Asian, Latin American, and some European countries in the mid-1980s, although they knew that it was tainted with AIDS.
The company stopped selling the drug in the United States in 1984, but continued to sell it overseas for an additional year."
Reducing government regulation of drug companies increases the chances of similar underhand practices, as companies can claim they were following the laws they were intended to comply with.
> "At the very least we should be allowing drugs to be sold that have been trialed and approved in other first world markets."
That still limits the pool of companies that can afford it to a select few. It's very expensive to bring a new drug to market, even if you limit the trials to a single market.
To give an idea of how much these clinical trials cost...
http://journals.sagepub.com/doi/abs/10.1177/1740774515625964...
"Therapeutic area was an important determinant of clinical trial costs by phase. The average cost of a Phase 1 study conducted at a US site ranged from US$1.4 million (pain and anesthesia) to US$6.6 million (immunomodulation), including estimated site overhead and monitoring costs of the sponsoring organization. A Phase 2 study cost from US$7.0 million (cardiovascular) to US$19.6 million (hematology), whereas a Phase 3 study cost ranged from US$11.5 million (dermatology) to US$52.9 (pain and anesthesia) on average. Across all study phases and excluding estimated site overhead costs and costs for sponsors to monitor the study, the top three cost drivers of clinical trial expenditures were clinical procedure costs (15%–22% of total), administrative staff costs (11%–29% of total), and site monitoring costs (9%–14% of total)."
1) Company A's drug is approved, but causes 10,000 people per year to suffer sudden death.
2) Company B's drug is not approved, even though it would have saved 10,000 lives per year.
The problem here is that scenario #1 makes the regulatory agency look bad, while #2 generally does not. Those patients (and even their doctors) usually won't know that there was a treatment available.
This creates an incentive for non-approval.
which story plays better with the incumbents? ignore any rational discussion of outcomes.
That's a really good suggestion!
I think this overall is good for consumers, and good for business.
Sprint is woefully under capitalized, neither T-Mo or Sprint have as much PCS Spectrum (read, they don't have enough) in the largest markets as either AT&T or T-Mobile. Because of this (and some other factors relating to economy of scale) neither T-Mo or Sprint is really truly competitive (on performance) with either AT&T or Verizon outside of a few selected markets.
Our Mobile Phone networks are expensive in the US - but thats largely a function of how much coverage you have to provide to places where (nearly) no-one lives.
Figure a cell site costs $1000+ a month to keep it on the air - and Sprint alone had 20,000 cell sites when I was inside their network last in 2015 - so 20 million a month just to keep the sites on, that doesn't cover backhaul, CO's, trunking, staffing or any of the other costs to keep a network up. Verizon and AT&T each have more coverage than sprint does, and 2-3 times the sites - they also have many more sites that on a good day might see 2-3 subs roam thru.
Also, are they on the same LTE bands? Even that matters. I know a lot of phones don't use T-Mobile's band 12.
http://www.fiercewireless.com/wireless/sprint-talks-comcast-...
No they're not. Cell phone bills are one of the only two deflationary categories in the basket used to determine rate of inflation by the federal bank, iirc.
That aside, I agree with your view. No one uses Sprint if they have a choice, it's their (previously) cheaper rates that locked people in (via contract or via simple inertia).
you could just as easily say that costs went from extortionary to merely exhorbitant. there's no way to pin it down without some comparative information.
if they've indeed been deflationary, my guess (and it's only a guess) is that capital expenditures (like building/upgrading cell sites) are slowing down now that increased capacity and speed are not the great differentiators that they once were, and a trickle of that cost savings is reaching the consumer (without diminishing returns to shareholders of course).
Even then, Sprint would somehow end up running the merged entity due to SoftBank ownership (?) so they’ll have more spectrum but the same everything else.
This might sort of work if T-Mobile gets to run the thing.
Edit: This article confirms my suspicions[1]. SoftBank appointed a Chief Strategy Officer to Sprint who I believe is looking to arrange a best-case exit for SoftBank after the leadership in Kansas completely failed to step up. Also, SoftBank has always wanted TMobile as part of their original strategy, but the Obama administration blocked them in 2014.
[1] https://www.bizjournals.com/kansascity/news/2017/06/06/sprin...
It's an oligopoly in a market that does not expand much anymore. So the only way what you write can be true is if the combination is going to be awful bad for business for the other two telcos. Is that what you mean?
Downward price pressure is created when one company is willing to operate on lower margins short term to take market share from the others. Lower prices are good for consumers. No small company can afford to enter the market because the barriers to entry are expensive and the margins are low. The existing carriers end up in a race to the bottom that resembles a perfect competition market. The risk is that one of the companies will become large enough to become a monopoly or near monopoly and gain pricing power to raise prices without consequences.
If the oligopoly fails, then the result will be low-margin businesses for everyone due to market forces.
If an oligopoly is successful then tautologically the participants won't have low margins because they will be able to suppress what JP Morgan called "ruinous competition" between them.
It's a self-fulfilling prophecy.
Sprint has, by any objective metrics, the worst coverage and speed. It had been an awful company who keeps taking wrong steps, is outdated, and not making much investment. I'd rather the merger not to happen, as competition is good, TMobile doesn't need Sprint, and Sprint by some miracle still has a fair amount of customers.
They have been ending the horrible contract system, taking customers with their innvoation. I love being able to use my phone internationally. I don't see how much good can come of this. sprint is just going to be an anvil around their feet, with debt service to paying off the sprint owners holding tmobile back. This is what at&t and verizon want probably.
I feel like once again this project has become another "walking dead" project :(
If a deal goes through, it'll be a merger for sure. But also it'll be T-Mobile as the bigger of the two companies. T-Mobile stock has tripled in the past 5 years. They have a healthy PE ratio. Sprint has more or less remained around the same spot. Which is now half the market cap of T-Mobile. Sprint is also having a hard time being profitable.