AT&T Argues That More Competition Is Bad For You & Leads To Higher Prices
from the economics-free-zone dept
Apparently AT&T-land is a place where basic economics doesn't apply. AT&T boss Randall Stephenson, still hurt from the rejection of his attempted merger with T-Mobile, is telling the world that greater competition means higher prices and less efficient markets. That this goes against nearly all understanding of economics seems like an important point that would be worth bringing up to Stephenson, but apparently the reporters present didn't bother. In particular, he claims that AT&T had to increase its data rates by 30% because it doesn't own T-Mobile. That makes no sense, but okay. Then he claims that competition makes things less efficient:"The more competitors you have, the less efficient the allocation of spectrum will be," he said. "It's got to change. I don't think the market's going to accommodate the number of competitors there are in the landscape."This is how a monopolist argues: if we controlled everything, why things would be much more efficient. He's seriously arguing that the fact that they have to compete for resources means that they can't get the same level of monopoly rents. Yeah, that's called capitalism, where you actually have to compete in the market. I mean, I'm sure UPS hates that it has to share the roads with Fedex (so inefficient), but it's actually good for the consumers to have real competition. Apparently, though, AT&T has a different point of view.
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Filed Under: competition, data rates, monopoly, randall stephenson
Companies: at&t, t-mobile
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Okay, then, AT&T...
The monopoly can go right back to Bell where it started.
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Re: Okay, then, AT&T...
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obviously
How many times have reporters patiently explained to us that if only all medical care was run by the government, it would be way more efficient because then the government could allocate resources based on need rather than greedy businesses allocating resources to maximize profit, etc.
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Re: obviously
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Re: Re: obviously
Minimums required for health and/or safety. Unfortunately what ends up happening is you get someone in charge who only looks at the money. It's far easier to make money by removing competition than it is to actually provide a quality service.
Quality actually requires you to, you know, work.
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Re: obviously
Funny, that's what insurance companies are saying now.
Just substitute "insurance company" for "government" and re-read your sentence!
That's an improvement over "government control" how exactly...?
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Re: Re: obviously
Make no mistake, what we call "health insurance" today is not "insurance" by any reasonable definition of the word. It is a pre-paid medical plan that negotiates discounts with health care providers. That's it. True insurance is supposed to insure against catastrophic loss. Think of the old-school, high-deductible major medical plan that the current administration would call an unqualified insurance plan. There is absolutely no reason whatsoever that insurance should be covering office visits, antibiotics, and other basic, day-to-day health care. Those are part of a any sane person's budget, just like electricity and gas. If you want to know why medical costs are so ridiculously high, there's your culprit: most consumers don't pay for anything directly, and therefore competition is not at play.
So how does that get fixed, when insurance companies have a stranglehold on the market?
1. Tax health benefits. I know it sounds awful, but if you want to encourage people to select benefit plans that are reasonable and remove control from the insurance companies, that's the way to do it. Besides, only employer pre-paid plans are tax exempt, anyway. So why do employees get special treatment that the self-employed don't?
2. Expand Health Savings Accounts. Imagine an account that allows anyone to allocate pre-tax dollars for health care. But, unlike FLEX plans, this is not a use-it-or-lose-it plan. All that money is YOUR money, and at retirement, you can use it for anything, tax-free. Before retirement, you can use it for health care, tax-free. But, it's YOUR money that YOU have to spend, meaning that you are much more likely to hunt for the best balance of price and quality instead of being oblivious to it.
Another nice benefit of HSA is that employers can contribute to it. By combining HSA contributions up to the deductible with a high-deductible major medical and no day-to-day coverage, an employer can offer that same out-of-pocket experience as a much more comprehensive plan, but at a fraction of the premium. Not only that, high-deductible plans are much less susceptible to premium increases from year to year.
That option would put a lot more control back in the hands of individuals without requiring massive government intervention. Intervention which, in most cases, is less effective, more expensive, and has more unintended consequences that are ever anticipated up front.
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I wish we had some sort of non-profit insurance companies, where people pooled resources but which weren't gunning for their 20% cut. We could still negotiate group rates and ensure coverage for rare cases and new entrants, but we could cut premiums.
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Re: Re: Re: Re: obviously
That's why you have employer-subsidized HSA accounts.
"They also don't work as safety nets for those who experience catastrophic health failures that affect them for the rest of their lives."
That's why you pair them with a high-deductible major medical plan.
Hell, did you even read what I wrote, or did you just stop at "HSA"?
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The US system seems to do it backwards, primarily for the financial benefit of the 'insurance' companies, the pharma/meditech companies, and all-too many doctors.
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Re: obviously
"based on need rather than greedy businesses allocating resources to maximize profit, etc."
is basically what the entire book argues against.
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Re: obviously
> it would be way more efficient
Canada has a government run healthcare system, and no one says it is more efficient than a private system. What is said is a government run system is more accountable, and distributes scarce resources based on need, not on money.
America's health care problems can be summed up as, An ounce of prevention is worth a pound of cure. America is great at the "pound of cure" side. But an ounce of prevention is cheaper. For example, diabetes is relatively easy to manage or prevent, but unmanaged, consequences like limb amputation, vision loss, or kidney problems are very expensive to treat AND they remove people from the workforce.
This is why Canada pays less for health care per capita and has better results.
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Re: Re: obviously
Only if you are relatively wealthy. If you aren't, you don't get very good care.
On the whole, the US has among the worst health care systems of the developed work if you measure it by actual outcome.
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Re: ... and somewhat lowers the maximum obtainable quality.
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Perhaps so, but the wait time in the US (or at least in my part of the US) is no better than Canada's, and you get a better end result in Canada.
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First, there are several cases of people coming to the US from countries that have a government run "health-care" because they couldn't get procedures in their country that they needed to live. They were considered elective in those countries. I know of several cases in which the people lived in Canada.
Second, America is not any other country, and humans are not constant. What I mean is any single individual differs from others, meaning that genetics, life style, eating habits, etc. play a part in that persons health not just medical care. So an individuals life is going to affect their health, so the general health of Americans is more because of their life style, genetics, etc. than the health-care system. Also, many Americans put personal choice, see "Freedom", at the top of their priorities, and part of that is being able to live the life you want and dealing with the consequences.
My point, you cannot look solely on the health-care system as a reason for peoples health. And, if you pay attention at all, you will find that the government has yet to do almost anything right. I would much rather remove the governments influence on health-care and let capitalism and competition fix it, far more than have the government take control and run yet another program into the ground.
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Healthcare is always open to other financial elements - look at all the Brits who go to Eastern Europe for cheaper dental care. But the baseline should be that prevention is better than cure, and support for most stuff should be available to nearly everyone, as much as possible.
Also, taking an economic view, government-controlled healthcare allws the buyer (the government) to really force down drug/equipment/service costs. Of course, this is somewhat offset by bureaucratic inefficiency, but overall it seems to help - and it fosters and is fostered by a culture of 'we are here to help', not 'we are here to profit'.
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Then the obvious solution
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Re: Then the obvious solution
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Fuck 'em. Let them starve to death.
Just ignore all the ancient crud (techdirt mostly writes about the whining of ancient dying crud) and forget about them.
Make this site about the modern age and the future for a change.
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Re:
Ignorance and complacency in the general population is what keeps those anachronisms on life support. So the more educated people become--by sites such as this one--the more we can mitigate the damage those dinosaurs do and the sooner those behemoths can be put out of our misery.
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Corporate Welfare
It's so simple though. If their were only one phone company, they could lay all those other people off. Less employment means fewer labor costs.
Also, without all that pesky competition, they could jack up prices. That's very efficient for AT&T. Their return on investment could shoot through the roof and customers would only have to pay 2x to 3x in additional costs.
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Look There!!!
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Re: Look There!!!
Who's captain obvious?
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Straight up lies...
For some truth on the matter of competition:
The Meaning of Competition - by Friedrich von Hayek
"In actual life the fact that our inadequate knowledge of the available commodities or services is made up for by our experience with the persons or firms supplying them � that competition is in a large measure competition for reputation or good will � is one of the most important facts which enables us to solve our daily problems." ~ F.A. Hayek ~
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Look at competition: most impose data caps. Every single one has identical (or near) pricing tiers. Every single one includes hidden fees and charges for text messages.
Let's look at cable: same thing.
Look at entertainment: same thing.
I'm sure these are all "monopolistic" views, but the fact remains competition no longer exists. These companies thrive on testing the market on what it's willing to tolerate, then price accordingly.
Yes, back in the day, there was cell competition, but that's all been obliterated when there's only a few left in the market.
I wouldn't be surprised if these industries sit around and say to themselves, "Yeah, how about we all agree to raise our monthly fees by $10. Everyone on board? Good, Verizon, you start first, followed by T-Mobile. AT&T, you go last, again. Punishment for your old days and old ways."
There are times I believe a monopoly would serve customers better if only a single entity would be closely monitored for any wrong-doing, like the "only" search engine of the world: Google (which, as you can see, gets everyone upset over a small change to which no one gets... charged. Oh, the irony.)
At any rate, this guy's obviously making rhetoric, but it sure does get one to think which way would be better for consumers... if competition truly existed.
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Yes, the situation is horrible, but at least there is some semblance of customer benefit going on.
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I'm very confused.
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Back in the day, I was under the impression competition was to make it so customers actually had a choice.
That's pretty much non-existent anymore.
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My point is that data bandwidth is a completely featureless product, like water or electricity. Since these companies (comcast/telcos/whoever) OWN the featureless product, they try to bundle things in to it and make it a non-featureless product, even though that isn't the service that most of us want. If companies had to buy the bandwidth wholesale, they would HAVE to offer what the consumer wants in order to compete.
I believe you could re-introduce competition to these markets if our anti-trust laws actually worked, and if internet bandwidth was made in to a public utility.
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At least then the prices would be high due to bureaucratic incompetence, rather than outright malice. Easier to swallow.
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Normally...
This slight variation does give some substance to his claims although I feel that the solution that I would propose would be different. Ideally, it would work where one entity would develop the infrastructure and another would provide the actual service. The problem is that the infrastructure provider would have to be the government, highly regulated, or some sort of non-profit organization, but none of those solutions have a high track record for success. The advantage would be that the spectrum would be utilized in the most efficient way, the result for the consumer would depend on how this was implemented.
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Re: Normally...
I think either your understanding of spectrum allocation and/or your understanding of roads is flawed.
There is, without doubt, a measurable and finite amount of (roads thru-put capability/radio spectrum information capacity/bandwidth). However, this only makes a difference when everybody is trying to use it at the same time. The rest of the time, the (roads thru-put capability/radio spectrum information capacity/bandwidth) may as well be infinite, as the very little use it gets will not clog it or use it up.
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For the last few months(years?) all the major carriers have been warning of a "spectrum crunch" where the available spectrum will no longer easily meet need. They are using this "cruch" to justify many things including, throttling 'unlimited' users, the switch to tiered pricing, and the ATT -T-mobile merger.
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Re: Normally...
The providers all have a significant number of users where they provide service, so the complaint is relatively insubstantial.
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Who knew that "essentially unlimited" meant generally overcrowded, constantly in need of expansion and crumbling in most major metropolitan areas...
Look Mom, my bank account and retirement fund is essentially unlimited.
Are you really an idiot or did you just stay at a Holiday Inn Express last night?
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Oh man, that is a great line. Gonna have to remember that one.
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Re: Normally...
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Remember that next time you're in your vehicle, on a major highway at a standstill because someone else had an accident.
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Cry me a river, Randall Stephenson
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The allocation of spectrum
As it stands, all the available RF spectrum is split up into blocks by the FCC. The FCC then "allocates" this spectrum, which is a nice way of saying that they grant monopolies on each of those blocks to various companies. As things currently stand, the spectrum is split into several hundred different, government-mandated and -enforced monopolies.
Now sure, AT&T would love to become the new Ma Bell. No arguments there. But the way I read the article, they're complaining that having hundreds of artificial monopolies is less efficient than having one or two artificial monopolies. I'd believe that.
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Re: The allocation of spectrum
So, we should consolidate all farms into one gigantic farm company so that the thousands of artificial monopolies over land are replaced with a more efficient monopoly?
The argument does not, in fact, drive toward the solution he is proposing. Rather it suggests that companies should be able to use their portion of the spectrum in trade. Leases, of course, would be the only viable option, but provided the FCC were to commit to a solid allocation schedule, they'd work quite well.
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He's right, you know.
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Re: He's right, you know.
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'Competition' doesn't quite have the same meaning in the mobile market.
This is like, back in the day, the AC/DC wars to determine a power standard. Imagine, if you will, your choice of electric providers -- all with different standards. If you want to switch, you need to rewire your house and get new appliances. That's the current situation in the mobile market, and the technology, while still obviously evolving, has matured to the point where it's a 'utility' and needs to be regulated by the government as such. Declare one standard, declare that phones must be multi-frequency so a device can, if not locked, function on any US network. Require providers to unlock devices sold at full price, require providers to unlock devices after contract period ends for 'discounted' devices.
_Then_ you'll see legitimate competition in the mobile industry in the US, and not the joke it is today.
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Re: 'Competition' doesn't quite have the same meaning in the mobile market.
Misleading. This is only true if the phones are designed to specifically only work on one network. RF transceivers are not that sensitive. It is true in that the providers ask for these phones to be hardware locked, but in that case you aren't really "doing away" with 'locked' phones.
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It is clear...
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Who knew AT&T supported socialism? I was sure their Super PACs only supported pro-free market politicians, not socialists.
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Their lies know no bounds.
What? Like all three of you? Yeah ok AT&T.
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Actually he's probably right about this. He's not talking about prices, features, or customer options. He's talking specifically about allocation of spectrum.
With multiple competitors you end up allocating separate spectrum blocks for the "same" functionality, once for each competitor. If you have fewer competitors then you can free up spectrum for other uses since you won't have to allocate the part of the spectrum that would have gone to those competitors.
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yes, he is actually talking about spectrum crunch rather than actual competition with a single market. So, the guy is still an idiot, but he is an idiot for different reasons than this article lays out.
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Anyone remember the recent conversion to digital broadcast TV that actually allowed more content to be delivered and freed up spectrum to be sold??? How about 802.11b to 802.11n progression?
On another note:
The biggest threat to the shareholders of telecom is the short sightedness of the shareholders of telecom. It would not be inconceivable that in 10-15 years there is just a giant public mesh network running in the ISM bands that is built on everyones own low cost, low power devices. Systems that grow to be distributed and robust will win out.
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It is a license free (unregulated) public spectrum.
The progression from a to n was delayed because of the ieee dragging their feet in defining the standards.
Most manufactures went ahead to market without the standards being finalized.
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{semi} Real problem... VERY stupid solution.
His problem is real (though a weak thing to be complaining about so adamantly), but his solution is completely ridiculous. He wants more customers, but he doesn't have room in his spectrum for more customers. So he wants to take some spectrum away from someone else so he can get more customers, and thereby more money. And I guess if that did happen it would, indeed, eliminate competition. So, by twisted AT&T logic, competition is the problem! It isn't REALLY competition he's out to get rid of, but rather resources he is looking to control. It is just that those darn competitors control those resources he thinks should be his, so let's eliminate them!
But you see, he can�t just say that. Sympathy for big greedy corporations is at an all-time low (geez, I wonder why), while socialism is very "in" right now. So he had to cover up the greed and package it up in a nice little socialist package. And, of course, the reporters ate it up.
On a side note... my daughter works at the local pizzeria and today was supposed to be payday. But apparently there is no money in the bank, so no one is getting paid. They are hopefully going to fix the problem by Thursday... hopefully. So I think I'll go down there and give them a suggestion - let's close down all the other restaurants in town! If they were the ONLY restaurant, then everyone would have to eat there and they would have money, right? Payroll issues � SOLVED! Thank you, Mr. Stephenson, for this wonderful solution.
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Economies of scale only work if they can bring the unit cost of something down by producing more of it. You cannot produce more OTA bandwidth. It's limited by physics. Therefore, economies of scale should not bring the price down, unless there are already major problems in the marketplace.
A monopoly would only encourage the inefficient use of spectrum by denying market competition.
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MCI & Sprint
Even if somehow a monopoly manages to charge a "fair price" for their services, it hurts innovation. Why spend all the money to implement a new idea, it's not like a competitor will beat you to the punch.
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This:
I'd like to amplify that. If the FCC was better at doing its job, or was even interested in doing it, they would manage the spectrum better. But the real need is for wireless signal carriage to be treated more as a common carrier situation.
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You say oligopoly, I say...
http://en.m.wikipedia.org/wiki/Oligopsony
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from Canada
This has already been occurring in Canada for awhile now.(a few new providers are sprouting up, but they still have no market share) Basically three providers controlled the entire market and all their plans, prices, rates, caps et al were identical. Its really no different nowadays either its just hidden behind subsidiary companies of the same three offering slightly different plans. They rarely compete with each other on price, a clear sign of collusion.
I live only a few miles from an average Canadian city, ~100k population, and my internet alone is $60/month with a maximum of 30Gb usage. Massive overage charges ($10/Gb) and throttling occur after reaching the cap. A 1Gig phone data plan from Telus (one of the big three) costs $35/month and $15 per Gigabyte over. Everyday Canadians receive rediculas bills for thousands of dollars, myself having been one of them.
Things are slowly changing for the better here I believe as Wind Mobile is starting to do well and Canadians have been demanding better service for so long. I think Rogers, Bell and Telus will start to get the picture as each day it becomes cheaper to start your own company.
Unfortunately I have no advice for you guys, just don't let it happen mmmk? :)
Relevant:
http://www.cbc.ca/news/canada/british-columbia/story/2012/05/04/bc-premiumtexts.htm l?cmp=rss
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Bullshit
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Re: Bullshit
raises prices, the others see it and raises theirs accordingly.It's just understood.
When I decided to get an iphone from AT&T in may of 2009, AT&T did not have a policy that all smart phones must have a data plan.Puchasing an Iphone at that time did require a plan while you were on contract.
Now that I completed my contract and want to stay on a month to month basis for telephone service only I can only do so if I have a data plan as well.I don't want a data plan so I cannot use my iphone...anywhere!It is a phone and all I want to do is to use it as a phone, with the occasional wifi internet use from home ( to update the apps that I cannot use)mostly it's become an expensive ipod
All the other carriers followed suit and they all now require a data plan as well.
Now I have an expensive smart phone sitting around that I can't use Unless I give in to their shakedown scheme.
In addition (in the US)all phone are either code division or time division spread spectrum...if you have a verizon phone it stays there.The same with Sprint,AT&T and Tmobile
If you want to change carriers you must get one of their phones.(except for AT&T and T-Mobile)
THIS IS COMPETITION?
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Is there any competion for AT&T land line service?
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Re: Is there any competion for AT&T land line service?
instead of:
I the only one ...
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