When Dinosaur telcos ruled the Earth
The Federal Communications Commission’s Michael Copps, ruminating on the merger of Cingular and AT&T Wireless, seems to have felt this icy chill too. The FCC gave its formal blessing to the union this week, resulting in the creation of the largest mobile phone network in the US, and one of the most powerful in the world.
In a typically thoughtful, but unusually pessimistic warning that goes far beyond today’s concerns, the former Clinton administration trade official points out that for the first time Bell companies will control over the half of the wireless market. Earlier this month Copps warned that the internet was dying, under pressure from vested interests who want a closed network, but his words were almost completely unreported. Now, he points out, both Cingular and the erstwhile No.1 carrier Verizon were formed from amalgamations of local Baby Bells. SBC is owned by SBC and Bell South AT&T Wireless, meanwhile, has Ma Bell in the DNA: it’s a spin off from the mothership itself.
“The chance that wireless will compete effectively with wireless incumbents is diminished,” he warns. Regulators call this “intermodal” competition, and it’s a reality, with mobile operators in more saturated markets, such as Europe, vowing to make the landline redundant. But Copps thinks this less likely to happen now, and cites the majority FCC judgement in his support.
Copp’s statement can be accessed online as a Word document or as a PDF. From the opening paragraph:
I support the Order as it relates to intramodal competition within the wireless market. With the divestitures achieved in this order, I believe that an acceptable level of competition will continue to characterize the wireless market. I must dissent to those parts of the Order relating to the intermodal aspects of the merger, however, because of the increased potential for discrimination by the merged entities’ wireline parent companies and also because I find the lack of rigorous competitive analysis troubling.
Note: Nothing about Copp’s dissent in the NYTimes’ piece – With F.C.C. Consent, Cingular Buys AT&T Wireless. The Washington Post at least quotes Consumers Union’s Gene Kimmelman in Cellular Merger Approved
“They’re allowing Cingular to control so much of the spectrum that it could only sustain two or three major players around the country,” said Gene Kimmelman, director of Consumers Union in Washington. “But what’s of greater concern is that two of the three biggest wireless firms are virtual monopolies in local telephone companies,” and that concentrates too much market power, he said. “This is an enormous retreat from past antitrust policies that promoted competition in the wireless market.”