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Romney2012Defeat Obama 2012-Chg we can believe inPremium
join:2002-03-03
USA
kudos:4 | reply to kapil
Re: No said by kapil:What kind of "synergies" are there to be had by merging a TV provider and a wireless phone company? I agree that Comcast shouldn't try to buy Sprint. But Comcast is much more than a TV company. They are a major internet provider and a major wired phone company as well. But I don't think they need TO BUY a wireless company to offer a quad play option. They can do that thru agreements with a wireless company.
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| said by Romney2012:I don't think they need TO BUY a wireless company to offer a quad play option. They can do that thru agreements with a wireless company. You're right. They can, and are, pursuing that path right now with with wholesale agreements with Sprint and (also an equity investment in) Clearwire.
It seems to be the cheapest and quickest way to wireless, with the least amount of risk.
But by wholesaling, they're dependent on a partner, and they don't have full control over the wireless network and product. This can reduce the likelihood of success.
And if they are successful, they're leaving a lot of money on the table by not owning it outright. Especially when they had the opportunity to buy them out on the cheap. Keep in mind, AT&T and VZ make billions a year on wireless, and keep squeezing more out of that golden goose. | |
patcat88
join:2002-04-05
Jamaica, NY
kudos:1 | said by Samsonian:Keep in mind, AT&T and VZ make billions a year on wireless, and keep squeezing more out of that golden goose. But AT&T and VZs billions are on a downhill coast. The unlimiteds (Cricket/MetroPCS/Revol), and now Clear's uncapped internet service at biting away viciously. ATT/VZW's only real customer base is those that think more expensive=better and rural customers. | |
| said by patcat88:But AT&T and VZs billions are on a downhill coast. We haven't seen that yet. Both of them have been able to keep boosting revenue, profit, margins, ARPU, subscriber count, and all those other financial metrics.
There's a bunch of reasons for this. The most obvious is the barriers to entry. You can't just into the game and start building a wireless network. You need spectrum licenses from the government, which don't come cheap. And building a network requires lot of capital. Not that many people have billions lying around, and the desire to do this.
And even if they did, they know that the 2 biggest players are entrenched in this market. AT&T Mobility and VZW have ~60% of the market, who wants to jump into this?
In a perfect market, there's little to no barriers to entry and many competitors. This market is far from that, and the government's policies have only made this worse (extorting insane prices for spectrum, approving big wireless mergers, etc.).
The unlimiteds (Cricket/MetroPCS/Revol), and now Clear's uncapped internet service at biting away viciously.
They're all tiny compared to AT&T and VZW for the time being. And they've had a negligible impact on the big 2.
The regional CDMA unlimited carriers have done a decent job so far though. But, their growth has slowed dramatically since Boost Mobile (on Sprint's iDEN network) and T-Mobile have launched aggressive prepaid plans of their own. Both of which are national carriers.
Cricket/Leap, MetroPCS, and Revol should merge already. They could fit their networks together like a jigsaw puzzle, achieve greater scale, have a network that is somewhat national in size, and be the 5th national carrier.
Clearwire is also still tiny right now. It'll be late 2010 before they have a good sized network, based on their deployment plan. It'll mainly be a metro broadband service til next year (handsets should arrive around then), but that reduces potential customers for the time being.
The problem is deploying a 4G network is a lot harder, mainly because of the backhaul problem. You can't just hook up tariff'd T-1, like with 2G and even 3G. Serious pipes (fiber or wireless+fiber) are needed to get this traffic to the internet, and that takes time and money.
ATT/VZW's only real customer base is those that think more expensive=better and rural customers.
No doubt many people subscribe to either AT&T or VZW mainly because it's a known brand, or they already get home phone from them. The devil you know is better than the one you don't.
Also, many people in more rural areas can only get service from VZW. There's something to be said for having the biggest network. | |
patcat88
join:2002-04-05
Jamaica, NY
kudos:1 | said by Samsonian:said by patcat88:But AT&T and VZs billions are on a downhill coast. We haven't seen that yet. Both of them have been able to keep boosting revenue, profit, margins, ARPU, subscriber count, and all those other financial metrics. We will eventually. I mean the regional unlimited's business model is cherry picking urban areas. The urban areas are the most profitable for the big 4. The regional unlimiteds are as disruptive as Cable and 3rd VOIP to ILECs.
There's a bunch of reasons for this. The most obvious is the barriers to entry. You can't just into the game and start building a wireless network. You need spectrum licenses from the government, which don't come cheap. And building a network requires lot of capital. Not that many people have billions lying around, and the desire to do this.
The regional unlimiteds don't plan to expand the same way as an incumbent cellular has.
The regional CDMA unlimited carriers have done a decent job so far though. But, their growth has slowed dramatically since Boost Mobile (on Sprint's iDEN network) and T-Mobile have launched aggressive prepaid plans of their own. Both of which are national carriers.
Growth slowed on purpose. I don't remember how many AWS cities they have yet to launch, but most of them seem to have launched.
Cricket/Leap, MetroPCS, and Revol should merge already. They could fit their networks together like a jigsaw puzzle, achieve greater scale, have a network that is somewhat national in size, and be the 5th national carrier.
Bad idea. Cricket and MetroPCS, and Cricket and Revol overlap in a couple markets. They have near/identical prices, but still, merging is worse for competition. Their target demographic doesn't want endless coverage to roam in. You HAVE to roam to go between markets. I believe at one point (or still?), you had to pay extra to roam out of your local market to another market of your regional unlimited.
The problem is deploying a 4G network is a lot harder, mainly because of the backhaul problem. You can't just hook up tariff'd T-1, like with 2G and even 3G. Serious pipes (fiber or wireless+fiber) are needed to get this traffic to the internet, and that takes time and money.
I do wonder what Clear's main idea for bandwidth is? 100K construction cost plus 10K a month for a ILEC T3, $200/megabit/mo, monthly fee from clear subscribers can't cover. | |
| said by patcat88:said by Samsonian:said by patcat88:But AT&T and VZs billions are on a downhill coast. We haven't seen that yet. Both of them have been able to keep boosting revenue, profit, margins, ARPU, subscriber count, and all those other financial metrics. We will eventually. Maybe, but we haven't even seen indicators of that. As big as the big 2 are, they keep posting strong growth.
I mean the regional unlimited's business model is cherry picking urban areas. The urban areas are the most profitable for the big 4. The regional unlimiteds are as disruptive as Cable and 3rd VOIP to ILECs.
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The regional unlimiteds don't plan to expand the same way as an incumbent cellular has.
True, but I'm not sure that's enough.
Coverage matters for wireless. No coverage = no service.
VZW has invested more in its wireless network than its competitors' have. VZW has made its name off "The Network." Quite a bit of their customer base was acquired, but most of it was organic growth. Their success isn't a complete accident.
Growth slowed on purpose. I don't remember how many AWS cities they have yet to launch, but most of them seem to have launched.
I was referring to net subscriber adds, not network deployment plans. The regional unlimited net adds have slowed. Boost Mobile added around 1 million net adds in a recent quarter. It's the main thing holding up Sprint's sub numbers for a while now.
Bad idea. Cricket and MetroPCS, and Cricket and Revol overlap in a couple markets.
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They have near/identical prices
The have almost the exact same business model, and largely different network footprints. Hooking them up is simple and straight forward.
VZW had to divest over 100 markets after the Alltel acquisition. Mainly because VZW would have been the only national provider, or only provider at all, in those markets.
A couple of competitive, urban markets is nothing to worry about, especially as regional carrier goes compared to a national. The government probably won't care. They could repurpose some of that spectrum, or just off some of those spare assets.
Not a big deal.
but still, merging is worse for competition.
This doesn't follow. I keep noticing some people bring this up every time a M&A occurs, is proposed, or even just wildly speculated on.
Not all mergers are bad for competition, there are plenty that result in more competitive markets.
Determining whether a merger will result in less competition is an incredibly detailed and complicated process as far as the government goes.
I personally don't have any particular rules for what is or isn't an acceptable merger. It really depends on the companies in question, their competitors, their customers, their suppliers, and the markets they're in.
I can say for certain in this instance: that regional wireless carriers merging amongst each other to effectively form a 5th national carrier, is good merger that will create more competition. National carriers merging with each other, would be detrimental to competition.
If you have a problem with a relatively small merger like this (which hasn't even been proposed), what about far larger acquisitions that did happen? Like AT&T Wireless/Cingular? or Alltel/VZW? Those deals actually reduced the number of national carriers, and reduced competition.
Their target demographic doesn't want endless coverage to roam in. You HAVE to roam to go between markets. I believe at one point (or still?), you had to pay extra to roam out of your local market to another market of your regional unlimited.
This doesn't make sense. People want coverage regardless. Again--No Coverage = No service.
I believe they still charge extra for roaming.
Well, we'll just have to agree to disagree regarding the regional unlimited carriers.
I do wonder what Clear's main idea for bandwidth is? 100K construction cost plus 10K a month for a ILEC T3, $200/megabit/mo, monthly fee from clear subscribers can't cover.
Wonder no more:
'»telephonyonline.com/3g4g/news/cl···ml?imw=Y'
There's no massive recurring fees from ILECs. They're building their own backhaul network. Something few other carriers have done.
90% of their sites use PtP wireless and get aggregated to fiber sites to be backhaul to the core.
Some of the latest PtP wireless systems can do over 1 Gb/s. In a few years they'll be able to do 10 Gb/s. | | |
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