Wireless Duopoly Pricing Collusion Is Just Good Fun
Analyst: Pricing Collusion is 'Business at its Best'
An editorial first posted over at the Wall Street Journal
recently bubbled up over at GigaOM
. In it, "management consultant" Rags Srinivasan talks about how AT&T and Verizon are, like most duopolies, just pretending to compete -- giving each other winks and nods when it's time to raise prices. The latest example of course is Verizon's new shared data plans
, which jack up the price of data dramatically to offset a reduction in user voice minute and SMS consumption. AT&T's expected to now soon introduce pricing that's probably going to be worse, and according to Srinivasan, two duopolists engaged in pricing collusion is just good clean fun:
Why is this signaling legal? There is absolutely nothing wrong in these pricing plans or in their signaling. A marketer is fully within their rights to not offer a certain product version and let other players know about it. I also do not believe lawmakers and regulators should try to dictate otherwise. One, it does not eliminate competition. There are other service providers who can choose to provide cheaper voice plans.
Srinivasan ignores of course that Verizon and AT&T have effectively cornered the market, and while there is growth on the prepaid front, that's little more than a gnat to the nation's two largest carriers -- whose lobbying muscle has resulted in regulatory capture (read: they literally write telecommunications law in most states
). That may be fun and games to Srinivasan, but it's anti-competitive collusion that results in consumers being absolutely ravaged when it comes to data pricing. Consumers certainly can't wait to see what kind of "creative" price penalties will be tied to AT&T's new shared data plans. If this is "business at its best," Mr. Srinivasan has some very low standards for excellence.
Re: Not collusion - watching other guy then reacting legal
said by sandman_1:Is it obvious? It has gone to USSC multiple times and been decided that offering similar pricing plans does not constitute cooperation or collusion. Unless you can PROVE that they actually got together and planned the moves, you got nothing.
They are cooperating, that much is obvious
Ex - Gasoline prices move in lockstep but the industry has won in court over and over again that the similar pricing was a result of competition and not collusion.
Unless someone has memos or other documentation of cellular carriers agreeing to move in lockstep, this ridiculous accusation will go nowhere.
And all of this is separate from laws concerning monopolies. The Feds, if so inclined could go to court over that. But that isn't the same as colluding to coordinate & fix pricing plans.
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Re: How quickly we forget.
said by Mr Matt:How'd that work out for those thousands of ISPs?
By the time Telephone Companies and Cable Television companies began offering high speed broadband the most dial up internet service providers were charging $12.95 per month or less for internet access.
Re: How quickly we forget.
said by WhatNow:Of course they are. I'm continually amazed that so many people believe that competition in capital intensive markets would spur a race to the bottom for consumer prices.
MR Matt is right upgrades are expensive.
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Re: The way
said by elwoodblues:It's my opinion that as long as people keep signing up, en mass I might add, then the prices are competitive.
If it was true competition and Verizon jacked up their prices, you would think AT&T would leave it, so that those that didn't like the price increase would jump.
We have the same problem in Canada, when one company reduced their calling area, the rest followed.
I will agree that they're not colluding, but it's not competitive, and frankly its a very fine line before they have crossed over.
"To be sincere, you don't have to know anything, you just say whatever makes you feel good and spin and smug circles in your tiny fucked up little head, happy as long as you're true to yourself. In other words, Sincerity is bullshit!" -Penn Jillette