The Wall Street Journal had this top-of-fold, front page story last Friday: AT&T Ends All-You-Can-Eat — Flooded With Web Data, No. 2 Wireless Carrier Puts Cap on Heaviest Users. In it, the paper writes that the reason for AT&T’s new data plan is:
…The company says it is also looking to rein in the heaviest users to improve service for all subscribers.
Carriers, such as AT&T and Verizon Wireless, have long chafed at having to spend billions of dollars to build and maintain networks only to watch Internet companies like Google Inc. and device makers like Apple Inc. collect most of the profits for using them. The pressure on carriers has grown more acute with the rise in use of smartphones like the iPhone, essentially mini computers that make mobile Internet use easy and put a heavy toll on networks.
Funny. There’s no significant mention of “maverick” T-Mobile in this story even though it dominated the news last year with the proposed merger between it and AT&T; even though the reporter talks up the deleterious confluence of bandwidth limitations, growing smartphone usage and “increasing competition” in the broadband wireless field, which the merger, in part, sought to address.
As you may remember, the T-Mobile as “maverick” theory – heavily advocated by the DoJ and its “public interest” cheerleaders – played an important role in the sinking of the AT&T / T-Mobile merger. It rested on the myth that T-Mobile, with its ~10% market share, represented a linchpin in the discipline of AT&T’s wireless offerings; and that absent it, through a merger, such discipline would fail. Consequently, consumers would be screwed forever.
Anyway, an interesting inset in the story appears at the bottom of page 2.
If you can’t read the scribbled upon picture (at right), it reads:
Does the end of unlimited data with AT&T make you more likely to switch carriers? (Emphasis added)
Er, we have a choice?
You bet we do – though the DoJ, FCC and all the (paid-for) “public interest” sycophants would have you believe otherwise. The competitive dynamic in the wireless industry is way bigger and more vibrant than the naysayers could ever let on.
The “maverick” T-Mobile – i.e., number four in the all-important “national marketplace” (DoJ’s terms) for wireless broadband – is not even a part of the WSJ story. It’s essentially missing. Sprint, Verizon and non-top-four, MetroPCS, all have a more prominent role in the reporting. And for good reason. That’s because if any carrier in the marketplace goes ahead and manages its network in a way that upsets customers, those same customers can and will ditch for other carriers, which are numerous in any given U.S. market. That’s what the inset implies, and then some.
In fact (not myth), “increasing competition” defines the wireless landscpae. Sprint knows this well (belying its real concerns in its SEC 10-K’s, as seen here). As the story points out, it stands to gain in AT&T’s latest attempt to manage its strained network capacity.
Even if AT&T picked up T-Mobile, the competitive dynamic would have remained vigorous and cut-throat. Sure, one fewer player, for the time being, temporarily, would have existed. But the competitive zeal to gain more customers would not have decreased. There’re simply too many checks in the marketplace for any one competitor to sit on his / her heals and start acting stupidly.
Customers can switch. In the wireless market, this has been a fact of life for some time. This means carriers must continually offer value or their fickle customers will go elsewhere.
Consequently, the whole wireless marketplace is a “maverick” unto itself. And the customer continually wins as a result.