Verizon Admits Wireless Industry Really Not Competitive, Has No Intention of Lowering Prices

from the big-fat-show-pony dept

As we just got done stating, the wireless industry would have you believe that it doesn't need net neutrality rules applied to wireless because the sector is just so damn competitive, and all that competition will keep companies on their very best behavior. In a recent Wireless Week editorial, former FCC Commissioner-turned-Comcast-lobbyist-turned-wireless-industry lobbyist Meredith Attwell Baker proudly proclaimed that we don't need neutrality rules because of "82% of Americans having four or more providers competing for their broadband business."

Except the number of major wireless carriers doesn't really mean much when AT&T and Verizon together dominate 85% of retail sales, and have an 80% plus market share of the special access market -- the lines that feed cellular towers. And while it's true that T-Mobile has disrupted the industry of late with some more consumer friendly policies and a lot of highly-entertaining rhetoric, there's only so much the company can do with that kind of duopoly in place. In a recent filing with the FCC, T-Mobile highlighted how AT&T charges them an arm and a leg for roaming. AT&T shot back insisting that T-Mobile should spend less time complaining and more time building their own network, but that can be hard to do when AT&T and Verizon also own the lion's share of available spectrum.

While AT&T and Verizon fend off neutrality rules by over-stating competition, the press helps their case by repeatedly over-stating T-Mobile's impact on the overall market (price war! price war!). If you pay closer attention, all of the industry's big four players make it clear that despite all the noise, not much has changed. In an investor research note this week, several Jefferies analysts say they've spoken with Verizon Wireless, which doesn't plan to seriously compete with T-Mobile (or a growing chorus of MVNOs) because they feel they simply don't have to:
"According to the note, Verizon's management "does not believe the wireless industry feels much different than in the past, contrary to the broad view that competition is intensifying to detrimental levels." Verizon Communications CEO Lowell McAdam and Fran Shammo have made similar comments in public at recent investor conferences. "Management again highlighted that it does not intend to broadly price down its subscriber base, but instead offer discounts to at-risk customers while making surgical plan changes," the Jefferies analysts wrote."
And by "surgical," Verizon means "largely cosmetic." So far, Verizon Wireless has pretended to compete by offering superficial price reductions on only their most expensive plans -- with the goal of heavily upselling users. Even T-Mobile, whose escape from AT&T's hungry maw has resulted in a shift away from device subsidies (and toward phone financing plans that may not be any better a value), admits they're not eager to have a price war, even if they could get roaming issues sorted out. Underneath the dull roar of their faux-punk rock CEO Tom Legere, the company's CFO concur's with Verizon's take that meaningful pricing changes really haven't occurred:
"The carrier says it has been competing more effectively by doing away with subscriber "pain points" like service contracts and international data fees. But its executives have also been signaling that they don't plan to start a price war. "When you really analyze a lot of the pricing moves that have been made, there has not been a significant repricing," (T-Mobile) Chief Financial Officer Braxton Carter said at a Morgan Stanley conference last week."
It's rather nice for them that they have the choice. As we've long noted, you probably don't need net neutrality rules if you've got meaningful competition, but what the broadband industry generally engages in is superficial theatrics, or what I affectionately refer to as "wink wink, nod nod" competition. It's that lack of more meaningful competition that has allowed Verizon and AT&T to engage in all manner of anti-competitive behavior, whether that's attacking users for tethering, blocking Facetime, blocking competing mobile wallet platforms, disabling device GPS so you'll use their more expensive services, cramming, or just good-old fashioned ripping people off with false advertising and stealth charges.

Limited competition from T-Mobile can't magically change these realities all alone, and it certainly can't automatically thwart the dumb, anti-competitive ideas to come. That's not to say things can't improve down the road (especially if Sprint can turn its fortunes around and MVNOs improve service coverage and reliability), but declaring that you don't need consumer neutrality protections on wireless simply because four carriers exist isn't much of an argument.

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  • identicon
    Anonymous Coward, 10 Nov 2014 @ 12:13pm

    Every time I hear from folk about their contract plans, I wonder how worth it, it is. I heard one the other day of $100 a month. For a friggin' phone? You gotta be kidding me. There is no way in heck I'm gonna pay that sort of money for a phone service.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 10 Nov 2014 @ 12:29pm

      Re:

      Well, that's because you just don't understand. It's not a "phone", it's a whole mobile experience. How can you doubt the value of that? Want some proof that it's that valuable? Just ask AT&T or Verizon. They wouldn't lie to you, would they?

      reply to this | link to this | view in chronology ]

    • identicon
      Republic Wireless for me, 12 Nov 2014 @ 4:55am

      Re:

      I got a Motorola X and only pay $25/mo. It's even cheaper if you drop the unlimited data.

      I work with people who pay well over $100/mo for their iPhone & plan.

      I expect to retire before them.

      reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 10 Nov 2014 @ 12:41pm

    If only their customer satisfaction ratings were used to determine if they get to keep spectrum.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 10 Nov 2014 @ 12:51pm

    "82% of Americans having four or more providers competing for their broadband business."

    That's the wrong C-word. The correct word should have been colluding.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 10 Nov 2014 @ 10:48pm

      Re:

      No, the reality is that there's two you can (sometimes) change states with who steal off you; and two you can't who don't usually steal off you.

      By 'stealing', I mean actual theft through shady accounting practices such as overbilling and excessive and opaque charges.

      reply to this | link to this | view in chronology ]

  • identicon
    TruthHurts, 10 Nov 2014 @ 1:02pm

    There's an easy fix for this...

    Pull all cell towers under Title II, mandate open access like PoTs lines, connected to Title II internet feeds, then all the Cell companies can pay to a pool to cover upgrades, expansion, etc... This would also do to nationalize a single standard, where we might actually get to have REAL 4G cellular service instead of redefined 3G cell service.

    That will even the playing field and prices will plummet as carriers won't be allowed to price-gouge as they do today.

    reply to this | link to this | view in chronology ]

  • icon
    Uriel-238 (profile), 10 Nov 2014 @ 1:15pm

    At what point do we get to see anti-trust action against these mobsters?

    Do we actually have to catch some baby-eating on film?

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 10 Nov 2014 @ 4:18pm

      Re: At what point do we get to see anti-trust action against these mobsters?

      Well let's see, the former head of the FCC is now directly lobbying on behalf of those he was supposed to regulate so... perhaps shortly after the swinging door(can it even be called a 'door' if it's always open though?) between 'regulator' and 'regulated' is welded shut, and the massive conflicts of interest are at least brought to manageable levels?

      reply to this | link to this | view in chronology ]

      • icon
        tqk (profile), 10 Nov 2014 @ 5:28pm

        Re: Re: At what point do we get to see anti-trust action against these mobsters?

        ... perhaps shortly after the swinging door(can it even be called a 'door' if it's always open though?) between 'regulator' and 'regulated' is welded shut ...

        It's interesting that sandwich makers can get away with forcing their staff to sign non-compete contracts, yet it hasn't occurred to the gov't to suggest anything like that.

        Rules are for little people, not captains of industry, and Occupy were anarcho-commies I guess.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 10 Nov 2014 @ 1:57pm

    the very reason Verizon and the other broadband suppliers have been greasing congress palms for so long is so as to keep the situation of 'no competition' as it is! how can any of the 3 or 4 companies manage to charge people an absolute fortune for providing a service that was payed for years ago, if there were any sort of meaningful competition? while those few companies live in each others pockets and meetings, where one charges more for this service and another charges more for a different service, making it an impossible task of really getting a good deal, they will continue to stifle innovation by suing new companies out of the game before they can even get in it!!

    reply to this | link to this | view in chronology ]

  • icon
    Uriel-238 (profile), 10 Nov 2014 @ 7:30pm

    Rules are for little people

    Wow. That takes us back two hundred years.

    Our democracy is a plutocratic oligarchy and now we don't even have Napoleonic law.

    So it's a matter of the little people discovering that the contracts they have with state are as one-sided as the contracts they have with companies.

    It's going to be a good season for mischief.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Nov 2014 @ 3:40am

    I don't understand how MVNO's and increase their service coverage. They basically lease access and use nothing but AT&T and Verizon's network infrastructure. So they only way for MVNO's to increase their service coverage, is to wait for AT&T and Verizon to expand their wireless infrastructure.

    reply to this | link to this | view in chronology ]


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