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AT&T still mad about blocked merger, vows to take it out on customers

Posted: , by Scott H.

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AT&T still mad about blocked merger, vows to take it out on customers
Speaking at an annual conference seeking pro-market solutions to social problems, AT&T’s Chairman and  CEO Randall Stephenson took the opportunity to once again whine in public about how unfair it was that AT&T was not allowed to swallow up T-Mobile last year. No longer content to rant solely at the FCC, Stephenson took the opportunity to attack competition in general vowed to raise prices on customers as a result.

Despite never satisfactorily answering questions raised by competitors and government regulators as to how the merger would benefit customers, AT&T is maintaining its party line that they simply don’t have enough bandwidth without adding T-Mobile’s airwaves to their own. Stephenson went on to explain that there are simply too many choices in carrier out there, saying:

"The more competitors you have, the less efficient the allocation of spectrum will be. It's got to change."

The “competition makes us inefficient” line didn’t work too well for Pan Am in the 1940s, and we doubt it will garner much sympathy for AT&T today. Stephenson went on to say they would eventually have to raise prices on customers now that the deal was scuttled, and expressed regret that AT&T hadn’t imposed data usage caps and tiered pricing plans sooner.

We have no doubt that AT&T does regret this – as we’ve discussed before, the sooner everyone is moved off of unlimited data plans the sooner the carriers will have a free path to increasing revenue year over year without having to raise the price-per-GB of data. And we don’t begrudge AT&T for wanting to make money, that’s what they do. But given the threat of companies like Apple jumping in to the wireless network business (and likely rendering networks to true dumb-pipe status) we’re not sure that railing against competition and vowing to raise prices is the best way of securing long-term customer satisfaction.

What do you think? Let us know in the comments section below!

source: WSJ

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posted on 03 May 2012, 11:31 21

1. iamcc (Posts: 1319; Member since: 07 Oct 2011)

What an ass.

posted on 03 May 2012, 13:30 1

40. Mxyzptlk (Posts: 12918; Member since: 21 Apr 2012)

Yup, the government turning a blind eye to the evershrinking wireless spectrum. Now thanks to their boneheaded decision, the consumers will still have to pay the price. Ironically, the FCC are harming the consumers they are so trying to protect.

posted on 03 May 2012, 15:14 4

45. remixfa (Posts: 14255; Member since: 19 Dec 2008)

there is plenty of spectrum left it just has to be reallocated. what we don't have is a lot of nationwide carrier competition. prices would have went up or at least stayed high longer with reduced competition had the merger gone through... which is bad for everyone.. but good for ATT.

how dare they have to rethink their ideas and come up with a solution that is ultimately good for them... and us.

if they raise their prices they will push themselves out of competition.. I dare them

posted on 03 May 2012, 15:50 1

48. cncrim (Posts: 823; Member since: 15 Aug 2011)

I guess you don't see long term effect of the merger, do you?

posted on 03 May 2012, 18:27 2

66. lsutigers (Posts: 820; Member since: 08 Mar 2009)

Yes, the long term effects of the merger would have been bad for everyone...except AT&T.

This guy is trying really hard and making a fool of himself in the process. Competition makes us inefficient??? Cry baby...

posted on 04 May 2012, 09:24

85. yt6nin (Posts: 100; Member since: 16 Nov 2011)

when was the government ever to helpful for the people??? it's just a stupid "authority tag" to declare that they have more power and "knowledge", to justify their decisions and claims... I was really hoping for AT&T and T-Mobile to merge, may be resulting in better and more coverage across the states, but the government decided against and put all of us in misery in the end... We the people, supporting this government has been returned with a real short end of a already short stick... -_-

posted on 03 May 2012, 11:32 13

2. Tmachaveli (Posts: 425; Member since: 01 Apr 2011)

Wow that sucks for att customers

posted on 03 May 2012, 12:05 7

11. theoak (Posts: 324; Member since: 16 Nov 2011)

If at&t raises prices ... guess what the other carriers will do ... raise their prices too!

It sucks for everyone.

posted on 03 May 2012, 12:22 1

21. rsiders (Posts: 911; Member since: 17 Nov 2011)

Of course competition makes everything suck.lol Money hungry ATT. And no bro, all the other carriers aren't going to raise their prices just because ATT does.

posted on 03 May 2012, 13:18 2

36. W.P._Android_in_that_Order (Posts: 208; Member since: 15 Feb 2012)

If you believe that history repeats itself (and history does) then yes other companies will also raise their prices. Its been happening over and over again ever since the iPhone was introduced to ATT.

One of the problems with the mobile industry right now is that it is not conrolled by the customer, but rather conrolled by the stockholder which is why the prices will continue to rise until someone breaks the cycle.

posted on 03 May 2012, 13:26 1

38. nickjjay (Posts: 79; Member since: 10 Oct 2011)

True. History is very often right.

posted on 03 May 2012, 15:17 2

46. remixfa (Posts: 14255; Member since: 19 Dec 2008)

that's actually false. prices have come down quite a bit over all in the past 4 years.

posted on 03 May 2012, 17:30

63. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)

I agree with remix, unfortunately, prices have dropped dramatically since the launch of the first iPhone.

posted on 03 May 2012, 17:32

64. jamrockjones (Posts: 345; Member since: 26 Oct 2011)

There is a point where people aren't willing to pay for a service that competition can offer for a much lower price. I know plenty of people who went to Sprint when the iPhone became available mainly because of the price. If AT&T wants to higher their prices then I highly doubt they will start gaining new customers and will probably lose existing customers.

posted on 03 May 2012, 23:59

83. Baseballer (Posts: 132; Member since: 07 Dec 2011)

Not on sprint lol. Yes, their speeds right now are crap! But they are fixing everything up with their Network Vision thing. Speeds have really gone up in dallas where i couldnt even surf the internet at times. Couple years and they'll be in great shape

posted on 06 Jun 2012, 11:04

91. thedarkside (Posts: 652; Member since: 30 Apr 2012)

AT&T and verizon have been known to match prices to each others plans. if one does it, the other will sure to follow.

posted on 03 May 2012, 11:36 9

3. Goldeneye (Posts: 419; Member since: 22 Jan 2011)

Just get over att! Find a better excuse to raise prices, record profits,record activations and still whining about not being able to monopolize the US GSM market,just ridiculous!

posted on 03 May 2012, 12:15 2

19. sithman (banned) (Posts: 299; Member since: 21 Apr 2012)

Exactly what they wanna do

posted on 03 May 2012, 11:42 1

4. yougotkilled1 (Posts: 167; Member since: 27 Apr 2011)

Asshole move T__T

posted on 03 May 2012, 11:44 3

5. cmcg53 (Posts: 1; Member since: 18 Jun 2010)

Just another reason why I am glad to not have AT&T. Unless I were to work for them and not have to pay a monthly bill for service!

posted on 03 May 2012, 11:49 4

6. som (Posts: 768; Member since: 10 Nov 2009)

Go ahead AT&T raise your price as high as you like people will move to Verizon, Sprint and T-Mobile. AT&T will be smaller than T-Mobile in the next 2 years when millions of customers end their 2 years contract.

posted on 03 May 2012, 11:55 5

7. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)

Glad I'm on Verizon. Competition is bad for spectrum?! What the hell is that?

posted on 03 May 2012, 12:09 1

14. -box- (Posts: 3991; Member since: 04 Jan 2012)

It's truth. If you have a pie, and 8 people want a slice, you need 8 slices. If you have the same pie but 16 people want it, you need twice as many - and half as large - of slices. Spectrum is the same situation

posted on 03 May 2012, 12:13 6

15. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)

No it's bad for profit. Carriers share spectrum all the time.

posted on 03 May 2012, 16:47 3

53. remixfa (Posts: 14255; Member since: 19 Dec 2008)

I agree with taco.. I feel so dirty...

posted on 03 May 2012, 13:05 1

33. ILikeBubbles (Posts: 525; Member since: 17 Jan 2011)

i highly doubt that something like spectrum can be counted like a pie as in when its used it's gone... i'd like to see 3rd party reports on the effect users have on spectrum.. and how much spectrum isn't borrowed or loaned to other companies...

remember all the times that people said we're running out of ip addresses... or that the backbone of the internet needs to be fixed? and nothing happened?

i believe this situation is very similar... it could all be press hype taking advantage of consumers lack of understanding on what spectrum is and how it works...

posted on 03 May 2012, 13:29

39. 14545 (Posts: 1521; Member since: 22 Nov 2011)

Your analogy is horrible. Yes, spectrum is limited, but having one, or few, owners of spectrum does not make for inefficient use of it. Why do you think companies get into wholesale wireless? For situations like what he is whining about. If he is really that afraid of running out of spectrum then he should be focused on roaming agreements(read, sharing). That would fix all of his spectrum issues. Att should have known that they weren't going to get the merger though, so they should have never attempted it. All I have to say is that wireless demand is not inelastic, and if he does go raising prices then I can assure him that he will lose business.

posted on 03 May 2012, 11:56 1

8. MorePhonesThanNeeded (Posts: 645; Member since: 23 Oct 2011)

Whaaambulance, call in the whaaambulance...is he the CEO of a corporation, holy crap! Talk about throwing a tantrum, lol. Anyway, what's next in the news today?

posted on 03 May 2012, 11:57 3

9. Droid_X_Doug (Posts: 5993; Member since: 22 Dec 2010)

And to think that this nutcase almost got his way. This little rant should remove any doubt that AT&T customers would have been f*cked once the merger had been done and baked. Yeah, the 'protected' customers would have been grand-fathered, but we have seen how AT&T treated all of the 'unlimited' customers that exceeded 3 Gb/month....

posted on 03 May 2012, 12:01 2

10. troybuilt (Posts: 155; Member since: 16 Dec 2011)

AT&T should merge with the oil companies. Find that it's their policy to raise oil and gas prices all over the country.

posted on 03 May 2012, 12:13 3

16. freemarketeer (Posts: 28; Member since: 05 Jun 2010)

FYI- The oil and gas companies aren't raising the price of oil and gas. When you run $1.5 trillion dollar deficits and monetize them (i.e. just print the money to pay the bills) you get this thing called inflation. The price of oil and gas hasn't gone up- the value of the dollar has plummeted.

posted on 03 May 2012, 12:42 2

28. Whateverman (Posts: 3262; Member since: 17 May 2009)

So your saying the price of oil ISN'T over a hundred dollars a barrel right now? Com'on! The price has not only gone up, but it's doubled in that last 10 years. The oil and gas companies just like all the record profits they have been "earning" lately and they don't care what any country has to say about it.

posted on 03 May 2012, 13:11

34. Virile (Posts: 38; Member since: 01 Mar 2012)

then why am i paying less and less each week for gas?

posted on 03 May 2012, 17:04 1

56. Whateverman (Posts: 3262; Member since: 17 May 2009)

Virile - I don't know how old you are, but I remember when gas was .99 per gallon. It would cost me $12 to $14 bucks to fill up, but today it cost me $44.82 for a tank of similar size. True it may be going down pennies at a time, but oil and gas companies are screwing us big time.

posted on 03 May 2012, 20:57 2

71. remixfa (Posts: 14255; Member since: 19 Dec 2008)

ok, heres a sad truth.. when I started driving, it was 69 cents a gallon. lololol I used to fill my car up on like 8 bux. It was awesome!

One thing about gas that people tend to forget (lets just ignore that OPEC oil mob for a second) is that its finite. The closer we get to the end of the reserves, the higher the price is going to go. Supply and demand. There is what.. less than 40 years left in the current drill locations? That sounds about right. Im sure someone will correct me if im wrong.. lol

We need to get US oil up and running.. and we have more than the saudi's by far, before the world runs low. When it gets low, if we are not on alternative fuels or drilling all the reserves that are left, expect wars to become way more common than they are now.

posted on 03 May 2012, 22:40

80. Whateverman (Posts: 3262; Member since: 17 May 2009)

Oh...the good old days!

posted on 03 May 2012, 13:20 1

37. 14545 (Posts: 1521; Member since: 22 Nov 2011)

Rollseyes. Yes, you are "paying more" for gas, but it is because a dollar HAS LESS purchasing power than it did 10 years ago. You can thank the fed for that. And the WORLD market sets the price of oil, not some "CEO". Stop talking, you don't understand how economies of scale work.

PS, clearly you also don't understand that the "profits" that the oil companies "earn" are only about 7-8% of their total revenue. Margins are what matter, not the actual dollars. Apple has a 40+% margin, but I don't hear you whining about that. Your voter registration card should be revoked for this stupid comment.

posted on 03 May 2012, 15:12 3

44. miles16852 (Posts: 241; Member since: 20 Oct 2011)

STUPID comparison about apple having a 40% margin and GAS 7 to 8% profit, NO ONE needs apples products to get around from place to place,
unlike GAS! and your BRAIN should be taken and given to someone who can use it more effectivly!

posted on 03 May 2012, 15:29 1

47. 14545 (Posts: 1521; Member since: 22 Nov 2011)

Says the one that doesn't understand how gas prices(and oil prices) are set. If the "oil companies" were nationalized and did not turn a profit, you would ONLY see an DECREASE in gas prices by about 20-40 cents a gallon. I'm sure that you don't even realize that gas "taxes" make up a solid 20%, or in some cases more, of the price of a gallon of gas. So what was that about my "brain"?

So how about learning something about the world around you before you speak. Instead of just hitting the talking points you heard on your brand of news media.

posted on 03 May 2012, 22:56

81. Whateverman (Posts: 3262; Member since: 17 May 2009)

Rolleyes right back. I understand inflation and the reduced value of a dollar, the roll our defict plays, and your analogy of measuring with the crazy yard stick. My response what based on the comment that oil and gas prices are not rising. No matter the reason, the plain and simple fact is prices ARE rising. When $3.79 gas signs change to $3.85...that's a raise in the price of gas. The reasons for it rising do matter, but troybuilt was just making a very simple statement that AT&T is just as bad as the gas companies. I'm sure his statement was meant to provoke an Econ lesson. Relax my friend, we're just venting.

posted on 03 May 2012, 16:33 1

51. freemarketeer (Posts: 28; Member since: 05 Jun 2010)

I won't rehash the corrections others have already made but I will say this. Trying to measure the price of something using dollars is like trying to measure the dimensions of a room using a yardstick that is never the same length.

If you look at the price of gas compared to gold or silver (hard currencies that have maintained stable value for thousands of years) it has actually gone down. An example- if you were allowed to purchase gas using the true value of a silver dime from the 50's, it would buy you about 5 gallons of gas. In the 50's, it would have bought 3 gallons.

posted on 03 May 2012, 17:20 3

59. 14545 (Posts: 1521; Member since: 22 Nov 2011)

Judging by the Tups and downs, it appears that very few people actually understand how markets work. A simple community college econ class would do them some good.

posted on 03 May 2012, 21:05 1

73. remixfa (Posts: 14255; Member since: 19 Dec 2008)

people getting an education instead of following news headlines and politician grand standing??

how dare you, sir!


posted on 03 May 2012, 21:06

74. remixfa (Posts: 14255; Member since: 19 Dec 2008)

thats neat and all, but people dont pay with silver or gold, they pay with dollars. Since we are not on a gold standard or any other precious metal standard, telling people how much they can get with silver is pretty pointless. Nice analogy, but ya gotta know your audience.

posted on 04 May 2012, 10:01

87. audiblenarcotic (Posts: 111; Member since: 16 Nov 2011)

Forget Oil... the wars of the future will be fought over fresh water.

posted on 04 May 2012, 10:06

89. troybuilt (Posts: 155; Member since: 16 Dec 2011)

lol. Waterworld right?

posted on 04 May 2012, 10:05

88. troybuilt (Posts: 155; Member since: 16 Dec 2011)

lol. That's because back in the 50's it was only change per gallon. I'm guessing you're not a history major. Prices of gas have gone up from mere change to what it is today. The value of a $1 hasn't changed, the prices have. It's common sense. Over the years population has increased greatly and prices go up. In the 50's this wasn't an issue.

posted on 03 May 2012, 13:14 4

35. 14545 (Posts: 1521; Member since: 22 Nov 2011)

Please stop. Clearly, you have no idea how commodities work. You are a part of the problem in the world.

posted on 03 May 2012, 17:10 1

57. jmoita2 (Posts: 930; Member since: 23 Dec 2011)

Amen,14545. He must be one of those talking heads that sells inflated gold coins to seniors by praying on fears of a Dollar collapse.

posted on 03 May 2012, 17:26 1

62. 14545 (Posts: 1521; Member since: 22 Nov 2011)

Uh, you do realize that I agree with freemarketeer, right? The dollar is collapsing. Inflation is real. However anyone that buys "gold coins" is an idiot. You find gold for close to market value in many places, not for 1/3 of it's market value like those gold coins people sale. It is not a bad idea to be hedged with gold/silver, and other precious metals. If you follow the commodities markets you will see that the dollar is on the decline. As all commodities have increase by proportionally the same amount overall.

posted on 03 May 2012, 21:08

75. remixfa (Posts: 14255; Member since: 19 Dec 2008)

gold and the dollar have been very inverse lately, so actual gold investment hasnt been a bad idea in the least. in fact, had you invested in gold in 2000, you would be doing pretty well right now.

posted on 03 May 2012, 21:12

78. freemarketeer (Posts: 28; Member since: 05 Jun 2010)

What do you think happens to a currency when you double the money supply in 5 years? The currency essentially loses half of what it was worth five years ago. Eventually you hit bottom where people no longer trust it, hence you have a collapse. That day is approaching rather rapidly because in power hold the same faulty views of economics that you do.

posted on 03 May 2012, 12:08 2

12. -box- (Posts: 3991; Member since: 04 Jan 2012)

Wow, could this article have been written with any more anti-AT&T bias? Seems very unprofessional

posted on 03 May 2012, 12:24 7

23. Scott_H (Posts: 167; Member since: 28 Oct 2011)

The article doesn't actually attack AT&T as a company - and goes out of its way to not attack them over their desire to be more profitable. The issue is how their CEO's own words are hindering those goals and being condescending to the public. And that's quite a risk they are putting themselves at when there may be much more serious competition against the current network model by software companies in the near future.

posted on 03 May 2012, 12:09 1

13. freemarketeer (Posts: 28; Member since: 05 Jun 2010)

Although I do agree that the merger between ATT and T-Mobile (or any merger for matter) should have been allowed to proceed, it is tough for me to have sympathy for Stephenson or ATT because they are talking out of both sides of their mouth. On the one hand, they look for the government to "regulate" their competition (read: produce enough barriers to entry into the market that they don't have any) but when their needs aren't served cry and complain.

It isn't competition that makes the delegation of spectrum inefficient- it the interference in the market by the FCC that does that. Rather than allowing spectrum holdings to be bought and sold like any other piece of property or real estate, everything has to be regulated and approved by a bunch of bureaucrats who have probably never worked in the private sector or have a clue about how a free market economy operates.

T-Mobile (and Sprint) developed their business model around being low-cost providers thinking they would be able to make up the reduction in their margins with volume. This hasn't been the case as the wireless industry (and technology in general) has been growing and changing at such a rapid pace that constant capital investment in infrastructure has been necessary to keep pace with growing demand. T-Mobile is now in an untennable situation: if they increase margins to fund network development, they lose the one thing they have been selling on- price. If they continue on their current trend, they go bankrupt. At this point an acquisition is a logical choice. The same goes for Sprint. This is what a free market is supposed to do- reward good choices and punish bad ones. Currently however, this process is being impeded by regulation.

Ultimately, it should not be the government and regulatory agencies that determine what the appropriate business decisions are for organizations, but rather the leadership of the organization meeting and anticipating the needs of their customers. Those who do this best, survive. Those who don't, die on the vine.

posted on 03 May 2012, 12:18 2

20. jmoita2 (Posts: 930; Member since: 23 Dec 2011)

You said: "Although I do agree that the merger between ATT and T-Mobile (or any merger for matter) "
Really??? How would you like if all carriers merged,and your only choice became the worst carrier you ever did business with??? Would that make you happy??

posted on 03 May 2012, 16:28

50. freemarketeer (Posts: 28; Member since: 05 Jun 2010)

It looks like you swallowed hook-line-sinker all of the bad economics you were taught in high school (the "robber barons", monopolies, etc) given the fallacies in your argument.

Say if your example came true and all of the national, regional, and local carriers all decided that they wanted to "screw" the consumer and merge because then they could set the price to infinity-billion dollars and us poor dolts could do nothing about it because we only have one option.

Here's where you're wrong. Simply because something has high demand does not mean it has an infinite price. Free markets place downward pressure on price through competition. Even if this new mega carrier held all the spectrum licenses, if it was delivering garbage for service at an extreme price, this would merely incentivize the market to find alternatives to said carrier. Maybe it would be a point-to-point VoIP system through WiFi, tin cans and string, who knows but incentives would be there for someone to come up with something better.

Also as businesses get larger, so do their operating costs which in turn means they have to generate increasing revenue to cover them. If they are not providing a sufficient product or service to the market, no one will buy which means they lose money and are forced to either lower prices or improve their product.

The only way a company can escape these rules of the market are if the government, through regulation and legislation, grant them a privilege over other participants. Did you ever wonder why cable and television services generally suck and why you only have a couple options? It is because thanks to regulation (which of course, is done for the benefit of us minions), there can only be said number of providers for a certain area. As an entrepaneur, I can't go out, acquire the capital, negotiate with landowners to lay cable, and start my competitive service that offers better service at a lower cost.

Essentially you are looking at price from the wrong direction. Businesses don't set the prices of their goods or service; consumers do through choice.

posted on 03 May 2012, 16:41 2

52. jmoita2 (Posts: 930; Member since: 23 Dec 2011)

Are you done with your thesis??? You are the one who swallowed up Friedman economics hook,line and sinker.

posted on 03 May 2012, 16:54

54. Republican (Posts: 99; Member since: 05 Apr 2012)

Remember to vote Republican. Rommney for president for a return to the Bush Prosperity. Obama destroyed the economy.

posted on 03 May 2012, 20:50

69. freemarketeer (Posts: 28; Member since: 05 Jun 2010)

Actually I am a student of the Austrian school which tends to explain more than Friedman and the Monetarists and a whole lot more than the Keynesian approach you apparently have.

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