Sprint CEO Dan Hesse vigorously attacked the AT&T-T-Mobile merger in the Senate
Of course, we have already heard Mr. Hesse speak against the proposed merger, but his testimony in the Congress was a powerful, well formulated verbal assault that envisaged a return to the dark ages of Ma Bell:
"The wireless industry thrives on competition, which, in turn, drives investment, innovation, consumer choice, job creation and U.S. global leadership in wireless communications."
This rather general statement was followed by his warning that innovation stagnation is imminent:
"If AT&T is permitted to devour one of the two remaining independent national wireless carriers, while the rest of the world achieves advances in technology and innovation for the 21st century, the U.S. will go backwards – toward last century’s Ma Bell."
The Sprint CEO claimed that if the merger is approved, it will result in a duopolistic control of the wireless market, which is against the interest of the public for four major reasons:
- AT&T and Verizon (referred to as the Twin Bells by Hesse) would be able to dictate freely the voice and data prices - and, nope, Sprint's CEO didn't suggest they will be decreased.
- He noted that the Twin Bells would be able "to raise competitors’ costs, reduce their network quality and quash competitive alternatives", because they will control most of USA's wireline infrastructure and the critical "last mile".
- Dan Hesse also said that a duopolistic wireless market would limit consumer choice, as most smartphone and tablet manufacturers would opt to release their products on Verizon and on the carrier that's formed by the AT&T-T-Mobile merger, because of their dominating market share.
- He warned that innovation would also be harmed, as developers would focus on creating content for the Twin Bells.
Furthermore, Dan Hesse attacked AT&T's claim that it needs T-Mobile's spectrum in order to extend its network reach in the rural areas, arguing it will reach out merely a percent more than it already does. As expected, he appealed to the Department of Justice and the Federal Communications Commission to reject the merger.
1. Mymotodroid (unregistered)
Sprint would suffer and die under the weight of the two giant carriers. In a way I’m glad he’s so strongly opposed to the acquisition. However, the state that Sprint is in right now, with their prices as low as they are. It would simply put them out of their misery.
3. skymitch89 (Posts: 925; Member since: 05 Nov 2010)
I think that if there were the two giant carriers, then the prices of devices and plans would skyrocket "because of the coverage" and more people would switch to Sprint because of the lower prices.
5. jogutier (Posts: 324; Member since: 12 Feb 2010)
No, I think they will keep it inexpensive until they sign alot more people and then get rid of all the inexpensive plans for more expensive plans.
Verizon and ATT&TM future prices:
Unlimited smartphone data = $50 ($30).
Unlimited calling plans with no data = $100 ($60)
Add a line $30 ($9.99)
66. remixfa (Posts: 13882; Member since: 19 Dec 2008)
sprint wouldnt suffer and die. Hell, they would actually have a boon. They would be the only national 4g "value" carrier left. Half of Tmo's customers would probably flock to them.
Thats not what they are worried about.
What sprint is worried about is carrier exclusivity on phones. Why would apple, htc, samsung want to give Sprint the exclusive rights on a phone when VZW and ATT are litterally going to be 3x bigger. That means sprint would ultimately get the shaft in a lot of products which would make it hard for them to compete on the high end phone level.
2. Jake (unregistered)
Yea, I think this is totally a return to a monopoly.
4. jogutier (Posts: 324; Member since: 12 Feb 2010)
SPRINT,,, get ready to get bought out. Welcome to VERIZON, we think you'll like it here. :)
54. jbash (Posts: 339; Member since: 07 Feb 2011)
wont happen because verizon is already at their max market share capacity aloowed by the fcc at 95%
67. remixfa (Posts: 13882; Member since: 19 Dec 2008)
VZW would have bought sprint years ago if they wanted them. back when they were worth even less.
To quote a direct conversation with one of the VZW uppers I had a while ago..
"why buy them and all their debt for billions when we can wait for them to sink, buy up their towers for pennies, and a large portion of their customers will come to us anyways for free.
6. You'reAtool (unregistered)
Good for Dan Hesse. Someone needs to take a stand on this. People who joke about Sprint being bought next probably don't realize what will happen. If it were just ATT and Verizon and small regional carriers here and there, they can do ANYTHING they want with plans, prices, devices, etc. We consumers are the puppets in this situation. We would have no control. cancel contract and go to the other? who cares, especially if there prices are nearly identical. Go to a regional carrier? Sure, but we all know the downfalls to that. This obviously isn't about Sprint going under to Dan. His arguments are for the benefits of the consumers, not himself or Sprint. If this deal goes through there's no stopping a Verizon/Sprint merger. Then there is no stopping those two companies to control this entire country(wireless industry). Sadly, we all need cellphones these days with the world we live in. You could see people flock to Sprint if this goes through, you may not. I would sway more on the side of may not, simply because people still havent flocked to Sprint, even though they are continually rated top in customer satisfaction, plan prices and too be fair, their coverage is better than ATT and not so far behind Verizon. The fact that Americans still haven't figured out Sprint is a good choice is still concerning and it possibly will never change sadly.
8. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
Someone here that has no idea what dictates price. You are not forced to go to ATT or Verizon you are also not forced to own a cellphone or a cellphone contract for that matter. The wireless industry has many different options and what dictates price is the consumer not the company. If it's too pricey for consumers then they wont buy. Simple as that.
9. celljrod (Posts: 82; Member since: 07 Apr 2011)
Not in this day and age. The majority of us HAVE to have a cell phone for one reason or another. It is no longer a luxury. I've seen people lose their house and live out of a car to make sure the cell phone stays on. I'm not saying it's right, but that's the society we live in now.
10. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
Just because that's what is accepted by society that doesn't mean that its a necessity. Selling cell phones has taught me alot about people. Most people don't buy what they need but rather buy what they want or to keep up with the Jones' when they can't really afford it or aren't going to use 1/4th of the features. Do you think most consumers who have smartphones actually use it to its fullest potential. I have customers who havent downloaded apps because they only use their phones to make calls and send text and they only buy the phone and pay the extra cost of data because everyone else has a smartphone.
11. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
Also that still doesnt dictate price. If people absolutely need a cellphone and cant afford a contract plan or doesnt have good credit there are prepaid phones that can work for them Virginmobile offers great phones for a great price.
13. celljrod (Posts: 82; Member since: 07 Apr 2011)
Not everybody has good prepaid options. For a lot of people it's Verizon, AT&T or nothing.
14. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
If its verizon or att then you can always go for verizon or atts prepaid options also wherever you have att coverage you have tracfone or net10 coverage if people cant afford verizon or att they can get something else. and if thats the case now anyways then this merger wont hurt people in that region because they had to deal with verizon and att regardless.
12. celljrod (Posts: 82; Member since: 07 Apr 2011)
I agree with you on that part. However, if you asked 100 people if they would rather have a cell phone or TV, what do you think the answer would be? If you asked a single guy or girl a similar question? Cell phones have adapted to be an integral part of most peoples lives. We are moving closer and closer to a day when there will no longer be standalone TV's, computers, etc. We will do everything from our smartphones.
17. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
I agree we will do mostly everything from our smartphones but that isnt the point. The point is many people dont need these features and the only reason they get these phones because they see everyone else has them. But again if you want these features you have to be ready to pay for them.
19. celljrod (Posts: 82; Member since: 07 Apr 2011)
Again, agreed. The problem I have is that without T-Mobile; Sprint, US Cellular and any other regioanl carrier are sitting ducks because VZW and AT&T will be able to control all pricing
68. remixfa (Posts: 13882; Member since: 19 Dec 2008)
i choose cellphones!! lol. I got rid of my cable and went netflix/hulu forever ago. i frikkin love it.
38. bridge4spirit (Posts: 6; Member since: 19 Oct 2010)
Exactly. Most people do not need smartphones. All the do is use Twitter and Facebook and check their email. You can do that on a dumbphone for less money....unless you are with Verizon who now charges $30 for data even on dumphones. Needless to say, I'm not a Verizon fan.
I truly think we all need to flee the huge cell companies...either for Cricket, Virgin, Boost, MetroPCS, etc......or old fashioned land lines and teach the major carriers that we CAN live without them.
49. tragichero (Posts: 163; Member since: 07 Jan 2011)
@bridge4spirit mobile email on a dumb phone for verizon is $5 a month unlimited..... 25 mb is also 9.99 with unlimited email. i understand your not a fan of verizon... but get your facts straight
39. tedkord (Posts: 3409; Member since: 17 Jun 2009)
It's obviously not a life necessity - no one's going to pay $1000/month per line for 450 minutes and no data.
However, it will drive prices up - monopolies (and duopolies with cooperating giants) always do. They also invariably stagnate innovation. If you've got no competition, you don't compete.
You don't need to look any further than microprocessors. At one point, Intel was the only real game in town, up to the original pentium. Processors were $500-1000, and speed changes were slow. Then, AMD stepped in with the original Athlon processor, which beat the PII/PIII in speed at lower price points. Suddenly, Intel started ramping up it's R&D and lowering prices. Today, a low end processor can be had for $50 or less, and it beats the tar out of a PII or PIII.
Initially, if it goes through, ATT will keep prices somewhat in line - until Sprint is either gobbled up by Verizon or just goes out of business. Then, hold on to your britches.
Just look at the moves Verizon has made in the past two years, without total market dominance. Requiring data plans for non-smartphones, removing New Every Two, removing 1-year contracts, removing 1-year upgrade prices in a two year contract, increasing phone prices for the newest from $200 to $250-300 on a 2-year contract, increasing ETFs.
And during all this, Verizon profits have soared - they weren't making these moves because they were fighting for survival and losing money. They made them because they felt their market power would allow them to get away with it. And, other than the data for non-smartphones, they have gotten away with it.
Now, imagine Verizon's moves if they're only competing with one company that mirrors their own policies and prices, while controlling 95% of the market combined.
This merger WILL ultimately be bad for the consumer. Period.
74. PoneLover (Posts: 9; Member since: 18 May 2011)
yeahhh thats trueeee...but ppl shudnt be complanin bout other companies...ppl shud mind their own fkn business..none of the carriers ask them to get in.nor nobody points at them with a gun..theres alot of companies u cud go to.
73. PoneLover (Posts: 9; Member since: 18 May 2011)
well yeah we all need cellphones but none of the cpompanies make u go on it..u got cricket.so stop complainin ppl..if verizon is expensive leave to us ..we dont care n u shudnt either...if we dont give a fk then u guys shudnt..we r ok with it....
15. bluechrism (unregistered)
YOu only have choice if there are genuine choices. If AT&T and Verizon own all the backhaul, all the infrastucture then they have the power to drive competitiors prices to meet their own, which i'm sure they already do with MVNO's. If sprint would be an acquisitoon target, then surly US Cellular, Cinncinnatti Bell and others have no chance, and MVNO's based off T-Mobile's, like SImple Mobile (1 million subscribers) are wiped out of existance, and if Sprint is bought by verizon, all the MVNO's using sprint will see a rate hike to bring them into like with what Virutual networks pay Verizon.
As Verizon and AT&T both have data and voice networks through landlines, FIOs etc, affordable mobile voice and data represents something of a conflict of interest. ALso in the rest of the worl where tethering is suported by carriers, this will never happen here as it's simple not in their interest.
Consumers will buy if it's a choice between paying X or not having it at all. Look at the controlled monoplies for cable Internet if you need evidence of that.
20. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
So youre saying that ATT and Verizon will drive all the regional carriers to raise their prices so they can make more money off the individual consumers. and if those consumers cant afford it then they go without right? Sounds like what you are saying. Wouldn't make more sense for a company to have as many subscribers as possible instead of trying to ring dry the consumers they already have? Your thought though well put together is flawed by the simple fact that businesses want to make money not lose money. So if the company loses subscribers they lose money. there are options take advantage of them.
22. celljrod (Posts: 82; Member since: 07 Apr 2011)
What he's saying is that with VZW and AT&T in control, they will be able to dicatate roaming agreements and thus force the regionals to raise prices.
24. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
Right that's what i understood. So i'm asking does forcing regionals to raise prices so the people who chose not to go with a national company because they were to expensive make any sense? They get kickbacks from those regional carriers and also if those subscribers decide they cant afford it and drop their service then that means you lose subscribers and therefore money. the idea that iwill drive prices up is flawed from a business point of view.
27. bluechrism (unregistered)
They get kickbacks fro the regional ones, but more money if they just go with the major carrier in the first place. Either way, prices won't go down - they will be positioned nicely to get the maximum profit, which means just the right side of the point where consumers decided to go without. As AT&T have landlines as well, many of those who go without would stay with AT&T on landline.
44. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
"Everything is worth what its purchaser will pay for" That is equilibrium you are talking about. Priced right that people will be willing to purchase the product and also priced enough that the supply (bandwidth) will not be affected greatly.
50. Mike (unregistered)
That is the most simplistic view one can have on this situation. It's easy to say consumers have a choice, and your right. In reality consumers do have a choice. But do you know what that choice ends up being with companies that have such a stranglehold on the industry? It drives it to the point where that choice is now not there, or the remaining choices are not a choice at all, but still fueling the beast.
Just look to Mexico's history with power companies. Do a little research.
Looking at our own history you can see ATT, when they had that monopoly for the most part of the 20th century, what did they do with it? They literally SHELVED innovation. No need to create new products, they had a stranglehold on the market, not allowing competitors any way to finance their own innovation because they were so powerful they also stopped and prevented innovation from other companies.
This is one reason why the United States of america has the absolute WEAKEST phone, wireless, and broadband infrastructure of ANY of the 1st world countries. We are playing catch up of nearly 50+ years. We have been able to make some strides, but its ridiculous how far we really are behind. Taking the isolationist view, without comparing ourselves to the world it's easy to think we are doing fine and everything will be okay.
You are sadly mistaken.
Please research issues like this, it's issues like this that help shape our country.
59. Duh (unregistered)
You are forgetting one thing here. This is America and we have the freedom of choice. This country was founded on the freedom of choice. if the merger goes through, the market will consist of a duopoly. That in itself is a travesty. apply this same concept to any other industry in America I promise you will be upset. Take away choice in the auto industry, home improvement industry. television what if there were only two major station telling you what entertainment is, or in the housing market, etc. AAt&t Claims they need t mobile for spectrum, they will pay 39 billion if it goes through, that money should be invested in building infrastructure. whether American have a need for a cell phone or if its a want. We deserve the freedom of choice.
7. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
I don't know why he is so butt hurt. This is called capitalism. This will not turn into a monopoly this will not turn into a duopoly. A company was bleeding customers and losing money and another company came in and bought them out. If these two companies are ok with the buyout then what's the matter? Dan Hesse will actually gain more instead of losing. I have people come in all the time wanting to go with Sprint or T-Mobile because they don't want ATT or Verizon for several reasons. Well since T-Mobile is taken out of the picture all those customers will go to Sprint. He should be celebrating this buyout. Did he really think he would be able to catch up to ATT or Verizon especially when they decided to invest into WiMax technology? Come on don't BS yourselves.
18. bluechrism (unregistered)
Agree WiMAx is a bad choice, but Dupoply doesn't promote competition, not really. Look at the Cable vs DSL options in most US cities - 2 choices, 2 technologies, same prices for same speeds. Both happy as 50% of customer base is great.
Duopoly like this is barely any better than monoploy, and all those like Virgin mobile etc, they still use the AT&T/Verizon infrastructure. The US probably has the highest rates in the wester world for communications technology with local tech monolies for wired communications and heading towards 2 tech monopolies for wireless too. It may be capitalism, but in this case, it is very bad for consumers
23. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
I know what your saying but this isnt a duopoly and also with cable companies and dsl companies that was done because can you imagine all the infrastructure that had to be in place to have several different companies in one area. but thats also why theres satellite there are options. you are not forced to buy into anything. if you want it there are options and you pick the one you want not the one they tell you.
28. bluechrism (unregistered)
Where i came from, the equivalent of the Ma Bell sell off had the major infrastructure owner open up their infrastructure to others at a national level, plus 2 other companies invested in digging up roads to lay cable. Within 2 years high speed INTERNET prices dropped to 1/3 of what they were and phone+tv+Internet combined cost what Internet only had done before.
About 10 years on and there are 3 major providers nationally of all these services, plus a host of virtual providers as well.
That original prover - British Telecom, now offers basic broadband, phone and TV (20Mb) for 20/month and Unlimited phone, internet (40MB) and TV for 40/month.
I'm sorry, but a few yeasr of infrastucture disruption in US citises whilst competitiors are allowed to hang wires or dig roads to build a network would be well worth it.
Also any Divestiture if this deal goes through should be national not local. IN the UK the Spectrum acutions are being broken up so at least 4 carriers can buy spectrum for LTE, and because the frequencies will be the same, you can use locked/unlocked phones.
Don't get me wrong, I like the US, but the commuinications industry here is not set up for the benefit of consumers at all and it bugs me. Oh, and check out what O2, T-Mobile or Vodaphone offer for phones and plans in the UK. Or which ones care about tethering (btw, none of them offer landlines or cable data, so they compete with the landline and internet companies too).
37. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
That's the thing a few years of infrastructure disruption isnt bad but think about it it wont be a few years nationwide The US is huge it will be a few years for a small portion and added all together will be an extremely long time just for another company to make its way through. that company has to put out such a large cost in the beginning just so that can happen. many companies refuse to do that and not to mention a disruption in infrastructure is a big deal. Think of how many green boxes you would have right outside of your home if you have several companies in the same area.
46. bluechrism (unregistered)
true, but these services are still in local markets and would be opened up in a local bases. PLus, nationwide, many of the contenders already are providers in a lot of markets. Even if it mean say, having both cox and comcast be able to provide cable in a city, that's still an improvement.
57. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
I agree that will definitely be an improvement. but imagine this. allow comcast and cox dig in your city because it brings more choices to the consumer. Now Time warner or brighthouse wants in. Now CenturyLink and so on. Imagine all the disruption you have just to get these companies to build their infrastructure in your city. 1 other company isnt a problem but when do you stop?
60. bluechrism (unregistered)
And you know what, if all those guys did that, i bet they would want to attract some customers, and to do that they have to offer compelling price plans and / services that are better or cheaper than what the other guys offer.
26. GMan35D (unregistered)
Were you alive during the days of Ma Bell? I can't say that I was old enough to really appreciate how things have changed, but Dan Hesse and the others remember those days with quite a bit of frustration. A duopoly is one step closer to a true monopoly. And if you can't see how the elimination of competitors is bad for overall business, then you need to go take an economics class. True capitalism relies on the market, well if only two, or even three, entities exist within that market, there won't be much incentive to innovate and develop, and in the age we currently live in, stagnation=death.
40. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
True capitalism relies on a free market and not regulation of it by the government. True capitalism doesn't require a government to stop a monopoly. I have a question for Hesse. If he had the opportunity to become the #1 carrier in the US by buying out another company would he do it? Or is he just upset that he doesn't have that opportunity right now?
70. remixfa (Posts: 13882; Member since: 19 Dec 2008)
Hesse actually was the CEO of ATT when the cingular merger went through, which made ATT the biggest company for a time. Interesting factoid, huh. He is now fighting AGAINST his own creation.
Hesse is protecting Sprint's interest. That's why he is paid. He has finally gotten the company to turn around and its about to sink not under bad management, but because of future lock out and exclusivity clauses.
Your missing the big picture. If ATT and VZW are the main 2 left, then it WILL be a duopoly as most of the regional carriers have huge roaming agreements with these 2 carriers. ATT and VZW WILL raise their roaming rates and either force those regional carriers to raise their rates closer to theirs to pay for it, cancel the roaming agreements making them even smaller (and thus having more people forced onto ATT/VZW because of coverage needs), or have them absorb the extra cost until they are so poor that they can be scooped up for pennies.
The government is trying to keep a situation like that from happening. Small regulation of the market is a good thing. Its when the government over reaches that we get into trouble. Government protection of the free market is a constitutional amendment. Its their job. And frankly I'd much rather see them doing their ACTUAL job instead of passing new big brother programs like obamacare that are going to further mess up this country.
21. janedahornygurl (unregistered)
well me im da kind of gurl that cudnt live without a cell phone. cuz without a cellphone i wudnt get any clients. clients are alwAys calling me to meet them up in a motel. or to call and tell me things like if i can host or what days is my booty gunna be available then i give them the days im available and we try to work something out. so yea to me a cellphone is my best friend
33. ATTCallCenter (unregistered)
Listen girl, get back on the corner and make me some money. Get off that dam phone before I slap you around. Your costing me money right now dammit!
29. lilbranbran (Posts: 21; Member since: 14 Jul 2010)
Hesse is absolutely right. This will make the mobile communication system more of a duopoly than having multiple carrier choices. It's sad to see that T-Mobile is doing badly, but that's the game.
34. bluechrism (unregistered)
How much better did you think it would be doing if AT&T wasn't planning to buy it? Justding by the reaction from T-Mobile customers, i think a lot.
Also, mostly these counts are contract customers. Even more plus is postpaid - non contract and cheaper than the exact same plan on contract. I wonder how many Even more plus customers they have.
30. snowgator (Posts: 3015; Member since: 19 Jan 2011)
First of - hats off to vvelez5 to taking the other side of the argument. Solid points.
To me, It comes down to basically a couple arguments. If this merger is approved:
1) Can Sprint thrive as a third choice? If numbers are correct and they sit at 55 million consumers, can they reach 80 - 90 million if AT&T-Mobile and Verizon both have over 100 million? I believe they can. Dump the iDEN network, inmprove your network, and do it quickly while all the merger logistics are hammered out. I still believe they stand to gain, not lose from this in the long run.
2) Can a regional carrier grow into a solid #4 over time? Can a U.S. Celluar, a Cricket, or some other well established small fry grow to a nationwide carrier? That one I am not as sure about.
I am not in favor of the merger, because I don't think it is good for the next 5-7 years worth of competition. But I think it goes through if AT&T can convince the FCC the answer to those 2 questions are yes. I bet they will. If not AT&T, what happens to T-Mobile? Their parent company wants out. They might just get dumped, period.
31. celljrod (Posts: 82; Member since: 07 Apr 2011)
What I would have liked to see if DT wanted out is for them to have sold to an outside party, rather than an existing US carrier. That would have still left the core of T-Mobile for another company to come in and try to turn around.
32. celljrod (Posts: 82; Member since: 07 Apr 2011)
I was also against Sprint acquiring T-Mo, although that would have been the lesser of 2 evils in my mind. Better 3 supercarriers than 1 mega carrier, 1 super carrier and 1 national carrier
35. bluechrism (unregistered)
As for other companies rising up, i'd like to see another GSm company. AT&T will have so much control and say with handset makers (who focus on GSM first as most of the world uses it) otherwise. I'd like to see Cincinnatti bell rise up, or some infrastructure and pectrrum divested to Simple Mobile so the virtual network (won't be killed off in the deal (customers buy unlocked phones on T-Mo frequencies) could be a real one, or a outside operator like WInd, Vodafone or someone else (with financial clout to make a realistic difference) be invited to buy spectrum.
42. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
Thanks for the complement snowgator very appreciated.
I believe ATT will be able to prove those two points myself.
And I agree with bluechrism as well I would like to see another GSM carrier to come out as well.
36. cellphonemama (unregistered)
Really Sprint ?? what a bunch of big babies... they know they can't compete so they are throwing a temper tantrum.. Sprint is probably one of the most crooked companies you can have service with.. horrible network service and horrible customer service ... time to pack you bags and go away ..
41. celljrod (Posts: 82; Member since: 07 Apr 2011)
That was true a few years ago, but I give credit where credit's due, Sprint has done a great job of turning things around over the last couple of years
43. vvelez5 (Posts: 623; Member since: 29 Jan 2011)
Yes they have the increase in customer service definitely saved them from bankruptcy
45. celljrod (Posts: 82; Member since: 07 Apr 2011)
By the way, it was nice going back and forth with you earlier. It's nice to disagree or come from 2 different angles without it resorting to petty namecalling