As the DOJ and FCC review AT&T’s proposed $39 billion acquisition of T-Mobile, one thing they’ll consider is how the deal affects the competitiveness of the market.Besides reducing the number of nationwide wireless carriers to three from four, the deal would also reduce the number of nationwide GSM-based carriers to one from two.
Asymco’s Horace Dediu has published a great post about how the U.S. wireless market has developed to be uniquely American — and unlike most of the rest of the world. He calls this the “American Wireless Galapagos Syndrome.”
One of the big factors has been the government’s decision to allow multiple, “competing” wireless technologies — primarily CDMA and GSM — versus requiring a single, compatible technology, as some countries do.
Ironically, this splitting of the market has reduced choice for the consumer, leading to a market where half of the phones don’t work with half of the networks. Operators have therefore locked most customers down on long-term contracts, and haven’t really supported prepaid customers.
It’s far from being like the European markets, for example, where phones work on multiple carriers, incoming calls are often free, and prepaid is much more common.
This may not end up playing a role in the government’s decision to approve or reject AT&T’s deal — or which sorts of concessions to demand — but the whole post at Asymco is a good read.
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