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Wireless Providers Competing More Than Ever

posted by mattie_p on Thursday February 20 2014, @09:36PM   Printer-friendly
from the but-think-of-the-stockholders dept.

siliconwafer writes:

"Competition among wireless providers could hurt profits in the wireless industry, according to a report by Reuters. T-Mobile's aggressive price structure, abandonment of contracts, and termination-fee payments have put downward pressure on mobile costs for consumers, and Wall Street analysts are forecasting a reduction in profits in the wireless sector as a result. AT&T in particular is showing signs of stress. While this may be bad news for the wireless industry, it's good news for consumers."

 
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  • (Score: 4, Interesting) by TheloniousToady on Thursday February 20 2014, @10:21PM

    by TheloniousToady (820) on Thursday February 20 2014, @10:21PM (#3996)
    More competition is good for consumers but it's bad news for some in the wireless industry. I've long held the theory that we will end up with three cell service providers in the US. There seems to be too much competition in the cell business at the moment - though consumers may not see it that way. T-Mobile and Sprint obviously are the weak players, so I predict that one of the two will disappear at some point.

    For example, Sprint's financials [yahoo.com] are terrible, so they're probably headed for merger and/or bankruptcy. T-Mobile's financials aren't available, but they're probably not much better. And even the mighty Verizon and AT&T are the two leading (trailing?) Dogs of the Dow [dogsofthedow.com].

    When a weak player like T-Mobile makes a grab for market share like this, they're playing a dangerous game of chicken. The big boys can ride it out, but it may ultimately lead to T-Mobile's own demise.

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  • (Score: 2, Interesting) by unimatrix on Thursday February 20 2014, @10:56PM

    by unimatrix (1983) on Thursday February 20 2014, @10:56PM (#4021)

    Doesn't seem as though it has done so in Europe. When I lived in Germany 10 years ago I bought my phone and paid for the plan each month. Now my Wife and I are considering going to T-mobile since we have separate plans right now. Given the savings we'll get each month, the phones will pay for themselves in a year. So if we keep them for 2 or more we're money ahead vs. what we're paying now.

  • (Score: 5, Insightful) by WildWombat on Thursday February 20 2014, @11:03PM

    by WildWombat (1428) on Thursday February 20 2014, @11:03PM (#4026)

    Sprints dismal financials not withstanding I don't think that there is too much competition in the US cell market. If there were more competition we wouldn't have some of the highest prices for service in the world. These high prices don't result in great service either; pretty much everyone here hates their carrier. The high rates and poor service we receive are more indicative of a market largely lacking in competition rather that one suffering from an over abundance of it.

    A couple of links about US cell phone prices vs. the rest of the world:

    http://www.androidcentral.com/us-mobile-data-price s-among-most-expensive-world [androidcentral.com]
    http://news.cnet.com/8301-1035_3-10307726-94.html [cnet.com]

    Those arguing for a free market often site the Adam Smith's 'invisible hand' and how competition results in greater gains for society. This is often used as a reason to forgo regulation of a market. Rarely mentioned, however, are the conditions Smith listed under which this actually happens. Things like there had to be at least seven competitors. Or that the largest couldn't be more than the second largest because it would then gain to much pricing power. We don't see anything like that type of situation in the US. Four players in a market with a ridiculously high barrier to entry doesn't make for a competitive market place at all.

    I certainly hope that the government doesn't allow any more consolidation. Say Sprints finances continue to deteriorate to the point where they are facing bankruptcy. I would rather let them go bankrupt and then have some other company buy their assets and enter the market than allow them to merge with one of the already to large players we already have.

    Cheers,
    -WW

    • (Score: 3, Informative) by No Respect on Friday February 21 2014, @02:57AM

      by No Respect (991) on Friday February 21 2014, @02:57AM (#4136)

      AT&T is unloading all their POTS copper landline systems. Oregon, Connecticut, coast-to-coast basically. The reason? It's not that the landline business is not profitable, it's that they can make MO MONEY on wireless. And not just wireless, 4G and LTE, mind you, the gravy comes from overage charges for data use. Their publicly stated projections for revenue growth are predicated on gouging their customers.