Showing 9 of 16 Publications

Tom Hazlett on the Benefits of Mergers

Presentations & Interviews ICLE Academic Affiliate Thomas Hazlett was a guest on CNBC’s Squawk Box to discuss his recent Wall Street Journal op-ed arguing that mergers often have . . .

ICLE Academic Affiliate Thomas Hazlett was a guest on CNBC’s Squawk Box to discuss his recent Wall Street Journal op-ed arguing that mergers often have consumer benefits. Video of the clip is embedded below.

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Antitrust & Consumer Protection

Competitive Effects of T-Mobile/Sprint: Analysis of a ‘4-to-3’ Merger

Scholarship Abstract Mergers in mobile markets are of keen interest to policy makers and scholars. Because carrier networks are subject to pronounced economies of scale and . . .

Abstract

Mergers in mobile markets are of keen interest to policy makers and scholars. Because carrier networks are subject to pronounced economies of scale and scope and given that communications regulators create substantial barriers to entry by limiting spectrum allocations for mobile services, wireless services generally exhibit relatively high levels of industrial concentration. Hence, antitrust authorities often struggle with the tradeoff between enhanced scale economies and enhanced market power. Between 2012 to 2016, for instance, four E.U. nations (Austria, Ireland, Germany, and Italy) consummated “4-to-3” mobile mergers while two such combinations were blocked (in Denmark and the U.K.). In the U.S., 4-to-3 transactions were blocked by regulators in 2011 and again in 2014, but a recent merger — between the No. 3 (T-Mobile) and No. 4 (Sprint) carriers was approved in February 2020. This combination remains a subject of intense debate. We examine post-merger evidence of retail mobile subscription prices, network investment, service quality, market shares, and industry profits in the U.S. mobile communications industry. We conclude that the data are consistent with the thesis that the T-Mobile/Sprint merger produced consumer gains. This outcome is particularly interesting given that the government remedy imposed to mitigate potential anti-competitive merger effects, the creation of a new fourth network (DISH), has produced no plausible pro-competitive impact.

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Antitrust & Consumer Protection

T-Mobile Proves That Mergers Can Benefit Consumers

Popular Media The government has become increasingly suspicious of major mergers over the past decade, under both political parties. The Justice Department under Donald Trump sued to . . .

The government has become increasingly suspicious of major mergers over the past decade, under both political parties. The Justice Department under Donald Trump sued to prevent AT&T from buying Time Warner. The Federal Trade Commission under President Biden is continuing a case the Trump administration initiated against Meta, parent of Facebook, to force the firm to cough up Instagram and WhatsApp, which it swallowed during the Obama years. In January, JetBlue Airways’ plans to merge with Spirit Airlines and Amazon’s plans to acquire iRobot were deterred under regulatory pressure.

Read the full piece here.

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Antitrust & Consumer Protection

From ‘Open Skies’ to Traffic Jams in 12 GHz: A Short History of Satellite Radio Spectrum

Scholarship Abstract As an industry, communications satellites have traced a wobbly trajectory. Envisioned to bring revolutionary advances to telecommunications services in the U.S. Communications Satellite Act . . .

Abstract

As an industry, communications satellites have traced a wobbly trajectory. Envisioned to bring revolutionary advances to telecommunications services in the U.S. Communications Satellite Act of 1962, the marketplace did open via Comsat, a public-private partnership. But the sluggish pace was revealed a decade later when progress increased substantially with the Open Skies policy. Free entry collapsed costs for wide area distribution of broadcasting services, launching the U.S. cable television industry (disrupting the TV broadcasting triopoly) in the 1980s and then direct-to-subscriber satellite TV (challenging the new incumbent cable operators) in the 1990s. In ensuing decades, however, fortunes reversed. Satellite phone and broadband service providers—Iridium, Teledesic, Motient, Intelsat and many others—financially crashed and burned. Yet another reversal may now be in evidence, however: satellites in service have increased more than three-fold in the past decade. Spasms of technological progress, including gains in small device electronics, are driving market change: “While some [satellites] are the size of a bus and weighing over 6,000 pounds, they can also be as small as a lunchbox,” noted a 2018 Aspen Institute report. “Constellations can now be composed of hundreds or even thousands of satellites.” The new mega-constellations are creating a crowded sky. With demand for orbital slots and complementary radio bands dramatically intensifying, new policy formulations are being floated. We outline possible innovations in spectrum property rights.

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Telecommunications & Regulated Utilities

Maybe Google Is Popular Because It’s Good?

Popular Media In July 2001, a dozen Google techies pondered their mission mantra. In essence, they aimed “to organize the world’s information and make it universally accessible and . . .

In July 2001, a dozen Google techies pondered their mission mantra. In essence, they aimed “to organize the world’s information and make it universally accessible and useful.” However, their ambition was celestial. They grasped for a moniker.

The network of networks was expanding exponentially in every direction, with websites stacking up data everywhere. The informational jumble was messier than a teenager’s bedroom floor.

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Antitrust & Consumer Protection

Rentseeking for Spectrum Sharing: The 5.9 Ghz Band Allocation

Scholarship Abstract The battle over rules governing 5.9 GHz airwaves offers important lessons in both the creation of property rights and applied public choice. Set aside . . .

Abstract

The battle over rules governing 5.9 GHz airwaves offers important lessons in both the creation of property rights and applied public choice. Set aside in 1999, the 75 MHz “Car Band” band was designated by the U.S. Federal Communications Commission (FCC) to support emerging vehicle telematics and computerized driving. Transportation regulators and automakers, including General Motors, Ford, and BMW, claimed this would efficiently promote road safety, fuel savings, and collision avoidance, as dedicated bandwidth would operate under a “spectrum commons” regime designed to favor such applications. While anticipated services gradually developed, the 5.9 GHz band did not. Spectrum inputs outside the “Car Band” accommodated driving applications, while the general development of wireless networks shifted social priorities. Eventually, Internet services companies such as Comcast, Google and Microsoft claimed the 75 MHz allocation was wastefully large and that switching access rules to favor WiFi would generate net benefits. Suggested for possible reallocation by the U.S. Department of Commerce since 2012, the FCC issued an order in 2020 to split the baby: 45 MHz of the band would be shifted to Wi-Fi, with 30 MHz remaining dedicated for Intelligent Transportation Systems. The FCC’s 2020 “Cost Benefit Analysis” purports to quantify the trade-offs involved, but upon scrutiny fails to plausibly value Wi-Fi services or to even consider the relevant opportunity costs. The costly, delay-intensive and ad hoc policy process (whose costs are additionally ignored by the FCC) begs for further development of auction mechanisms to rationalize alternative rights assignments.

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Telecommunications & Regulated Utilities

The Ajit Pai FCC on Radio Spectrum Allocations

TOTM Disclosure: The one time I met Ajit Pai was when he presented a comment on my book, “The Political Spectrum,” at a Cato Institute forum . . .

Disclosure: The one time I met Ajit Pai was when he presented a comment on my book, “The Political Spectrum,” at a Cato Institute forum in 2018. He was gracious, thorough, and complimentary. He said that while he had enjoyed the volume, he hoped not to appear in upcoming editions. I took that to imply that he read the book as harshly critical of the Federal Communications Commission. Well, when merited, I concede. But it left me to wonder if he had followed my story to its end, as I document the success of reforms launched in recent decades and advocate their extension. Inclusion in a future edition might work out well for a chairman’s legacy. Or…

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Telecommunications & Regulated Utilities

In the race for a COVID-19 vaccine, how do we balance risk and safety?

TOTM No matter your Twitter feed, “vaccines have been one of the greatest public health tools to prevent disease,” as The New York Times explained in . . .

No matter your Twitter feed, “vaccines have been one of the greatest public health tools to prevent disease,” as The New York Times explained in January…

Many are terrified that the Food and Drug Administration may hastily authorize injections into hundreds of millions. The FDA and drugmakers are trying to assuage such concerns with enhanced commitments to safety. Nonetheless, fears have been stoked by President Donald Trump’s infomercial-style endorsement of hydroxychloroquine as a COVID-19 remedy, his foolhardy disdain for face masks and campaign rally boasts of a preelection cure.

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Innovation & the New Economy

Policy Diversity Saves Lives: Unmasking Confirmation Bias Caused by a Virus

TOTM The brutal toll of the coronavirus pandemic has delivered dramatic public policies. The United States has closed institutions, banned crowds, postponed non-emergency medical procedures and . . .

The brutal toll of the coronavirus pandemic has delivered dramatic public policies. The United States has closed institutions, banned crowds, postponed non-emergency medical procedures and instituted social distancing. All to “flatten the curve” of illness. The measures are expensive, but there is no obvious way to better save lives.

Read the full piece here.

 

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Innovation & the New Economy