TOO Good at What They Do

In my days-long drive to find something to help motivate me to start writing again, I stumbled across this Bloomberg News article. Apparently, AT&T and Verizon Wireless have grown 'too big,' snagging around 60% of the wireless market share. Of course, that ticks people off, so a "broad inquiry into wireless industry practices" is being proposed for the next FCC meeting.

According to the FCC's Public Notice, here is what the meeting will try to accomplish:

• Item 1: to "identify concrete steps the Commission can take to support and encourage further innovation and investment"
  
• Item 2: look into "the status of competition in the mobile wireless market"
  
• Item 3: find out "whether there are opportunities to protect and empower American consumers by ensuring sufficient access to relevant information about communications services"
  

I have to stop and admire the masterful use of rhetoric here: lovely words like 'support and encourage,' 'innovation,' 'protect and empower' – these guys sound like saints! What objection could I possibly have against their stated goals?

Rhetoric aside, they're really only trying to find a basis for prosecuting 'Big Wireless' for being so good at what they do that they've taken up too much of the market share.

When I say they're too good at what they do, I mean their business acumen. For example, I always thought the deal AT&T made to be the sole carrier of the iPhone's wireless service was absolutely genius. To consumers, that may be something of an annoyance, but I consider it about as annoying as Taco Bell's deal with Pepsi, when I prefer Coca-Cola. <sarcasm> What if I want a Diet Coke with my Crunchwrap – perhaps Pepsi should be investigated! </sarcasm>

I also find the contracts annoying, but similarly no more so than the need to sign a year-long lease to my apartment. Like my apartment building, telecommunications companies tend to have very high fixed costs (costs that remain more or less the same regardless of how many customers they have).

That means, if customers unexpectedly abandoned their contracts without penalty, the companies could be hard-pressed to meet their fixed obligations. They can't simply produce less bandwidth to match declining demand – they're more or less stuck with it. Requiring contracts and imposing penalties for leaving the contract early merely attempts to match revenues to costs. How is that a crime?

High barriers to entry probably have more to do with the huge amount of capital required to build the equipment needed for sufficient coverage over a large area. (That would also explain the high fixed costs!) Nevertheless, that is not the existing companies' fault, so why should they have to share or otherwise be punished for what they've built?

Instead of thanking them for investing so much to provide a service we couldn't get otherwise, we're investigating them for possible antitrust violations. We're essentially telling them they should stop doing business so well and 'let the little guy have a fighting chance' – meaning, let him use their infrastructure and take some of their market share, without putting in the same effort.

Does that mean I can tell a doctor to lend me some of his expertise and experience so I can try to take some of his patients without having to work for a medical degree?

If my boss told me to stop being so good at what I do because it's not fair to the other employees, I'd look for a new job. What if the big wireless companies did the same? I wouldn't blame them!

Good thing they have so much capital tied up in their business – even if it does cause high barriers to entry and high fixed costs.