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In this edition of Views and News, ETI examines AT&T's proposed acquisition of T-Mobile, and the status of competition in the wireless market. We also revisit the use of a "Bill and Keep" replacement for cash payment-based Intercarrier Compensation under the approach outlined by the FCC in its Universal Service/Intercarrier Compensation rulemaking that was initiated in February.
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And then there were three: AT&T swallows T-Mobile
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The deal was announced quietly on a Sunday evening: AT&T, the nation's second largest wireless carrier (and largest incumbent telco) hopes to buy Deutsche Telekom's T-Mobile USA, the fourth largest wireless carrier in the US. The deal will likely face regulatory scrutiny from both the FCC and the Department of Justice, and rightfully so. Despite AT&T's rhetoric that this merger will improve network quality and bring broadband to every part of America, the reality is that if this merger is allowed to proceed, the two largest wireless carriers will together have more than 80% market share in a market landscape of already diminished competition. Will AT&T receive the necessary regulatory approvals? AT&T is betting $3-billion that it will.
It seems hard to imagine that this proposed merger will be anything but a major blow to competition. We discussed the decline of wireless competition in Views and News last July. Here we revisit and update that analysis on a pro forma basis, assuming that the merger is approved, and examine some of the possible repercussions.
Continue reading at econtech.com
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A new approach to Intercarrier Compensation
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Prior to the break-up of the former Bell System (the old AT&T) in 1984, most domestic calls within the United States – local and long distance – were carried, end-to-end, by one or more units of the same parent company. Traditionally, most calls were provided on a "sender-paid" (sometimes referred to as "calling party pays") pricing regime, in which the person who initiates a call pays for the call in its entirety. If a call involved more than one unit of the old AT&T(e.g., a call from New York to Chicago would have been handled by three AT&T units – New York Telephone at the originating end, Illinois Bell at the terminating end, and the AT&T Long Lines Department for the intercity segment), the revenues paid to the originating unit (New York Telephone in this example) would need to be allocated among all three participating units. This was accomplished via intracorporate allocations based upon what was then referred to as the "Division of Revenues Plan." ...
Continue reading at econtech.com
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About ETI. Founded in 1972, Economics and Technology, Inc. is a leading research and consulting firm specializing in telecommunications regulation and policy, litigation support, taxation, service procurement, and negotiation. ETI serves a wide range of telecom industry stakeholders in the US and abroad, including telecommunications carriers, attorneys and their clients, consumer advocates, state and local governments, regulatory agencies, and large corporate, institutional and government purchasers of telecom services. |
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