Everyone’s focusing right now on whether AT&T’s proposed merger with T-Mobile will give it too much power in wireless. But that’s only part of the worry.
AT&T also wants to sell you a so-called “triple play” of cable, telephone and Internet service. Or better yet, a “quad play” of cable, telephone, Internet and wireless. Arch-competitor Verizon has the same game plan.
Already, more than 75% of AT&T U-Verse cable customers receive their service as part of triple play or quad play services, according to research firm Strategy Analytics. The average revenue per triple play customer has increased 8% to $175 a month. Now add wireless to the picture, and you’re talking well over $200 a month paid to Ma Bell.
You’ll be paying just as much for Verizon FIOS TV for its quad play bundle.
If AT&T’s merger with T-Mobile goes through, it’s a virtual certainty that Sprint will have to hook up with Verizon to remain alive, giving a duopoly vast control over how much you pay for phone, mobile, Internet and pay TV service.
What of cable powerhouses like Comcast and Time Warner? Well, since they don’t have strong wireless offerings, they’ll be at a competitive disadvantage — especially since people who sign up for quad-play services are much less likely to “churn”, or switch to another provider, according to Strategy Analytics.
I’m not particularly sympathetic to cable companies’ woes — Time Warner already charges me more than $200 a month for my triple play — but you have to ask yourself what these mega-companies do when they feel their “pipeline” is threatened. Well, what did Comcast do when it wanted to ensure steady access to content? It bought NBC Universal (surprisingly blessed by the Commerce Dept. and DOJ in January).
Could you imagine Comcast merging with Verizon? How about News Corp. buying a stake in AT&T now that BSkyB is effectively scrapped?
To be sure, cable and entertainment companies will remain on the acquisition war path even if AT&T/T-Mobile is scrapped. Smart money has T-Mobile (and probably Sprint, too) looking for other sugar daddies if the deal doesn’t go through.
DOJ’s lawsuit at least serves notice that at least someone’s minding the government till these days, unlike the previous administration.
There really is no endpoint to mega-mergers once you open the door. As David Lazarus of the Los Angeles Times noted some months ago, AT&T could just as easily argue that the best “economies of scale” and peerless wireless coverage would be gained by merging with Verizon.
Yep, one big mega-company to rule them all and in the darkness bind them. And if you think that company’s going to have your interests at heart, you’ve probably been reading too many fantasy novels.