Does anyone recall ever benefiting because one company merged with another? It’s not necessarily similar to Apple’s purchase of Beats and selling expensive headphones, because that deal was more about acquiring technology, which is something that’s been done for years.

 

So consider the act that saved Apple, acquiring NeXT in 1996, which brought a state-of-the-art Unix-based OS that, over the years, morphed into macOS and iOS. That move came in the wake of the failure of Copland, Apple’s own effort to build a successor to Mac OS. It took a while to jell, but here in 2018, we are still benefiting from the fruits of that transaction.

 

It also brought Steve Jobs back to Apple, and the rest is history.

 

From Apple A-series processors, to Touch ID, Face ID and — yes — even Siri, Apple’s ongoing acquisitions of technology companies have delivered compelling features that have advanced the company, and enhanced the user experiences of hundreds of millions of customers.

 

But when two companies consummate a normal merger, there are almost always promises of realizing synergies, and somehow benefiting customers. In the end, the stockholders and the executives become richer, but people lose their jobs because they are deemed redundant. With fewer competitors, prices just may increase.

 

When buying a company with different products and services, it may be easier to get approval from the powers-that-be in the U.S. government. Even then, there may be restrictions to reduce corporate excesses of one sort or another. When Comcast, the number one cable and broadband company in the U.S., completed its acquisition of NBC/Universal in 2011, the deal came with restrictions to ensure fair treatment to competing companies.

 

So Comcast needed to be fair with in negotiating carrier deals to carry NBC content, which includes such cable networks as Bravo, CNBC, MSNBC, SyFy and USA.

 

Over the years, I’ve heard all sorts of tech support horror stories from Comcast cable customers. There’s no indication things became any better after the merger. Of course, the entertainment division isn’t involved in direct interactions with individual consumers.

 

When AT&T bought DirecTV, the world’s largest satellite TV network, in 2015, the support systems were combined. Not only were jobs lost, but service got a whole lot worse. These days, when I dial up AT&T for satellite or wireless support, I have to navigate through a mostly deaf voice assistant, and I’m often forced to talk to several people just to resolve a simple issue. How does that save money?

 

I remain a customer for two reasons. First no other TV service is available at this apartment, which is wired for CenturyLink, and includes a single DirecTV satellite dish feeding all the units in each building. Reception via an interior digital antenna is hit or miss. Second, although it was hard to find, I receive an AARP discount for AT&T wireless, and that discount is enough to match T-Mobile’s “Uncarrier” price.

 

Speaking of which, AT&T attempted to merge with T-Mobile in 2011, but the government said no. Forced to compete on its own terms, T-Mobile began its “Uncarrier” promotion, which did away with standard two-year contracts, and overhauled the industry.

 

As a result, your wireless bill is no doubt cheaper regardless of the carrier. T-Mobile is growing rapidly; the move spurred Sprint to slash its prices, so both became more compelling alternatives to market leaders Verizon and AT&T.

 

Now T-Mobile and Sprint are trying to become one. But T-Mobile’s flashy CEO, John Legere, insisted that there will still be more competition in the market than most believe: “This isn’t a case of going from four to three wireless companies—there are now at least seven or eight big competitors in this converging market.”

 

Or maybe not.

 

True, cable providers are entering or planning to enter the cell phone market, but it’s not at all likely that they’ll suddenly became major competition for the big four — make that big three if this merger is consummated.

 

At the same time, it is true that T-Mobile and Sprint together will provide healthier competition to the Verizon and AT&T. As it stands, T-Mobile has good cellular coverage in larger cities but relatively poor coverage in rural areas. A larger footprint will also provide more network resources and revenue to speed deployment of 5G networks.

 

In theory, that should be a good thing.

 

Then again, as Sprint learned when it bought Nextel in 2005, combining two incompatible networks is no easy task. Basically Nextel was shunted to the side in the wreckage of that deal.

 

So T-Mobile uses GSM, same as AT&T. Sprint uses CDMA, same as Verizon. Sprint claims some 20 million customers have handsets that are compatible with T-Mobile, which will be the winning company. After a migration period to the combined service, which will take from two to three years, it’ll still leave millions of users with incompatible handsets, unless the equipment supports LTE and is deployed in an area where there’s an acceptable LTE signal. I just hope there will be special discounts for people with bricked phones to upgrade.

 

While Legere also claimed that more employees will be needed with the combined company, that may be a tricky response. Perhaps there will be, workers to perform the hardware migration and upgrades. But what about sales and support people? How many of them will be getting pink slips? Doesn’t it make sense that there will be thousands of redundant positions, or does T-Mobile expect many of these employees will be willing to transfer to the hardware division?

 

Will prices really go down?

 

Of course, this deal hasn’t been Okayed by the authorities, and there may be restrictions to protect customers with potentially obsolete gear among other things. It would be nice to see guarantees that prices won’t increase, but such restrictions are usually temporary. What will the market be like in five years?

 

I am, however, pleased that the new company will be in T-Mobile’s image and not Sprint’s. I tried Sprint in the early 2000s, before switching to AT&T. As bad as the latter’s support is now, Sprint was far, far worse.

 

Peace,

 

Gene

 

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Gene Steinberg is a guest contributor to GCN news. His views and opinions, if expressed, are his own. Gene hosts The Tech Night Owl LIVE - broadcast on Saturday from 9:00 pm - Midnight (CST), and The Paracast - broadcast on Sunday from 3:00am - 6:00am (CST). Both shows nationally syndicated through GCNlive. Gene’s Tech Night Owl Newsletter is a weekly information service of Making The Impossible, Inc. -- Copyright © 1999-2018. Click here to subscribe to Tech Night Owl Newsletter. This article was originally published at Technightowl.com -- reprinted with permission.

 

 

Published in Technology

The smartest business analysts in the world don’t seem to know what Dish Network’s CEO Charlie Ergen is up to after spending $6.2 billion in the recent airwave spectrum auction. That put Dish on the same playing field as Verizon and T-Mobile when it comes to ownership of the airwaves. All of it’s unused, however, and Dish has never presented a plan of how it intends to use its spectrum, whether that’s streaming Dish Anywhere to its customers’ devices or building a wireless network of its own for Sling TV users, which is helping Dish add subscribers but is lowering revenues.

Analysts say Dish Network’s action in the auction makes it less likely that Verizon Wireless would merge with Dish, like AT&T did with DirecTV. But I refuse to believe Verizon isn’t interested in Dish’s spectrum. Verizon reportedly needs more urban capacity (and I can attest to this personally), which requires the very spectrum Dish owns. If that doesn’t scream value on Dish Network’s behalf, I don’t know what does.

But Dish stock has plummeted since the spectrum auction purchase was announced, dropping over six percent in two days. It’s stock price is lower than it has been since the start of 2017. That drop could continue until companies can start communicating again at the beginning of May, which was done to avoid collusion during the auction.

That’s when I see the fireworks happening. Ergen will sell all the spectrum Verizon doesn’t need at a huge markup thanks to Ergen’s opportunistic purchasing of the airwaves from bankrupt satellite providers over the years. The sale will put Dish in an ideal situation to negotiate a merger with Verizon, thanks to Ergen retaining the spectrum in low frequency bands that Verizon requires to make it’s urban service better. Verizon currently owns 24.3 fewer megahertz of spectrum below the 1-gigahertz frequency than AT&T.

Verizon and Dish merge to give AT&T some real competition while AT&T negotiates a new contract with the International Brotherhood of Electrical Workers in June. Verizon will get the boost it needs in urban areas thanks to Dish’s spectrum, and Dish will get a boost in subscribers from bundlers getting out of cable contracts, which are expected to double in price. Dish will also benefit from turning their Sling TV subscribers into new Dish contracts by offering bundles that will save them money on telephone service. Sling TV will continue to bring in those unwilling or unable to pay for television service, while DirecTV lowers prices to try and match the new juggernaut in the market.

The best part is that both Verizon Wireless and Dish Network share the same color scheme and already provide commendable customer service. I’ve never been a customer of AT&T's before, but the customer service experience I had with Dish is far better than that of DirecTV. I never had a problem with Verizon (besides price) in 12 years as a customer, but they just reported a loss of subscribers for the first quarter ever. I was one of them.

These near-monopolies know where the market is headed. People are going to move between the very few providers of television and telephone services to take advantage of introductory rates, much like they do with credit card debt and balance transfers. The key is to give consumers a reason to join and then more reasons to stay. There’s inherent value in already providing commendable customer service, and when people switch to VerizonDish, they’ll be more apt to stay once they speak to a customer service representative.

Top US Pay TV Service Provider Metrics Q3 2016 (ranking by subscribers)
Rank   Platform Subscribers (millions) Net Adds ARPU*
1 AT&T IPTV + Satellite 25.292 -3,000 $118.09
2 Comcast Cable 22.428 32,000 $148.47
3 Charter Cable 16.887 -47,000 $80.81
4 Dish Network Satellite 13.643 50,000 $89.44
5 Verizon IPTV 4.673 36,000 n/a
6 Cox Cable 4.146 3,000 n/a
7 Altice Cable 3.598 -41,000 $117.80
*Comcast and Altice ARPU is Total Blended ARPU, All others are Video ARPU  Source: Strategy Analytics' Digital Television Operator Performance Benchmarking: North America   

Courtesy of FierceCable.com via Strategy Analytics

Editor’s Note: An update follows.

Dish Network CEO Charlie Ergen announced in an interview with the Denver Post that Dish will use its spectrum to build a network for devices, citing that most Sling TV subscribers are watching on mobile devices and not televisions.

The network could be used by any device that connects to the internet, including self-driving cars, heart monitors and home security systems. Ergen didn’t rule out partnering with other wireless companies but did say that Dish would like the network built by 2020.

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Published in News & Information