Big 2 cell companies seek to destroy smaller onesPublished 12:00pm Saturday, July 13, 2013
Unfortunately, the Republicans, who at least pay lip service to the free market, often end up protecting Big Business at the expense of free enterprise. In return, they get political contributions. This is the same racket the Democrats play with the unions.
Thirty years ago, our federal courts broke up AT&T, which had a monopoly on the telecommunications business. What followed was an enormous boom in telecommunications. Once the market was free, competition and innovation flourished.
It is no exaggeration to say the breakup of AT&T has transformed life in America and opened the door to huge gains in electronic communications, including the Internet.
Despite this new age of instant communication, human nature has not changed. Here we are 30 years later and AT&T is back together again dominating telecommunications and thwarting competition along with Verizon, also a former AT&T creature. Combined, these two companies have 65 percent of the cellular market share.
AT&T and Verizon are using their political power to eliminate cell phone compatibility throughout the nation. These two giants want to implement a proprietary system that could wipe out smaller cell phone companies such as C-Spire.
Under current law, C-Spire customers can go anywhere in the country and access the Verizon and AT&T roaming networks. That’s because all cell phones must meet compatibility standards.
But with the introduction of 4G, the duopoly wants to be free to introduce a proprietary system that would eliminate roaming. The two companies have been busy lining up politicians on their side. With $350 billion in market capitalization, you can imagine the political clout Verizon and AT&T can muster.
You would think C-Spire would have the unwavering support of Mississippi’s congressional delegation. After all, it is one of Mississippi’s finest home-grown businesses. The Creekmores have deep Mississippi roots and have supported our state in innumerable ways.
But it isn’t so. Verizon and AT&T wield enormous clout. Their PAC contributions are crucial to national political organizations. These organizations put pressure on the leadership of the House and Senate, which puts pressure on individual congressmen and senators. It’s a bad scene and represents a marked change from the time our congressmen were much more independent from their House and Senate leadership.
AT&T and Verizon claim that compatibility drives up the cost of phones and creates interference. Independent cell phone companies have submitted studies contesting both claims, but the push toward a proprietary system marches on.
If AT&T and Verizon get their way, it would give them a huge advantage against smaller cell phone companies that don’t have a proprietary nationwide network. It would drive all the smaller competitors out of business, forcing them to sell to the big players. The market share of the big two would go from 65 percent to 100 percent.
The desire of big companies to drive smaller companies out of business has been ongoing for centuries. That’s why we have the anti-trust division of the federal Justice Department and the Federal Trade Commission.
The problem is that enforcement has declined dramatically as both political parties have become dependent on PAC money to fuel ever-increasing campaign costs.
Even the venerable Wall Street Journal runs constant editorials extolling the efficiency of Big Business and openly advocating monopolies and duopolies, which often control over half the total market share in hundreds of industrial sectors.
To be sure, I think most government regulation is a disaster. But if there is one legitimate role of government in business, it is to keep the markets free and open. This is no different than government’s legitimate role to keep our streets safe and courts free from corruption.
A few weeks ago, I was at the Warren Hood Boy Scout camp west of Hazlehurst. Anybody who had Verizon or AT&T cell phones was out of luck. Zero reception. My C-Spire phone worked like a charm.
C-Spire is run by Mississippians who know that a cell phone must work in a deer stand and on a bass pond. Most executives at AT&T and Verizon don’t even know what a deer stand is.
That’s a perfect example of why you need competition. That’s why we should aggressively support and protect independent companies from monopolistic practices.
The backbone of the United States is composed of independent businesses. Half of all private sector employment comes from firms with fewer than 500 employees. Most of the job growth comes from these smaller companies.
The free market built America. Let’s not let Big Business and Big Politics ruin it.