[AequitasOmnibus]

While not mentioned in the article, it’s worth mentioning that this also coincided with T-Mobile’s acquisition of Sprint. Specifically, T-Mobile made assurances that the acquisition would lower prices. Instead, within a couple years they exercised their newfound market power to increase prices a fair amount. The merger should have never been authorized.

[overstay8930]

The end result was inevitable, if the merger was blocked Sprint would have just filed for bankruptcy and the 3 remaining carriers would split it up amongst themselves.

Sprint was effectively on life support and the last CEO’s only job was to pump up subscriber numbers as high as possible to make a deal as attractive as possible. That’s why Sprint had so many “free” deals a year before the acquisition was announced.

The US government made a massive miscalculation on Dish network, when in reality it really should have been split amongst CableCos who are now stealing customers from the big 3 because they have already done the hard part of building infrastructure, while Dish can’t even get off the ground.

[dangus]

I don’t understand why the government couldn’t have done a bankruptcy bailout of Sprint to maintain a vital industry/important competitor in the market. Essentially follow the same playbook as GM and have the government temporarily buy Sprint, rehabilitate it, and sell it back to public investors.

What the government did with Sprint was akin to allowing GM to be purchased by Ford. Whether or not that happens in bankruptcy court is almost irrelevant: a huge business in an oligopoly merging into another is generally bad news and the government should be on top of it.

(Let me also be clear to people who hated the automotive bailouts: they were easily the best possible outcome and hindsight shows they were great policy. The alternative was essentially the collapse of the American automotive industry, allowing the US to follow the fate of the British industry, and on top of that government made a profit on its investment of taxpayer dollars to carry it out)

[tipsysquid]

Sprint was a technological wrong turn. They invested in the next generation platform on multiple occasions. Billions $ into WiMAX left them with a nonpractical and expensive footprint and no mid term speed benefits to really show. Then, after wanting to keep original CDMA infrastructure, they went LTE/GSM anyway. This period meant multiple modems and lower battery life. It was over with no great options.

[dangus]

I think in this regard the government could have basically reallocated spectrum to be roughly equal among the big four and financially it would be a bankruptcy situation.

[grepfru_it]

Don’t forget Nextel, that was an expensive acquisition with almost nothing technological to show for it.

[mike_d]

> What the government did with Sprint was akin to allowing GM to be purchased by Ford.

The government depends on three carriers (ATT, Verizon, Sprint) for its own redundant critical communications (Continuity of government, military communications, etc).

The entire deal was structured in a way where where the wireless subscribers were shed onto T-Mobile and the important guts of Sprint were sold to Cogent for $0, who didn't have the capability or desire to take on the consumer facing business.

[qp11]

Thats exactly how Governments in the rest of the world protect strategic sectors from being swallowed up by Wall Streets massive mountain of capital.

[sneak]

Perhaps tax dollars should not be used to engineer economic outcomes.

If you get too big to fail, why avoid failure? It’s about incentives.

How useful or efficient or competitive do you think taxpayer-funded Sprint would be today? What makes you think they would suddenly start being good with an influx of tax money when they weren’t good before free money injections?

[dangus]

Tax dollars were paid back in full with interest. It was an investment with ROI - plus the preserved American jobs.

[kortilla]

> they were easily the best possible outcome and hindsight shows they were great policy

No, just because those are around does not mean there wasn’t a better alternative in bankruptcy. Bankruptcy does not mean the individual company stops making cars, let alone the entire industry collapsing. That’s pure FUD to justify the govt preventing a moribund industry from being purged of legacy companies coasting on their brand.

[dangus]

I think my comparison to the British auto industry is apt. Bankruptcy doesn’t mean the brand goes away but it can mean the domestic industry evaporates into nothing.

You look at companies like Lotus, MG, Land Rover, Jaguar, and even Volvo and you look at a future where their intellectual property assets essentially only exist to help geopolitical rivals. GM and Ford being sold to the Chinese would have been devastating to US industry.

There is no Volvo EV that is built in Sweden. There is no Lotus EV built in Britain. At the end of the gasoline production line run it’s just China producing all their future electric cars when they go fully electric in 5 years.

Don’t forget that automotive parts are a huge employer beyond the auto manufacturers themselves. If Geely buys Ford they’re moving parts supply to China. It’s a whole ecosystem and it’s strategically worth protecting.

Like I said, don’t forget how the government was paid back in full with interest for the bailouts. On top of that the governor gets to keep people employed rather than sending the jobs abroad. It was a no brainer obvious good policy, supported by both parties as well.

[android521]

The bad unintended consequences are gonna be much bigger this way. Think of communism, it started with good intentions but the unintended consequences of absolute power concentration (who can buy or sell what and at which prices ) caused absolute corruption and inefficiency

[TeMPOraL]

The point is for the government to have the ability to occasionally look the biggest wolves of Wall Street in the eye, and say to them, "haha. but no.". Exercising it doesn't require abolishing private property and taking central control of all trade.

[android521]

His point is that government should bailout failing company. I don't think this will end well if it becomes a common practice to bail out companies.

[dangus]

Yes, communism is when the government participates in bankruptcy court, makes an investment, and gets paid principal and interest on their loan. That’s exactly what Karl Marx was talking about.

[PaulDavisThe1st]

In what way is "communism" a good example of what could happen with the US auto industry bailouts?

[blackeyeblitzar]

I think the problem is that they’re competing against much bigger players, ATT and Verizon. It’s just not possible to compete against them as a late comer. That’s why there are no new networks, just MVNOs. Starlink maybe can change that. But outside of that technological change, we’re stuck and a smaller player cannot hope to be competitive on coverage against bigger players.

Ultimately what we need is much stronger anti-trust legislation against all kinds of companies that are too big, or aren’t in functioning competitive environments.

[thayne]

There really needs to be more accountability for such promises made during acquisitions. Or no credence should be given to such promises.

This is not at all surprising, and we've seen this happen over and over. Two big companies merge, promise prices won't go up so the merge gets approved, then within a few years, sure enough prices go up.

[throwup238]

> Or no credence should be given to such promises.

This should always be the default. The first rule of capitalism is that companies lie. Who’s going to stop them?

[ramesh31]

>The merger should have never been authorized.

So that Verizon could own the entire market along with a few also-rans? It was a choice between the lesser of two evils.

[bsder]

If Verizon controlled that much, then it should have been broken apart.

You don't fix a monopoly by creating more monopolies.

[ClassyJacket]

How is reducing competition good for competition?

[JumpCrisscross]

> How is reducing competition good for competition?

I am not familiar with the telecom market. But blocking mergers doesn’t necessarily increase competition. (For example, breaking up Walmart would reduce competitive pressure on Amazon.)

[ramesh31]

>How is reducing competition good for competition?

By creating actual competition. Sprint and T-Mobile separately would always be second tier to Verizon. Combined, their network actually competes.

[alexsereno]

Hacker news is peak contrarian. If your stance was that this merger was incredible, your replies would be entirely about competition lol.

[adolph]

HN has a diverse set of viewpoints. For any assertion one might make, there will be someone with the opposite viewpoint.

In addition to out-and-out opposition or agreement that sounds vaguely oppositional, a comment might call for a pedantic annotation, a tangential aside or book recommendation.

[basil-rash]

Don’t forget the unconstructive meta-analysis.

[adolph]

  sudo !!

[alexsereno]

This is a wonderful example

[Dylan16807]

Okay, glad you made it impossible to write a comment that disagrees with yours.

You know what they say about things that aren't falsifiable, they're definitely correct!!

[TeMPOraL]

That's to be expected. A typical conversation starts with someone taking a high-dimensional problem, projecting it to their favorite dimension, and saying "the solution is obviously on my side on the number line". Of course you'll get multiple "contrarian" replies ranging from "hey, what about my preferred dimension" to "you know the problem has more than one of them?".

[darby_nine]

What? Verizon's clear benefit died long before the acquisition, even if their market share did not. The best thing to do would be to foster competition, not actively bless its destruction.