Deutsche Telekom to create global super giant…Cellular monopolies on the rise?

Written by: Mike, Monday, September 14, 2009 8:35

Deutsche Telekom

I’m sure many of you can remember back to the good ‘ol days of the AT&T/Bell monopoly. They got big, then broken down, repeat, repeat. Here we are in 2009 and AT&T is growing ever larger (again) and another large acquisition is coming to light. The latest reports have Deutsche Telekom eying a potential purchase of Sprint. First off, the GSM/CDMA compatibility is a big hurdle. Now you have two completely different technologies to watch after. Second, the merger would create a giant #2 U.S. carrier with 78.2 million subscribers — just behind AT&T’s 79.6 million. The merger would also knock down the “top” U.S. carriers from 4 to 3: T-Mobile, Verizon, and AT&T. If we’re in an age that focuses so heavily on preventing monopolies, why are they being allowed to build back up?

With the AT&T monopoly roller coaster still fresh in many minds, the potential for a second more global scale monopoly is frightening. Monopolies never help anyone except the company in charge. Even then, some would argue they are hurt as well with many potential users turning away from the lack of competition. Still, Deutsche Telekom’s potential bid should signal legal experts and systems in several countries. If they do in fact make a bid and take over Sprint here in the U.S. as well as move further with plans to aquire Orange UK, a global monopoly will begin to overshadow.

It strikes me as slightly odd that even after going through numerous checks and balances and various branches of government, these mergers are allowed to happen only to be criticized some years later and broken up. We all know the outcome of sucking up smaller companies. Eventually there won’t be any left and you’ll be stuck with a couple big corporations controlling everything. Now I’m not some crazy radical against the free market or capitalism. Hardly so. It’s just as larger companies consumer smaller companies, the concern grows.

One potential problem that Deutsche Telekom may have with a Sprint merger is their vastly differing technologies. Sprint uses CDMA and EVDO. Deutsche Telekom so far has focused on GSM. Two completely different technologies with different needs. Sure you’re also gaining the staff needed to support said network. Still, at some point the differences are going to show their ugly face. Deutsche Telekom could switch Sprint’s network over to GSM, but then they’re looking at costly “freebies” that will have to be given to every Sprint customer so they can function on the new network. The next few weeks will certainly be interesting as Deutsche Telekom could place a bid as soon as within a couple weeks. It’s worth noting neither Deutsche Telekom or Sprint have made an official announcement or even acknowledged the talks. But as is the norm these days, the tight group of tech gurus and geeks manages to glean this information out from the tight grasps of inner company catacombs giving us an early leg up.

So am I being too paranoid or can well all see the growing threat? Do you think in 10 years time we’ll see Deutsche Telekom’s growing monopoly broken up just as the almighty AT&T/Bell once was? Heck, do you see AT&T reaching epic sizes again?

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