The government has become increasingly suspicious of major mergers over the past decade, under both political parties. The Justice Department under Donald Trump sued to prevent AT&T from buying Time Warner. The Federal Trade Commission under President Biden is continuing a case the Trump administration initiated against Meta, parent of Facebook, to force the firm to cough up Instagram and WhatsApp, which it swallowed during the Obama years. In January JetBlue Airways’ plans to merge with Spirit Airlines and Amazon’s plans to acquire iRobot were deterred under regulatory pressure.
In April 2020, however, T-Mobile and Sprint managed to sneak past regulators, merging to reduce the number of major U.S. mobile networks from four to three.
T-Mobile’s takeover of Sprint was controversial among analysts. “If this merger is not anticompetitive,” Eleanor Fox, a trade regulation and antitrust law professor at New York University, told reporters in 2020, “it is hard to know what is.” Yale economist and antitrust scholar Fiona Scott Morton delivered her verdict on the deal in a co-authored 2021 article: “The era of aggressive price competition in wireless is over.” The authors predicted that the wireless industry, whittled down to a big three, would “nestle into a cozy triopoly.”
The prediction proved wrong. Average monthly mobile subscription fees dropped sharply. In the three years before the merger, according to government price data, mobile charges declined in real terms by about 8%. In the three years following the merger, the real price decline has been nearly 12%.
These trends were even more impressive given dramatically improving network performance. Before the merger, the top four U.S. carriers delivered data download speeds averaging about 26 megabits per second, nearly all via 3G or 4G. By early 2023, with 5G deployments spreading, Verizon and AT&T data flowed 24% to 39% faster, while T-Mobile was more than three times as fast as before. T-Mobile’s high-speed coverage had also expanded; half of its connections were via 5G by January 2023, against just 10% to 20% for its rivals.
T-Mobile’s aggressive deployment of the Sprint spectrum rights it had purchased paid dividends in enhanced services for customers.
The Wall Street Journal‘s Editorial Board decries the fact that Lina Khan and other progressives in the Biden administration are pushing their neo-Brandeisian folly into the administration’s trade policy. Two slices:
U.S. Trade Representative Katherine Tai this month explained the Administration’s new anti-trade agenda at a conference on antitrust regulation in Brussels. She said previous Administrations were wrong to promote trade policies that would aid U.S. businesses and consumers by making markets more efficient.
“If we’re only pursuing policies to benefit people as consumers, and those policies are actually impoverishing those people as workers, the entire system doesn’t work,” she lamented. No longer does Washington aim to lower trade barriers and expand American access to foreign markets. It wants trade share and production regulated by governments.
Ms. Khan and her sidekicks torpedoed freer digital trade because they want to make it easier for foreign governments to impose their anti-trade agenda on U.S. businesses. Since they can’t pass their agenda in Congress, they are leaning on foreign governments to do it for them.
Pierre Lemieux reminds us of an eternal economic truth, one often forgotten: “For the consumer, there is one thing worse than a price increase: it is to find no supplier, which is exactly what a price cap and a shortage entail.”
If such a “clean energy transition” were efficient economically, there would be no need for the massive subsidies and other policy favoritism intended to achieve it; market forces would effect the “transition” without Beltway interference. But unconventional energy is very far from efficient, and so the administration has not been interested in an honest cost analysis of these policies.
Biological reality, economic reality. These will always be unpopular among the powerful because they impose strict limits on their utopian schemes, even as their house pundits and academics deny those limits.