App Developers Need Competition, Not Consolidation in the Wireless IndustryJuly 14, 2011
Independent app developers would be harmed by reduced competition in the wireless market. But according to Morgan Reed of the Association for Competitive Technology (ACT), nothing’s going to help independent mobile app developers more than the AT&T/T-Mobile merger–apparently app developers should look forward to the day when the gatekeepers that stand in the way of them and their customers have more power.
ACT’s argument is simple: the merger will lead to better mobile broadband, which app developers need. This ignores something pretty major: today, it’s the smaller players, T-Mobile and Sprint, that offer the most consumer- and app-friendly data plans. Sprint offers real unlimited data and T-Mobile throttles its customers after a a certain point. Throttling isn’t great but it’s sure better than the alternative–being hit with surchages (which both AT&T and Verizon wireless do) or even being cut off from the Internet. Apart from that, both AT&T and Verizon, the two dominant carriers, have a record of blocking apps from even reaching consumers’ phones. A future where there’s one less competitor, and where AT&T is even stronger, would be worse for app developers, not better.
The Merger Would Not Lead to Better Mobile Broadband
The fantasy that a more powerful AT&T would be good for app developers is not the only way that ACT’s argument is flawed. In the first place, there’s no reason to think that T-Mobile’s current customers would get better service under AT&T. T-Mobile has stayed competitive and profitable against larger competitors for years, but this counts for nothing to ACT. For example, Reed writes that T-Mobile is “relying … on outdated technology that is nearing the end of its competitiveness…[which will] deny [app] developers access to the basic resources that our global competitors have.”
He’s referring to the fact that T-Mobile has picked HSPA+ instead of LTE (AT&T’s choice) for its high-speed network technology. There’s a huge PR battle between wireless carrier about whose network is “better.” Customers only care about actual performance, but carriers insist on throwing a bunch of acronyms at them. Who really cares whether LTE or WiMax or HSPA+ is better? When carriers know what they’re doing, “last-generation” technology often performs quite well. According to PC Magazine, today T-Mobile’s network outperforms AT&T’s.
The debate about which new and shiny technology is best is far from settled. As Dominic Rowles of Anite argues, “We must stop the confusion about which technology is going to win; it achieves nothing positive and risks damage to the entire industry.” The fact that Deutsche Telecom (DT), T-Mobile’s parent company, has no plans to deploy LTE in the U.S. doesn’t matter too much. There are a number of ways that it can hang on to its lead over AT&T: If T-Mobile were spun out from DT as an independent company it might “upgrade” its network if necessary, or if company besides AT&T bought T-Mobile it might do the same. DT might even have a change of heart on LTE, or T-Mobiles’ engineers might find a way to squeeze better and better performance out of HSPA+ (which they’d so far done, quite successfully). But according to ACT, it’s LTE or nothing.
AT&T has also been making the self-harming argument that the only way it can improve its network is to buy out T-Mobile—but it has as many possible ways forward as T-Mobile. “More spectrum” is not the only way for AT&T to improve its network and catch up with its competitors. It just happens to be the most convenient way for AT&T. At the end of the day, competition, not consolidation, are more likely to lead to better networks from both AT&T and T-Mobile.
We don’t know what the future holds, and all of the speculation about how T-Mobile’s or AT&T’s network might change for good or bad should not be enough to overcome a simple antitrust analysis: After the merger, the US would be left with only two carriers controlling 80% of the national market. Wireless consumers will be harmed right along with the app developers who want to sell to them.
Independent App Developers Would Be Harmed By Eliminating T-Mobile
The concentrated wireless market already makes it hard for app developers to reach an audience. Both AT&T and Verizon have blocked apps from popular app stores—and giving AT&T more power is a good idea? The best way to make sure that independent app developers can reach an audience to to make it so that a few large carriers don’t have the power to veto their innovations.
Developers of apps and services that are data-hungry–like Spotify, which finally launched in the US today–are already suffering death from a thousand cuts from data caps. Carriers seem intent on defining a standard of “reasonable” use that rules out things like streaming video. (And call me paranoid, but step two will likely be for them to roll out their own house-branded apps that are magically exempt from caps. Wireless carriers fought for a net neutrality exemption for a reason.) The best way to ensure that carriers adopt data plans that are fair to consumers and open to innovation is to increase competition, not lessen it. It’s not a coincedence that the smaller carriers T-Mobile and Sprint, who have to do more to set themselves apart, have not embraced data caps like Verizon and AT&T.
App developers and consumers alike benefit from a competitive wireless marketplace where app developers can reach wireless users through multiple channels, and where data usage policies are set by market forces instead of the whim of a few carriers. App developers shouldn’t buy into a fantastic vision where broadband can only get better by hobbling competition.