As much as cell phones have become one of the most vital must-haves in our society, the mobile industry is continually growing and multiplying their interests. Mobile market analysts believe that cell phone carriers' demands cause the inflation of cell phone monthly rate, and eventually result in cell phone companies' vast profit. There are those Americans that believe the massive growth of cell phone companies will benefit the country’s economy. On the other hand, some Americans say that its extremely demanding industry of mobile market is pressuring the federal government to come up with a resolution that would benefit both cell phone companies and the consumers. With the information from market analysts, alongside the opinions of many involved, the fact of the matter is that there is an impact on every decision made within this mobile market, which will affect the United States in the long run .
As we can tell by the history of the rise and fall of cell phone competition in the United States, we started out with numbers of telephone companies, maintaining a healthy competition. However as time passed by, especially in the case of the original AT&T, it all ended up with one company eating up the rest, achieving absolute control over the market. In this particular instance, the original AT&T was forced to split into seven “Baby Bells,” by the United States Department of Justice in a long-running antitrust suit. While this stimulated a growth in competition and awareness of possibilities within the industry, all but one “Baby Bell,” Bell Atlantic, merged together to recreate the behemoth that was AT&T. Luckily, Bell Atlantic grew to become Verizon Wireless, preserving a sense of competition in a vastly unsaturated mobile market. In the market of today, these four players reign supreme, and because of this they have the ability to affect the market as they please.
The four major companies in the United States, AT&T, Verizon, Sprint, T-Mobile own roughly 90 percent of all the contracts in this country, which means about 270 million Americans their phones with those companies (Wasik). The result of the current market has a history of mergers, which built up this ecosystem where these giants own the greater share in the mobile market. Cell phone mergers emphasize that “combining the two carriers will mean a wireless network that is much stronger than the sum of its parts. There are no other opportunities on the table designed to give consumers a better wireless experience and businesses a more solid platform for innovative growth virtually right away - and without any public subsidies or government help” (Guardino). On the other hand, mergers’ greater share in the mobile market result in fewer choices, higher prices, and often times lower quality of service, of which is already not a forte in the ever aggressive environment that is the U.S. mobile market . In my personal opinion, despite the fact that mergers can be helpful, I believe that it impacts competition in a negative form by limiting the number of viable carriers and potentially hiking prices in a vertical direction. This option affects the market in the United States, again in my opinion, for the worse. One of the various impacts on the consumers is market availability, which right now is realistically in the hands of four carriers for the time being, but as volatile as the market can be, this can change at any point for the better or worse.
In recent events, AT&T raised the price of the ever increasing data user by five dollars within their pricing brackets. While the data bandwidth was also increased, this more or less created an opportunity for AT&T to justify a price hike rather than helping the bottom line consumer and just modifying the plan in place to incorporate these changes without a pricing model change. Following behind AT&T, others look out each other’s rate fluctuations to adjust their prices. For instance, AT&T and Verizon, the two largest mobile providers, originally had an unlimited data segment. As the need for data increased in society, with the popularity of multi-media messaging and social networking, these carriers moved from an unlimited model to a tiered model causing a price fluctuation. Analysts now suggest that the U.S. consumers pay more for wireless service than consumers in just about any other country in the world. to support this claim, Chris Murray, from senior counsel consumers union said, “U.S. consumers pay more for wireless service than other developed nations-an average of $506 each year, higher than the OECD average of $439, and way above countries such as Sweden ($246), Spain ($293), and Germany ($371). Why are the dominant wireless carriers all raising prices? Because doing so is profitable and because they can (cite this)." Addition to that, competitive wireless carriers need “special access” lines which are like on-ramps to the “backbone” of our telecommunications systems. AT&T and Verizon collectively control more than 90% of special access lines, and by some estimates, this market power is being used to generate profits of more than 125% in special access revenue. This broken market will ensure a slowed economic recovery for all but one small sector of our economy. Furthermore, handset exclusivity arrangements worsen the divide between major carriers and competitors, and further concentrate the market. Because of handset exclusivity arrangements, 8 of the 10 most popular smart phones are available to only one carrier. Popular phones, particularly innovative smart phones, drive growth in the market for wireless services, and offer the best chance for wireless carriers to survive and grow. Small carriers lack the market power and the promise of nationwide advertising needed to get the best deals. This is a downward spiral: small carriers cannot get innovative devices, and thus cannot grow, while large carriers get exclusive deals and grow larger.
There are a lot of aspects within the issue of growth of the mobile market that I do not know about and to be able to grasp this topic soundly, I would like to pursue and answer my queries by researching over the course of the semester on questions such as these: How can smaller cell phone companies expand their influence to the likes of the larger-scale companies in the United States in order to create innovation within the mobile market? How can the Federal Government resolve the mobile market dilemmas that already have been presented and moreover prevent potential problems? What are some negative effects that would come out of the competition among the cell phone companies? To find more information about my questions, I would have to do a substantial amount of research at the library, go to websites that deal with such issues, read economic/governmental news articles, and different court cases that involve the issue of the vast growth of the mobile market and the companies involved. This will enable me to widen my scope of knowledge within the mobile market and make educated decisions and assumptions about the market climate based on current events and market trends.
Cell phones have become an essential part of society. Expansion of mobile companies affects our daily lives in many ways such as, the rate of our cell phone bills, and limitation of cell phone functions as much as consumers’ demands rise. Decisions among the mobile companies can be thought of as controversial, as there are always two sides of a coin. Where some see the benefits through actions such as the mergers, others view them as destructive and unbeneficial. With all the facts out in the open, I believe that the situation within the mobile market is a matter of the creation of innovation through means that will grow, rather than deteriorate the current market, but in order to do this we need to consider all possible outcomes due to the wide implications they can bring in the future.