Hazlett in Barron's: Gravitational Shift in Wireless
"Regulators may not know it, but telecom competition is alive and well -- without their help," says Professor Thomas Hazlett in an op-ed appearing in Barron's. In it, Hazlett suggests that competition in mobile phones has supplanted competition among networks, and traditional regulators of competition have failed to see the swing in market power away from telecom carriers.
"The regulators know that sales concentration ratios rose substantially from 2000 to 2010, but they have not noticed that retail prices plummeted in the same decade, or that bountiful new services emerged, such as text and multimedia messaging, as well as broadband Internet access via netbooks, e-readers, tablets and smartphones," he explains.
"The fight for mobile subscribers has a new dimension," says Hazlett. "Companies like RIM, Apple, Microsoft and Google, lacking bandwidth or network infrastructure, have entered the mobile sector by contract. They play the carriers against each other. They compete by developing one disruptive innovation after another. They vertically integrate to bring an entire ecosystem along for the ride."
Gravitational Shift, Barron's, March 31, 2012. By Thomas W. Hazlett.
"Competition among the physical networks spins profits out to the virtual networks. Apple's value (from iPhones and iPads) to the wireless industry was estimated in early February at $248 billion -- about 92% of the enterprise value of the entire U.S. mobile-network sector. Apple owns not a single base station or wireless license; it builds no networks. And yet it has emerged, in four short years, as "dominant in the mobile market" -- an unqualified assessment offered by Walter Isaacson in his superb Steve Jobs biography."