This week the biggest news was from the Mergers and Acquisition front. But before we get to that, I want to talk about Verizon.
This week Verizon announced they are going to limit the bandwidth of heavy users on congested cell sites. I think this is much ado about nothing. Verizon has to do something to slow down folks on overloaded equipment. They have chosen an algorithm that makes some sense. Heavy users are getting the most from the service, so the lighter users are more likely to be done soon. At that point, having these users stop using bandwidth might allow other users to get the bandwidth they paid for.
Which bring us back to one thing that may or not be clear about Internet Service. The network was originally designed for transactional services like web surfing and E-mail. There is generally a lot of time between clicks so that other customers get to take advantage of that bandwidth when you are reading. In setups with streaming, your use of bandwidth goes up over the long term. It is less bursty and more steady. What this means is that there are fewer empty places to burst traffic to other users. You can see why video streaming is such a problem for this network.
Now to the M&A front. The Sprint and T-mobile merger is officially dead. That might be good news and it might be bad news. From a purely theoretical standpoint, we still have 4 national wireless carriers and that should keep pricing better for consumers. The challenge is to keep 4 national competitors viable. So far, it is not apparent that more than 3 will actually be able to maintain a presence. On top of this, Sprint’s CEO got booted. T-Mobile has been making a lot of changes and moves in the market. They seem to be on a bit of an upswing. Sprint on the other hand looks to be in a mess. The “Framily” plan seems like a nice idea, but the commercials for that service are just awful.
I want to add one contrast to this with the proposed merger of Time Warner Cable and Comcast. Cable companies operate in local markets and to date have not overbuilt each other. This means consumers were offered service from either Comcast or Time Warner but not both. That is a very different situation with Sprint and T-Mobile which have a lot of network overlap. There are other potential issues with Time Warner and Comcast but consumer choice is not one of them.
Have a great weekend everyone!
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