Thursday, September 1, 2011

We Need A Better Metaphor

Caption: Replicators. They're relentless, they reassemble themselves, and they never quite go away. Kinda like some monopolies...

Image credit: See NOTE below

In retrospect, the Death Star was such an inappropriate metaphor. Stargate SG-1 provided a much better one:
The U.S. Department of Justice has filed a lawsuit to block AT&T from acquiring mobile competitor T-Mobile USA, with the agency saying the $39 billion merger deal would significantly reduce competition, jack up prices and stifle innovation.

The DOJ lawsuit, filed Wednesday in U.S. District Court for the District of Columbia, points to T-Mobile USA's role as a low-cost competitor to the three other nationwide mobile carriers as a reason to block the deal.

Justice Department Wants AT&T, T-Mobile Merger Blocked
Apparently, there is an upper bound to how big a telecommunications monopoly can get, and AT&T has passed it. I doubt it's going to stop them for very long, though. As the title of that article implies, stopping AT&T from consuming more of the market is anything but a slam dunk, even for the federal government.

One of the central ironies of this case, at least for those of us whose memories go back to the 1970s, is that this potential merger is just the latest step in a long retrenchment from the last time the U.S. Department of Justice thought that AT&T had gotten too big:
The Bell System divestiture, or the breakup of AT&T, was initiated by the filing in 1974 by the U.S. Department of Justice of an antitrust lawsuit against AT&T.[1] The case, United States v. AT&T, led to a settlement finalized on January 8, 1982, under which "Bell System" agreed to divest its local exchange service operating companies, in return for a chance to go into the computer business, AT&T Computer Systems. Effective January 1, 1984, AT&T's local operations were split into seven independent Regional Holding Companies, also known as Regional Bell Operating Companies (RBOCs), or "Baby Bells". Afterwards, AT&T, reduced in value by approximately 70%, continued to operate all of its long-distance services, although in the ensuing years it lost portions of its market share to competitors such as MCI and Sprint.

Wikipedia: Belly System Divestiture

In short, the DoJ administered a magnum load of legal buckshot to the telecom monopoly, and we had a "free market" again.

As this Nyquist Capital article shows, AT&T's telecom holdings have been gradually reassembling ever since. That chart shows where things were in 2006. Since then, at least one other merger has happened, CenturyTel and Qwest.

You can also see from the 2006 chart that in the mid-1990s AT&T started divesting itself of many of the parts of its business that aren't directly related to telecom, like chip designer Lucent and broadband giant Comcast (strictly speaking, it sold its broadband component to Comcast). In business-speak, thanks to losing Lucent and Agere, AT&T is less "vertically integrated", meaning that it now depends on outside suppliers for things it used to develop in-house, and it's a bit less diversified thanks to dropping broadband and the computer-related stuff it sold to NCR.

Looking carefully at the chart, and noting what's happened since, the thing that strikes me is that, just like the replicators, the little pieces of the old AT&T are putting themselves back together. They're not doing this as some centrally-directed entity, but as independent bits that slowly assemble themselves into bigger bits.

So, long story short, they're slowly getting the band back together. But that's a different metaphor, isn't it?

OK, so I suppose the best way to end this is to say that I hope the DoJ remembered to bring lots of ammunition, and whoever they have in the Solicitor General's office whose legal skills are most analogous to Sam Carter's alpha geek status ...

NOTE: All images in this article are screenshots taken by Cujo359 of the Stargate SG-1 episode "Nemesis". The makers of this television show did not contribute to, approve, nor in any way associate themselves with this article.

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