Rates in a Consolidated World
You know, if we all live long enough we'll be taking care of our parents they way they took care of us as children. So it goes in the telecom industry, where the Baby Bells have grown to a point where they will now be taking their parents, (the long distance companies) under their care and feeding. SBC is buying AT&T and Verizon is buying MCI and the circle of life will be complete. But what will happen to rates in this re-consolidated industry? Good question and here are some scenarios to consider...
1. With less competition, economics 101 dictates rates will rise.
2. This new industry paradigm will create a rush to gain market share and create an even more competitive industry.
3. The effect of new entrants, VoIP, wireless, satelite and cable companies will render the IXC acquisitions moot, as traditional long distance usage and data traffic dwindle to nearly nothing. And since the Bells are regional monopolists who have relied on tariffs to shelter them from real competition since their birth, they will have no idea how to operate in a competitive environment and these acquisitions will be the beginning of a long slide into the same fate the IXC's suffered.
For now, your guess is as good as ours, but we'll be back with further thoughts as circumstances unfold.
1. With less competition, economics 101 dictates rates will rise.
2. This new industry paradigm will create a rush to gain market share and create an even more competitive industry.
3. The effect of new entrants, VoIP, wireless, satelite and cable companies will render the IXC acquisitions moot, as traditional long distance usage and data traffic dwindle to nearly nothing. And since the Bells are regional monopolists who have relied on tariffs to shelter them from real competition since their birth, they will have no idea how to operate in a competitive environment and these acquisitions will be the beginning of a long slide into the same fate the IXC's suffered.
For now, your guess is as good as ours, but we'll be back with further thoughts as circumstances unfold.
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