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Tuesday, February 15, 2005


More Merger Talk

There are some small problems with the recent merger between Verizon and MCI, as well as last month's SBC buying AT&T. I have heard that we're getting closer to raising our telecom companies to regional monopolies. Yes, these companies are large, but in this age they have to be. The high overhead involved in cell phone networking (maintence costs, etc.), as well as the cost of cell towers, means that very few small businesses can carve out a portion of the market. With the advent of VoIP, though, more companies can compete. The costs of VoIP does not include large and expensive cell towers, instead the service relies upon existing broadband access. Verizon is set to dominate the market early on, but I know that my local cable company is offering VoIP. Many other smaller companies are beginning to emerge in this soon to be very competitive market.

The monopoly claims are baseless, there are many national networks that offer cheap telephone service. Although I cannot speak of their reliability, I know that most of these companies offer service for as little as ten dollars. Some companies entering the wireless market, such as Virgin, have yet to set up a network of their own, and instead have rented access to the Sprint network. This isn't a bad idea, and if the renting of access by smaller companies gains any headway, the cost of entering a wireless network will go down a small ammount (a decrease in costs of around 5%). The model that Virgin has used is relatively innovative, yet when I was on their network, I couldn't help but think I was being overcharged for a prepaid plan. But that is of course personal preference. So there's no monopoly. I wonder what all of these negative people are going to latch on to next? Not Social Security, I would bet.


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