Most Mobile Markets are "Too Cencentrated" With 3 Major Providers

Mobile markets will, over time, tend to feature three leading service providers, history suggests. Looking at the biggest 36 mobile markets globally, Chetan Sharma found that the average Herfindahl-Hirschman Index (HHI)--the test of market concentration also used by the U.S. Justice Department--the typical market ranks 0.344 on the scale.

Developed markets have an HHI of 0.327. The U.S. market HHI is 0.25, between “heavily concentrated” and “moderately concentrated” markets. The U.K. market is the notable exception.

The Justice Department will generally investigate any merger of firms in a market where the HHI exceeds .100 and will very likely challenge any merger if the HHI is greater than .180.

Some would argue that any deal in a market with an HHI over .230 will be heavily scrutinized and most likely rejected.

Sharma found 30 of the 36 markets over that level. The U.S. market has an HHI of about .250.

Supporters of a Sprint deal to acquire T-Mobile US will have to convince antitrust authorities that--despite the HHI--the U.S. market will continue to be dynamic, with the entry of at least two additional national providers, including Dish Network and a consortium of U.S. cable operators lead by Comcast.