Applying HHI in a Triple-Play Merger Context Will be Complicated

The next antitrust review involving any of the larger fixed network providers will provide a challenge, as the evolution of the business into a triple-play business means internet accounts, video accounts and, to some extent, voice accounts. Under such conditions, figuring out the actual market share, or household reach, will involve a bit of work, across the three key service silos.

In the fixed networks business, antitrust reviews have included a number of tools, such as the Heffindahl-Hirshman Index (HHI). But, up to this point, regulators and antitrust officials might not have had to deal with the complexities of an industry that sells multiple products (internet access, entertainment video, voice), with different households buying different mixes of those products.

Also, the video entertainment share analysis is complicated by the significant presence of one independent satellite provider, though the biggest satellite provider now is owned by AT&T.

As a rough rule of thumb, past proposed horizontal cable TV mergers have used a 30-percent test: no single proposed entity could have market share of more than about 30 percent of U.S. accounts, or have networks passing more than about 30 percent of U.S. homes.

Those rules are applied differently in the mobile business, as national reach of the population is not the issue, but rather actual account share.

Some day, it might be even harder, as the difference between the mobile and fixed industry segments might blur quite a lot.

For the moment, the HHI remains a huge barrier for many of the trial balloon mega-mergers being floated.
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