AT&T CEO on Competition

Communications policy always is political and always has industrial policy ramifications. That is why one hears so much talk about who is "ahead" and who is "behind" in 5G. Much of that concern is industrial policy, focused on which industries, in which countries and regions, can gain leadership in infrastructure supply; applications; content or platforms. 

Private telcos and internet service providers generally, and incumbents always, loathe government-owned networks that, by definition, erode communications markets. For firms that are publicly traded equities, opposing the expansion of such competition has a genuine fiduciary duty obligation, one might note. 

The public networks business is a scale affair, made more difficult in the competitive era for many logical reasons, ranging from stranded assets to tougher growth prospects to slimmer profit margins. 

The migration of value away from "access and transport" and towards applications, services and content made possible by the internet does not help either. 

National policymakers always seem to want robust investment, quality services and low prices. Up to a point, competition tends to help. Past a certain point, with excessive competition, investment, quality and prices all suffer, as the network business model cannot be sustained. 

The balance policymakers must seek is to balance competition with sustainability. Nowhere in the world has it been possible to sustain many competitors serving the mass market using fixed facilities. 

Mobile markets have been the exception in allowing three facilities-based providers to sustain themselves. In some markets perhaps four can survive. 

The point is that nobody has yet discovered a way to sustain many suppliers, over the long term, and still obtain the benefits of competition (high rates of investment, high innovation and lower prices). 

In most markets there is rarely sustainable competition between two national, facilities-based mass market fixed network telcos. Mobile has done better, in that regard. 

We might not like all their policy positions, but firms such as AT&T understand the economics of their businesses quite well. Competition does reduce gross revenue and profits. Up to a point that is not a problem. At some point, excessive competition destroys the market.