Linked by Thom Holwerda on Sun 20th Mar 2011 20:20 UTC
PDAs, Cellphones, Wireless A major deal just went down in the United States, which seriously shakes up the mobile industry on the other side of the pond: AT&T has announced it plans to buy T-Mobile USA from Deutsche Telekom.
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RE[2]: Invisible hand
by molnarcs on Mon 21st Mar 2011 12:58 UTC in reply to "RE: Invisible hand"
Member since:

I don't want the government running business, explicitly or implicitly - that's worse than a business monopoly IMHO.

Although I agree, I have an interesting counter-example. In Vietnam, there are about 6 or 7 carriers. The two largest are state owned (VinaPhone, MobiPhone), while the third largest is owned by the army. Another small one is owned by the secret service (yeah, I'm not joking! you can buy cellphones directly from the secret service around here).

Now the interesting thing is that these three companies are at each others throats! Competition is so fierce, the prices have been dropping steadily in the past few years. In fact, the government had to intervene (just issued a new decree last year) because they were so busy undercutting each others prices, that smaller carriers could not compete (ie they can't afford to run at a loss for a few weeks like the major ones). They have dirt cheap pay-as-you go packages, and almost every month they have days when you can recharge your phone and get double the value (pay 100.000 VND and get 200.000 for example). 100.000 VND is about $5, that basically lasts for about a month. You can use 2g with data (GPRS optional), 3g + data (HDSPA), and the latter is so cheap, that now I know people who switched from ADSL at their homes to 3g (via tethering).

How they do it? Well, despite the fact that they are owned by the state (plus one by the army, one by the secret service), they are run like a real business - ie the government won't help them if they fail in the market - so they must produce profit, must grow their customer base and retain them, in other words, they must compete just like any other company. And despite the fact that the owner is the same (in case of VinaPhone and MobiFone)they have their own, completely independent management, CEOs, etc.

edit> forgot to add - one of the major ISPs (FPT telecom) is also state owned. So now they are in fierce competition with VinaPhone and MobiFone (+ Viettel, the army owned one) for a share of the Internet market. The cellphone companies are selling cheap 3G sticks for mobile internet, pay-as-you go or on contract (in which case, they throw a free netbook at you).

Edited 2011-03-21 13:04 UTC

Reply Parent Score: 2

RE[3]: Invisible hand
by ricegf on Mon 21st Mar 2011 17:46 in reply to "RE[2]: Invisible hand"
ricegf Member since:

That's interesting, but I don't see the value in the government owning these telecom companies. Can you elaborate?

I "get" private / corporate ownership of telecom companies with the government as referee (strong consumer protection and management of public resources such as frequency allocation, and ensuring no monopoly abuses against competitors), but that may be cultural predisposition. Having government own the corporations seems like a conflict of interest with it's duty to regulate.

I'd love to learn more, though.

Reply Parent Score: 2

RE[4]: Invisible hand
by molnarcs on Mon 21st Mar 2011 18:55 in reply to "RE[3]: Invisible hand"
molnarcs Member since:

Yeah, I was a bit surprised about this - have no idea what is their interest in this at all. It might be a cultural thing. Vietnamese are competitive and have a very keen business sense. Every single family I know has some sort of business. Thanks to the fierce competition, these companies might work on pretty low margins - so it's not like the government can reap lots of profits or something.

It might be a strategic decision, part of opening up the economy and politics. Perhaps they didn't attract enough capital at the beginning, so they invested in this area. I know that IT and telecommunications is regarded as a strategic area for the country's development goals. Internet penetration is high, even in remote villages I saw internet cafes and "GameOnline" places... I'm especially puzzled by the Army running a telecom service in a free market economy (so it's not like they are the only players, controlling what people can or can't do). Anyway, I don't really have an answer to your question - some things around here defy traditional logic ;)

Reply Parent Score: 2

RE[4]: Invisible hand
by spiderman on Mon 21st Mar 2011 19:19 in reply to "RE[3]: Invisible hand"
spiderman Member since:

I don't think there is any conflict of interest in principle. They recognize that competition is stimulating. The advantage of having the government own the carriers is that the profits don't go through the hand of local and foreign parasites (share holders). The profits can be used to serve the population instead.
Actually, I see a conflict of interest in corporations run by private share holders. Their interest is in direct conflict with the company (both the consumers and the workers). Their only interest is to make money, with the company or elsewhere.

Reply Parent Score: 2