Mobile Price War Expected in 2014: Butler

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Dec. 6 (Bloomberg) –- Telecom Equipment and SVC Senior Analyst John Butler discusses mobile pricing plans and carriers moving away from the phone subsidy model. He speaks with Stephanie Ruhle on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

Live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle.

Welcome back.

And washington, budget negotiators will work for the weekend trying to cut a deal to avoid an new government shutdown in new year.

They avoiding tough issues, but in even in narrow agreement is coming under fire.

Peter cook has more on the state of play.

More gridlock or finally some dealmaking?

How legitimate is it?

You are particularly fatigued over this.

It is some dealmaking, but is small dealmaking.

Negotiators are getting close.

Patty murray and paul ryan are on the path to a deal.

They still have differences here.

The bigger question is, can whatever agreement these to come up with pass muster with their collective colleagues?

They will be at it this weekend and communicating with their staffs.

The deadline is next friday, december 13. the real deadline is january 15. that is when the government runs out of money.

The key component of the deal, is that spending levels will replace the automatic spending cuts.

Savings in other areas and some new revenue would not involve any tax increases or major entitlement reforms.

None of those big-ticket items.

Even the smaller deal is proving to be a challenge right now.

It just seems like every thought that we have had on this set says that we have to have entitlement reform.

If those issues are not on the table, what is the point of this?

The only point is to provide some certainty in the short term.

There is a case that we made here, a lot of people are skeptical of.

If they can reach the smaller deal in one or two years, maybe that gives a comfort zone or some opportunity to strike a larger deal.

They will not cut a grand bargain.

Certainly with the election coming up, no way they won't mess with entitlements.

If that is the case, then a small deal loan may be an option.

At least something they could build off of.

How do you think the tea party will build on this?

They will not like some things in this.

There are some things in here that not everyone likes.

There talking about an aviation can -- security fee.

That is one issue.

Airlines do not like it, but a lot of conservatives and democrats think that is not the right way to approach it.

They are talking about tightening entitlement programs.

Democrats, particularly locally, do not like that.

They are also talking about the democrats wanting to extend unemployment benefits.

That will be about $25 million.

Nancy pelosi said this would be a deal killer.

She backed off of that a little bit.

With this jobs report, there will be questions.

Is it necessary to extend those again?

That just makes me wonder, how much hard work has to be done on the democratic side?

The easy conclusion to jump to is that paul ryan has to get the tea party on board.

Patty murray has her work cut out for her.

She does.

It is notable that paul ryan met with the study committee yesterday.

He asked to bring with him -- he will get most of the republican congress.

Democrats here are not happy about some aspects.

The federal workers are at big issue.

Unemployment is a big issue.

Will they get those votes.

At the end of the day, the sense i get is that they will get a deal.

It could be announced next week.

Thank you so much for joining us.

Peter cook, our chief washington correspondent.

When we come back, at&t jumps on the no contract bandwagon.

All you need is to own your own mobilephone.

That is next.

You are watching bloomberg tv.

We are streaming live on your phone, tablet, and bloomberg.com.

? you are watching "market makers." a new ceo takes over at time warner cable next month.

He has worked his way up to chief operating officer.

His biggest decision may be to sell time warner cable and find his way out of a job.

Unless his current job doesn't first.

Rob gave us the next lucid interview this week.

He comes to us from san francisco this morning.

He does not strike me as the world's most modest man.

He thinks he is the right guy for this job.

There is no doubt about that.

He came right out and told me, i do not mean to be in modest, but i am the guy for this situation.

For those who have not been following this, time warner has been a speculative target for charter communications.

They are the fourth largest u.s. cable company.

In recent weeks, because charter has been out there with their bid to acquire time warner cable, comcast -- the largest company, and cox, the third- largest company, has said let's take a look at this.

Time warner has a roach to both of those companies.

There was mutual interest.

Definitely charter is the most aggressive, but it is a situation where rob marcus will probably be juggling potential buyers.

He has a background in an and eight.

-- m&a. he thinks he is the right guy to get maximum value for time warner cable if you decide to sell.

That brings me to the question.

What signal is he trying to send by saying things like i am the perfect guy to manage the m&a component out there?

Is he saying i am the guy to get the right price or that this company is on the table and you have to negotiate with me?

One thing he is not saying is that this company is not for sale.

He easily could say that.

The fact that he is not saying that means that it is for sale.

The idea is that you have to negotiate and i will get the highest price pop -- possible.

They offered and at market, no premium for the deal, at market price -- rob is saying that will not cut it.

You'll have to offer premium to get this deal done.

What makes this a curious situation is that time warner cable's stock has gone up so much in the past few months that a lot of the premium is -- it makes it more difficult when the stock is trading higher.

It is around $130 per share.

It is not attractive anymore.

So many of the things that he told you struck me.

None more than this.

A direct quote -- if i want another job, i will get one.

I have no doubt and it will be a good one.

What message is he trying to send their?

The idea is that he had not come out and said anything about whether he is dead set on running this company.

It is an odd situation for him.

He himself called it weird.

He is taking over on january 1. even if he did not want to, the company is up for sale.

Turner's trying to buy it, either in a friendly way or hostile way.

He is saying that he will not let his own vision as a ceo stand in the way.

Do not think that for one second, because it is my time, it will maximize -- it will stop me from maximizing value.

If the deal comes along that i find attractive, do not worry about me.

He gets a 50 million plus payout package.

He will be ok.

I was going to say, not going to be too painful for him if that happens.

Thank you very much.

A great interview with the incoming ceo.

That is down san francisco.

A $50 million payout package.

He does not need to worry about his cell phone bills.

At&t is taking on t-mobile with a new contract free pricing plan.

It is designed to save customers money on their monthly bill.

The question is, what is behind this pricing strategy?

I'm going to bring in john butler.

He is an analyst here at bloomberg.

When i look at this, it makes me think, are we entering into a mobile price war?

We are.

2014 is the year where the gloves come off.

Particularly, we sell bank buying sprint.

They have a history in japan of winning a from large incumbents.

They do aggressive pricing.

T-mobile kind of beat them to the punch.

If you look at their plan, 2.5 gigabits per month.

You bring your own phone to the plan and you pay $60 per month.

At&t just went from 95 to 80. the elephant blanks.

I am not sure if linked hard enough.

Is the goal here that they do not want to be subsidizing new phones?

There is something inappropriate one.

Subsidizing the phones has been very hard on carrier margins.

They would like to see the subsidies go away.

We have seen the advent of these new plants where you can finance your phone over a two-year.

-- period.

You can say i won a month-to- month contract.

There are a lot of different options.

The characters are getting away from that subsidy model very slowly to my but surely.

Are they doing it to attract a demographic?

It seems like a spring move.

It is kind of a sprint move.

They have been aggressive in price.

The type of company that does customer that they are attracting away from at&t has been a single, possibly unemployed, unmarried -- not on a family plan.

The gains by t-mobile have been tremendous.

It really has rattled at&t. i want to talk about apple.

They had struck a deal with china mobile.

What is your take on that?

That is the report.

Nothing is official.

If it is true, it is big for apple.

Why?

They have lost so much share in china.

Their upgrades recently have been meaningless to the chinese.

The chinese have an older, three g data network.

Apple has been upgrading to these 4g phones and it is not compelling enough for people to step up and say more -- pay more.

We have seen more vendors in china, names that we have never heard of, come in and win a lot of share from apple.

This could be a big deal.

China mobile is the largest mobile carrier in the world.

It could give them a great lay and run in.

Apple wins again.

Thank you so much for joining us.

Our own senior analyst at bloomberg industries.

When we come back, secrets of the all-star money managers.

We have the next steps for next year.

That is next.

Stay with us.

? all come back.

We may have gotten a stronger than expected jobs report this morning, but as long as wages do not pick up, the economy is stuck in second year.

We are going to revisit the golden age of the 1950s. even eric schatzker was not born yet.

Our own scarlet fu is here to highlight some of the most iconic brands.

Who did the research?

Tom keene?

He left that era.

Marketing reached a new fever pitch.

A couple of the companies are still around.

Dunkin' donuts is among them.

That is very much a northeast coast grand.

It is only making its foray into california now.

Dunkin' donuts is there, sonic -- the burger and shake place.

It was around in the 50s? and guitar center made its start.

Trader joe's? it was actually called pronto markets originally.

And the owner switched gears to make it more affordable.

He stopped -- he stopped the room with these shirts.

What has really become the most iconic brands?

A lot of brands have really a vault.

Like the williams sonoma story.

It was begun by a building contractor named chuck williams.

He went to paris and discovered omelette pans that you could not find the united states.

He opened his own store in california.

It sounds really high-end.

I love my vita mix.

Eric loves his.

You love your souffle pan.

They are struggling now with the other retailers.

They have fallen victim to show rimming.

-- rimming.

-- rooming.

Other retailers are selling the same things for cheaper.

Thank you so much.

A walk down memory lane.

Meantime, the stock market is on a tear in 2013. the bull run continues today.

Will it continue next year?

If it does not, where the will investors put their money?

They reveal the best bets for making big toe in the latest edition of the magazine.

Julie hyman is here with more.

Let's start with john burbank.

Big beard -- we have to talk about why we want to know why he thinks.

He has a 19% annual average.

So, he had a valuation.

He thinks that tec has been underappreciated.

He lives in san francisco.

Certainly some areas of text do not suffer from being underappreciated.

He thinks that internet firms in the u.s. -- he thinks that china, because of protect ionism and in japan because of the peculiarities of the culture.

He says that health care is trickier.

There will be advantages from obamacare.

There will the hospital payouts that could be a risk.

He also likes gold.

He tends to come back to gold.

The price could rally 20% to 30% in 2014. still stuck.

Another guy from fidelity -- they do not talk very often.

He manages a biotech firm over there.

He is looking down.

He says to beware of the bubble.

I am into that headshot there.

He says there is a risk of a bubble.

He says to target drugs.

A lot of them are targeted to a specific population.

People do not have a choice.

The drug will treat a particular illness.

It is not something that people can rip off.

He talks about writing the innovators.

Also, profits from generics.

That is the other big theme.

You know me.

I am a fixed income junkie.

Eric likes to call me credit girl.

I am a bond girl.

I think we need to get you a superhero costume.

One big font manager.

We talked to someone who used to manage the bond fund.

An 11% average going back a few years or so.

She says that there is no fixed income sector.

Just illustrating the challenges in fixed income right now.

If there is an area, she likes telecom.

There has been a lot of consolidation there.

She likes investment rates.

They are just so tight at this point.

You might like them, but if you are managing insurance money, you might like those sec there's. you might like the names, but where will i get returns?

That is why she says there is no table by.

She also says, no suppress, stay away from treasuries.

I do not know if anyone is talking about filing its treasuries.

Thank you very much.

Three picks if you well.

Let's look at what is happening right now.

We are approaching 56 past the hour.

It is time for on the markets.

We will give you a snapshot is what is happening with the broad indices.

Stocks are having their best day in months.

They are up 8/10 of a percent.

Same thing with the dow.

People are very encouraged by the job numbers.

That is totally counterintuitive.

Every piece of data that we have seen has caused the market to go down.

Investors jump to the conclusion.

They thought the said would taper faster.

I do not want to talk to anyone.

I want to go by individual names.

Sears is actually rising.

The division i like most -- lands end.

Eddie lampert has not had a good year.

We will be back in a few minutes.

We will be talking about the ebay that you have never seen before.

We will talk about how they became a technological giant.

? . .

This text has been automatically generated. It may not be 100% accurate.

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