Carrier Wars Not for the Faint-Hearted: Dorman

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Jan. 15 (Bloomberg) –- Former AT&T Chairman and CEO Dave Dorman discusses the smartphone wars and whether Apple has lost its luster. He speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "Market Makers." (Source: Bloomberg TV India)

Is either 100% of people have phones or you are counting some people twice.

There are certainly some people who don't, but we are close.

The wars are driven by the need to take customers from someone else versus getting someone who's getting their phone for the first time.

It's great for the customers because the rate -- the race help us get cheaper service.

I think competition is being driven by a variety of factors.

First of all, scale required today to compete, the bout of spectrum the need and capital that needs to be spent is huge.

This is not for the faint hearted.

I would imagine at&t and verizon each are probably spending between $15 billion and $20 billion a year investing in their network.

T-mobile and sprint are investing billions as well.

This is a serious race.

The ceo of at&t has been lulled into this race to the bottom with t-mobile.

How long can i continue before somebody runs out of a looks?

There are a couple of things that play.

Device subsidies which are unique to the u.s. market.

The problem is you can't take the candy away from the children now because they are hooked on it.

You stay on it for x years and get a subsidized phone, that has been very attractive.

The fact that these changes are happening so quickly and devices are advancing, no one stays with a phone that long.

All the carriers would like to wean them off.

I think t-mobile is kind of interesting.

Dan has see who runs sprint works for at&t -- worked for at&t. don ledger who runs t-mobile work for at&t. any have at&t and verizon -- lowell mcadam was at pacbell.

It's not like these people came from foreign lands to meet each other.

They're all fighting ground they are familiar with using different techniques.

But right now, they are crossing rubicon's no one in the wireless industry dream they would have to cross.

If t-mobile -- sprint has some deep pockets because softbank is behind them.

T-mobile can be bought by sprint, can they continue on this path without bankrupting itself?

There are a couple of questions.

T-mobile wanted to sell itself to at&t but it was stopped.

What you telekom signaled a willingness to sell.

They had a price they were happy with and they would prefer not to continue to invest in the u.s. versus other markets they could choose.

T-mobile made a decision and today, we are in a situation where can the government back up from the decision it made which was the whole record around t- mobile and at&t being not allowed was for 23 is bad.

At&t is a bigger company.

The record was about the structure of the market, not who was big and not big.

Do we say now that three roughly the same size is ok?

I think that is a hard case to make.

I think that the government policymakers should avoid picking winners and losers in industrial policies in deciding who the players are and how they should lay.

We are a free market and we should let the free market work as much as possible.

Look at the device manufacturing.

Is anyone telling apple what they can do?

But you say device -- i have to ask, what's the future for my beloved blackberry?

You better go buy five of them and put them in a drawer.

There's nothing left?

Lex the pool truth is if you would back six years as we were talking off-camera, the biggest names in devices were lack berry, nokia and motorola.

Today, where is nokia's smartphone in the u.s.? blackberry failed to change its destiny with the 10. and motorola is now owned by google.

The three biggest names are gone and you have apple, samsung and other players.

I think it is very difficult to recover.

Blackberry has a very strong following for business e-mail users.

When you get into a broader function device, they don't hold up.

Can you look into the future and see who's going to win the device work?

I would not bet against apple or samsung both being there.

Having said that, when i joined the motorola board and was chairman for four years, the razor had sold -- that takes me back.

It was terrific and nobody would have predicted three g happened and motorola didn't have a product and apple would launch it.

Very few people know that when ed zander was ceo of motorola, he and steve jobs met frequently and agreed to launch a product which had an apple ipod in a motorola phone.

I have been told, i wasn't in the meeting, but after one of those meetings, steve jobs look at his people and said these guys are hard to deal with.

Why don't we just put a phone in it?

How hard would that be.

The rest is 500 billion in market cap and hundreds of millions of phones will stop that was the era of steve jobs.

Has apple lost its groove?

Many of us said this looks like an apple products, the nest is an apple guy -- they have talked a lot about tv.

We've heard about apple tv for a long time.

That's an area that supports their ecosystem which is content distribution.

Nest to me makes more sense for google.

Let's face it, we get a lot of information from our nest.

I know what the temperature ours are and what the profile is.

If you had to bet on one company, the information company , the cloud company, the hardware manufacturer or designer that makes us live in walled gardens, which one would it be?

Look at the margins, over the last five years, no one has made that kind of money apple has made in the device business.

I had a debate with a guy similar to this last year.

I don't care how good you are, the pace of innovation required for apple to maintain its lead in margins is a tall order.

Think about ibm going in the gross business -- their business was based on the margins of their mainframes.

In apple, the business is based on the margins of the iphone, ipad and other devices.

They've built some other interesting stuff -- they don't want to turn into ibm.

The pace of innovation is way faster than mainframe computers.

More people are talking about the internet of things.

We were talking about the wireless worsen the carrier perspective.

If you are a carrier, are you going to fight phone by phone for every dollar you get or are you going to innovate and create new products?

We're at the dawn of a major sea change in what the carrier is going to be offering.

It's going to open the door and it will certainly be appealed for a new growth and video programming product distributed through devices and carrier networks.

I think it's driven with the four g networks they are deploying, their access to wi-fi on these devices, and the fact that devices can store more and operate faster at faster processor speeds and digital home -- at&t launched a product called digital life.

The cable companies are doing the same thing.

You will see a whole new set of applications built on these platforms.

To your point about google, i think google is in a terrific position.

They launched android and took more than half the market in an incredibly short time.

Maybe steve ballmer would like to have had that.

Google -- when you become a

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


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