Will the Wireless Industry Continue to Change?

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Feb. 7 (Bloomberg) -- Helpful Executives-In-Reach at Rutgers Business School Denny Strigl examines redefining the wireless landscape with Erik Schatzker on Bloomberg Television's “Market Makers.” (Source: Bloomberg)

By helping people understand just how much has changed in the telecommunications industry in the last five to 10 years.

You got into it around the time that the biggest change was happening.

The breakup of ma bell in 1984. this really took fire in 2007 and the advent of the iphone.

There was a forecast very early on in the industry that there would only be 900,000 customers of wireless products.

Now we have far exceeded that.

The growth that we have is phenomenal.

Our expectation is that will begin to continue to grow.

This industry has changed so much.

There are fewer competitors in the united states.

If you look around the world, there are still tons of competitors.

Even with the four major competitors we have in our country, and continues to be a very competitive industry.

How good is the business model in america?

Or some of the real pioneers like japan?

The market here is based on average revenue per customer.

If you look at the penetration rates in the united states, some would say we are more 100% penetrated.

Every person in the united states has a phone or some people have two or three.

When we can -- are you a multidevice guy?

My wife and my five kids are.

That all goes into the equation of how we determine an attrition.

It is fantastic here in the unit states.

We continue to have good growth rates.

It is a very good, healthy industry.

Those who complain that they have to subsidize the purchase of the phone in order to get people to sign up, they should not be complaining?

We have been doing this since 1984. so what?

There are still plenty of money to be made.

If you look at margins, there are some as high as over 40%. is there a case to be made that the american wireless industry would be better off if you had to do what you have to do in europe which is by the phone?

I don't think so.

It is just a different model.

You get to the same and equation.

Sure, there are some who argue that if you have customers pay full price for the handset that is healthier.

I go back to the point that this is a healthy industry anyway.

You mentioned that there are fewer competitors in this country than there are in other parts of the world.

There may be even fewer if one transaction takes place.

I am talking about the potential consolidation of sprint and t-mobile.

At&t tried to buy t-mobile.

Her steve alessi is sitting right inside me.

T-mobile has been a target for a long time.

Bring us up to speed on exactly where this stands.

I am happy to ring our viewers up to speed.

T-mobile and sprint with softbank are making a massive er plush in washington.

They want to get consumer advocates on board.

They were to get politicians on board.

They know the justice department does not like the idea of further consolidation.

The justice department says it will hurt customers.

The justice department stopped the deal between at&t and t-mobile, t-mobile has been successful in driving the price war going on.

If you look at the margins, t-mobile is at 19%. if you look at verizon and at&t, they are at 40 or 50%. they are undercutting their competitors.

They are successful at it.

They have had the most market share gains in the last three quarters.

They are being successful.

It is hard to argue that consolidation is good for the consumer.

Have you ever seen an executive like the ceo of t-mobile?

We have plenty of good executives in this industry.

T-mobile is very tough.

They are doing very well.

That growth rate is a smaller base of customers to begin with.


For a long time they had been losing subscribers.

In this industry, there are ups and downs all the time.

The fact that we have t-mobile going at a very -- fast rate, that is nothing new.

Largely, they have not changed.

There is no up and down on that.

On growth from one competitor to another, it changes quarter to quarter.

On the margin front, it is very clear.

Maybe the market -- when you think of what it takes to run a wireless company, if you look at at&t and verizon, it is costly to run this business.

You are running 50% margins, where else is that happening?

T-mobile has shaken up the industry.

Is the idea of being a celebrity ceo, some people mock him and some celebrate him, is he doing any favors for his shareholders.

? at the end of the day it is management's job to get the highest price for the stock.

His antics and the price-cutting that he is doing has brought plaudits from the justice department.

They said this is evidence why no further consolidation is needed.

If that is the case, he is but a hammer on the potential combination of sprint and t-mobile.

That is not good for t-mobile's shareholders.

I don't agree with that statement.

Going back to the history of the industry, we have seen plenty of active growth periods that come with essentially stealing customers or lowering prices to the point that they are not profitable.

The key for this industry has been that when you want to sell your company, the way to do it is to pile customers on.

You let the next guy make money.

To that degree he is successful?

What you described sounds like what many companies in the wireless industry have done over years and years.

We have fallen behind when it comes to our systems.

The infrastructure in europe is actually getting better after years of decline.

Is that a source of strife in the industry?

What has happened in europe, there's been a lot of discussion about the strength of the european wireless market.

The strongest market is in the united states right here.

Catching up, i don't believe that.

If anybody is catching up, it is the european market with us.

Do you think the justice department will let sprint and t-mobile combined?

If that happens, how might it affect the industry?

I don't think this justice department will allow it.

The way this works in the industry is when there are acquisitions made, the justice department gets involved and there are requests to shed customers and sell to somebody else where there is a monopoly type market share.

I know you will love this irony, sprint came in and said it is not possible.

We need an independent t-mobile out there for the consumer sake.

It is a competitive it industry -- competitive industry.

Is what is good for the goose good for the gander?

If that was going to reduce competition wouldn't it reduce cap edition now?

I have a much different view.

At&t should have been permitted to purchase t-mobile.

There is no reason in the world why sprint and t-mobile should not be able to get together.

I just don't see that.

The industry is so strongly competitive.

T-mobile independently a striking a price war.

They are undercutting and serving the market as being theun-carrier.

It seems to be working.

Cutting prices is not a long-term strategy.

That is a short-term strategy.

You cannot do that forever in this industry.

You have to build the indexed -- infrastructure you need.

You should go to washington.

T-mobile is being

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


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