Economics at the FCC, 2013–2014

Collaborate or Consolidate: Assessing the Competitive Effects of Production Joint Ventures

“…According to the applicants, one partner would focus on expanding its GSM‐based wireless network, whereas the other would maintain a CDMA‐based network (ACS ). By way of comparison, when AT&T acquired rival Leap while continuing to maintain its separate Cricket brand in 2014, it forced customers to transition from Leap's CDMA‐based network to AT&T's GSM‐based one (Baker et al ). Such a cost‐reducing transition would not have been feasible in the Alaskan JV because the partners continued to serve their own downstream wireless customers.…”

“…Examples of network sharing have included the Cornerstone and MBNL 50‐50 joint ventures (JVs) between major European operators. Such arrangements have been observed less commonly in the United States, with the notable exception of a scrutinized and approved 2013 JV between the two major Alaskan‐based mobile wireless providers, GCI and ACS Wireless, who perhaps fearing that a merger between them would be disallowed due to the presence of only one major competitor (AT&T) opted to combine their upstream assets instead (Baker et al )…”

“…4 Examples of network sharing have included the Cornerstone and MBNL 50-50 joint ventures (JVs) between major European operators. Such arrangements have been observed less commonly in the United States, with the notable exception of a scrutinized and approved 2013 JV between the two major Alaskan-based mobile wireless providers, GCI and ACS Wireless, who perhaps fearing that a merger between them would be disallowed due to the presence of only one major competitor (AT&T) opted to combine their upstream assets instead (Baker et al 2014). 5 It is by now well established in the economics literature that production collaboration may engender anticompetitive effects as great as those of a horizontal merger (Bresnahan and Salop 1986;Chen and Ross 2003;O'Brien and Salop 2000;Reynolds and Snapp 1986).…”