It’s Time to Return to Market-Based Antitrust Law

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Tim Lee makes an interesting argument today. He notes that cell phone plans have gotten a lot better lately:

Next time you go shopping for a new cellphone plan, you’re likely to find that the options are a lot better than they were a couple of years ago. Prices are lower. You don’t have to sign up for one of those annoying two-year contracts. You’ll probably get unlimited phone calls and text messages as a standard feature — and a lot more data than before.

Why has this happened? Because for the past couple of years T-Mobile has been competing ferociously with cheaper, more consumer-friendly plans, and the rest of the industry has had to keep up. But what prompted T-Mobile to become the UnCarrier in the first place?

Back in 2011, AT&T was on the verge of gobbling up T-Mobile, which would have turned the industry’s Big Four into the Big Three and eliminated the industry’s most unpredictable company….But then the Obama administration intervened to block the merger. With a merger off the table, T-Mobile decided to become a thorn in the side of its larger rivals, cutting prices and offering more attractive service plans. The result, says Mark Cooper, a researcher at the Consumer Federation of America, has been an “outbreak of competition” that’s resulted in tens of billions of dollars in consumer savings.

After the AT&T deal fell through, T-Mobile needed a new strategy….So T-Mobile and its new CEO, John Legere, started changing a lot of things. In 2013, the company dropped the much-hated two-year contracts that had become an industry standard. It introduced a new price structure that offered unlimited phone calls and text messages as a standard feature….In 2014, T-Mobile added more goodies, including more generous data caps and unlimited international texting. It boosted its data caps once again in 2015.

Antitrust law in America has been off track for decades, and it’s time to get back on. The government shouldn’t worry about trying to gauge price levels or consumer welfare or benefits to consumers. That’s like trying to centrally control the economy: we don’t know enough to do it well even if we want to. Instead, the feds should concentrate on one simple thing: making sure there’s real competition in every industry. Then let the market figure things out. There are exceptions here and there to this rule, but not many.

Competition is good. Corporations may not like it, and they’ll fight tooth and nail for their rents. But it’s good for everyone else.

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Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

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