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T-Mobile USA is looking forward to fewer regulations and more mergers in the telecom market under President-elect Donald Trump. With net neutrality rules possibly being overturned, the company says mobile Internet providers will have a lot more leeway for “innovation and differentiation.”
The election results will lead to a regulatory environment that is “more positive for my industry,” T-Mobile CFO Braxton Carter said in a Q&A session at a UBS investors conference yesterday. “You look at some of the earlier decisions that Trump has already made [in choosing advisors], I think it’s very clear there is going to be less regulation, and regulation often destroys innovation and value creation in bringing benefits to the consumer.
And the trick is bringing a benefit to the consumer while you’re also benefiting your shareholders.”
Under President Obama, the Federal Communications Commission reclassified fixed and mobile ISPs as common carriers and imposed net neutrality rules that forbid blocking, throttling, and paid prioritization.
Carter seems confident the Title II decision will be reversed.
“With Title II being overturned there are a lot of really interesting things you could potentially do, but we’ll see what happens.
It’s going to be an interesting year next year,” he said.
Carter is also hoping for tax reform that reduces the amount T-Mobile has to pay, he said.
T-Mobile was nearly purchased by AT&T in 2011 and Sprint in 2014, but it remained a separate entity as US regulators objected to mergers that would reduce the number of major nationwide wireless carriers from four to three. Under Trump, Carter said he expects the US government to have “more openness to consolidation.” On the specific question of whether the four major wireless carriers will be reduced to three, Carter said that it’s too early to tell.
Carter didn’t detail exactly what “innovation” there would be if net neutrality rules are eliminated. Recently, the main controversy has been over zero-rating, the practice of exempting some online services from data caps.
Carter said that T-Mobile structured its Binge On video zero-rating carefully to avoid regulatory problems—the T-Mobile program zero-rates video from third-party services while reducing video resolution to about 480p.
But T-Mobile made the program open to any content provider and doesn’t charge them for zero-rating, and it lets consumers opt out of the video quality reductions.
AT&T and Verizon Wireless took a more risky approach, zero-rating their own video content while charging other companies for the same data cap exemptions.
The FCC has said this practice may violate net neutrality rules, but such plans will likely be allowed to proliferate when Republicans control the FCC. If the ban on paid prioritization is overturned, ISPs could also charge online service providers for faster access to consumers than online services that don’t pay for prioritization.
The end of Title II rules would “provide the opportunity for significant innovation and differentiation,” Carter said.
Carter also discussed cable companies’ impending entry into the mobile market.
Cable firms such as Comcast and Charter would be resellers since they haven’t built cellular networks, and Carter said this will put the cable companies at a disadvantage.
When you control the wireless network, as T-Mobile does, “the power is you know what the individual consumer is doing and what the individual consumer is looking at, because it’s purely a personal device,” Carter said. “The cable industry now knows who the household is, but the household is very diverse.
The value creation you can get from understanding that intelligence down to the individual is very powerful, and you’ll never get that type of integration with a resale-type agreement.”