How the Big Cell Phone Companies Are Getting Away with Ripping You Off Each Month

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http://www.alternet.org/economy/how-big-cell-phone-companies-are-getting-away-ripping-you-each-month



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Heads They Win, Tails You Lose

Does Oligopoly sound familiar? Remind you of another game you used to play called Monopoly? You’ve got it. Oligopoly is its first cousin.

An oligopoly is a market dominated not by one, but by a small number of players. Because the number of players is so small, serious price competition doesn’t happen very much. Instead oligopolists tend to do sneaky things like put their heads together to figure out ways to raise prices, protect their turf, and limit consumer choices. They typically deploy armies of lobbyists to accomplish these goals. Some of these lobbyists go on to careers as regulators or vice versa (more on that in a moment).

The market for wireless providers is a classic case of oligopoly, currently dominated by AT&T, Verizon and Sprint, with T-Mobile bringing up the rear. In recent years, the number of players in the carrier market has shrunk, with the size of individual players increasing through mergers and acquisitions. Last year, AT&T gobbled up Leap Wireless, T-Mobile swallowed MetrocPCS and Japan’s Softbank bought Sprint.

When you get down to it, the wireless market is really a duopoly between AT&T and Verizon, which have about two-thirds of the market between them. They are the big boys, with Sprint and T-Mobile considered the challengers.