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Kagan: Why AT & T and Time Warner should merge



Last week I gave an interview to NPR Marketplace and the conversation crystallized the question and the answer of whether AT & T and Time Warner should merge. Actually, there is only one answer. Yes. There are many different reasons. Let me explain some of them.

First, the reason for this proposed merger is to help AT & T and Time Warner prepare for tomorrow's competition. Tomorrow looks very different today. That means that when considering this merger, we must look forward, not backward, to the way the industry is changing. How technology is changing How competitors are changing How customers' expectations are changing.

Companies that do not prepare for tomorrow always fight

Companies that do not prepare for tomorrow always fight. Consider Motorola. They ran the phone space for decades, until the 1990s, when they did not change fast enough. That's when they stumbled and now they're at the bottom of the package.

Nokia, Blackberry and Palm took the lead over the next decade. They were strong companies, but they did not change fast enough, so when the Apple iPhone and Google Android hit the market, these three leaders come in last.

There is no possibility of remaining still. Companies are growing or declining. Companies face pressure to keep up and lead. If they do not, they die. It's okay. Leaders die That's why so many leaders in the telecommunications space have been merging in recent years. That's why AT & T and Time Warner want to merge. They want to continue being strong. It continues to change and remains relevant.

If these companies were the first to make a move, that is when regulators could see them and decide whether to let this new route continue to develop or block the transformation.

However, they are not the first. Or the second. There have been several major mergers in recent years creating a completely different industry in the future. In addition, new technology and new competitors are growing rapidly and threaten yesterday's model. In addition, customers are already on board with this change. That's why traditional cable television and traditional telephone service are in decline. That is why this type of change is necessary.

In the changing industry, blocking a merger is meaningless

So, change is necessary for today's competitors to continue competing. Without change, the wave of market change will sweep over them, pass them by and leave them behind in the dust. That's one of the many reasons why AT & T and Time Warner want to merge.

It would not be fair to block existing competitors that want to transform when others have been approved. It would not be fair to your investors, workers, partners and customers. So, if a company that has been with us wants to continue to change and reflect the new market trends to remain relevant and competitive, there is no point in blocking them.

Let's take a closer look at how other mergers and new competitors are transforming the market.

How the telecommunications industry is changing

Several years ago, AT & T acquired DirecTV. That was an important moment. AT & T expanded the company and began offering DirecTV NOW. This is an advanced TV service delivered over the Internet. This was very innovative and exerted significant pressure on its competitors in the pay television space.

Then, AT & T innovated and created a new service category called wireless TV or mobile TV, which users love. This delivers pay television to your smartphone or tablet, through the AT & T mobility network, to any device, anywhere in the United States.

This innovation is very popular and is causing competitors to move in the same direction. Verizon says they will move in the same direction. T-Mobile USA recently announced that they are also moving in the same direction.

This is fine. This is the kind of innovation that exists, creative competitors bring to the table. We want to continue promoting more of this.

Public companies must continue to grow to maintain shareholders

It is important to remember that public companies must continue to grow to maintain their investors. Investors will move to another company if they can not make money. That's why the industry led this new iPhone and Android growth route ten years ago. It created the next wave of growth for so many companies, including wireless service providers, application manufacturers, startups like Uber and Lyft and much more.

In addition, suddenly the telephone companies are now competing with the competitors of cable television. Today, customers can choose among all the competitors for all their services. That means AT & T, Verizon, Comcast, Charter, Altice and more. All these companies are growing rapidly in the same direction. So, although AT & T's lead as a first player was good for them, that's rapidly evolving into industry-wide change.

In addition, all these competitors now face a new competition of players with whom they had never competed. Companies like Amazon.com Facebook, Google, Netflix, Hulu and more. These are companies that offer new ways for users to obtain television services.

This is an expansive opportunity for new players and a real threat to existing leaders and competitors.

Yesterday's competitors face threats and opportunities

This threat must be met if yesterday's leaders will be able to compete in the future.

Several other major mergers have also been approved in recent years that threaten the entire industry. Any threat is also an opportunity for growth, provided that the competitors are not tied.

Comcast merged with NBC Universal. That means they offer cable TV, IPTV, pay television, they own and offer NBC channels, offer VoIP phone and now also offer Xfinity Mobile. This has put Comcast in an enviable position. They are one of the key leaders.

Verizon has merged with AOL and Yahoo. That means they have wireless connection, telephone, pay TV and content.

This is the direction towards which the entire industry is heading. Networks have been acquiring content players. The next step, already under way, is for networks and content players to unite and compete with each other.

The reason why AT & T and Time Warner want to merge

That's all that AT & T and Time Warner want to do. They will not be the first. Actually, they will be the third, with more to come. Other networks and content companies will continue to meet in the coming years. In fact, that's why Comcast wants to merge with FOX.

The time to stop this next wave would have been years before it started. Now that this industry-wide transformation is taking place, it is fair to allow existing players to merge and remain competitive with their new and old competitors.

Must be able to compete with existing competitors that have merged and changed. They must be able to compete with new competitors that enter and change space quickly.

If not, we are hitting these competitors in the gut and saying that they should not be allowed to compete. That would not be good for employment or innovation. And nobody has that right.

The industry continues to change and transform. That is good. Change and transformation created not only new segments of the industry, but also created new companies, new competition and more. This has benefited the market, workers, investors, competitors and more.

Think of all the positive changes and growth we've seen in the last decade thanks to Apple iPhone and Google Android creating this new smartphone segment. Before them, Blackberry leads the smartphone sector. At that time, they were only a commercial service and there were only a few hundred applications.

Today there are more than two million applications. That means countless companies have created unlimited opportunities for growth. That means that it helps the economy in general, the workers, the investors, the partners and more.

We do not want to block transformation and growth. If we did, we would still be driving the Model T Ford. Or worse, we would still be riding on a horse and in a carriage. We would not have Internet service or wireless phone. That is not what we are. We want growth and innovation.

What is at stake with AT & T, merger of Time Warner

This is what is at stake. We must embrace the shaking of the ground, the innovation that changes the world. We must welcome not only new competitors like Amazon.com Google, Netflix and more. At the same time, we must allow existing leaders to compete in this new market in the future.

That is not only fair for them, but we will all benefit from what this type of competition brings to the market. Remember, how AT & T acquired DirecTV, created DirecTV NOW and started the wave of wireless TV.

This is what we can expect more if we do not tie their legs and prevent them from competing. The choice is ours That's why we must approve the merger between AT & T, Time Warner and, in fact, any other similar merger that occurs.

Tomorrow is fast. We must allow each competitor to continue to merge and innovate. If we do, we will all benefit if we are users, workers, investors, partners and more. If we stop the mergers, we will be attacking our own future.


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