Telco Mergers and NHL Hockey

Everybody involved in hockey — not just players and management, but people who sell beer or jerseys — loses. No one who was not intimately involved in the negotiations can understand what went on between the two sides, but the end result is that this was the first cancellation of a major league sport in North America ever.

The losers from the telecommunications deals (let's include SBC and AT&T here) are not as immediately obvious, but the mergers will have a much greater impact on the economy. Thousands of people will lose their jobs through "cost savings," and prices will rise, particularly for small businesses, through less competition. If small businesses spend more money on communications (a required expenditure), they will have less money to spend on marketing their goods and services. Cutting marketing and sales expenses is what companies have always done when they need to increase their bottom line. It's a short-term gain, but a long-term loss.

Marketing, whether it's enhancing the image of your brand or telling people where they can buy your products and services, is one of the things that makes the U.S. economy so robust. Advertising has outpaced GDP most years and that is a good thing for everyone involved in media, marketing, retailing and most every other industry.

So the 2004/2005 NHL hockey season is over, and both sides are at fault. But the season of larger telecommunications companies is just getting started. We all lose.

This Post Has 3 Comments

  1. Linda

    Good tie in of two seemingly unrelated events.
    Look at how much the top guys at MCI will take home, and how many people way down the totem pole will lose their jobs. But, it may have been even worse if Qwest had won this fight.

  2. Charlie

    I read an interview last night with Steve Jobs, where he made the observation that when a 40 something gets a new home, the first thing they do is set up landline phone service. A 20 something just brings his or her cell phone and leaves it at that. The slow death of the local plain old telephone service is driving a lot of this. Make yourself big and diverse enough that when local telephony is dead, you're still living.

    As for the NHL, anyone who misses hockey can catch my son's Pewee game Sunday. PLenty of seats available 😉

  3. Jose R.

    These mergers are anti-competitive. But this is the logic of the marketplace. The public usually loses out to the interests of a handful of high-placed executives.

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