In 2008, getting your hands on a new iPhone meant signing a two-year AT&T contract. Some markets, because of the costs of being a player, tend toward either a single firm or a small number of firms. Everyone hoped the wireless market would be different. A telephone monopoly has been the norm for most of American telecommunication history, except for what may turn out to have been a brief experimental period from 1984 through 2012 or so. It may be that telephone monopolies in America are a national tradition.
a. How did AT&T, the exclusive provider of wireless service for the iPhone in 2008, influence the wireless telecommunication market?
b. Explain why the wireless market might “tend toward either a single firm or a small number of firms.” Why might this justify allowing a regulated monopoly to exist in this market?