(Image courtesy: FCC.com)

Many of President-elect Donald Trump’s choices for America’s newest regulators have track records of being so “hands-off,” it is hard to find their fingerprints.

Wall Street expects the Trump Administration and the Republican majority in Congress to eliminate vast swaths of regulatory oversight, perhaps enough to put the federal government’s involvement in commerce at a level not seen since before the Great Depression. UBS analyst John Hodulik believes the Trump Administration will look the other way as an unprecedented frenzy of corporate mergers and acquisitions begins — mergers that would never have passed an antitrust review during prior administrations.

Hodulik might as well suggest the next four years could represent The Great Convergence, as cable and wireless operators merge, potentially leaving the majority of Americans with just one choice for telecommunications services.

“We have long believed that secular changes in technology and usage would lead to the convergence of the cable and wireless industries,” Hodulik said. “The transformation of the internet into a mobile-first platform combined with the rapid migration of video from proprietary networks to digital and the rise in competitive pressure this entails increases the value of an integrated fixed and wireless service to cable providers. Densification of wireless networks required to meet the needs of video-centric subscribers increases synergies of cable-wireless combinations and provides the springboard for 5G-based services. A roll-back of Title II re-classification could further increase incentives for cable.”

Hodulik envisions that a wave of mergers during the first term of the Trump Administration could look like this:

• Comcast <-> Verizon: Conquering the northeast and mid-Atlantic states, a supersized Comcast would likely be the only telecommunications company offering broadband service in states like New Jersey, Delaware, and Maryland with Verizon FiOS just another flavor of Comcast’s coaxial and fiber network. The only remaining competitors of significance would be Frontier Communications in Connecticut and upstate New York and FairPoint Communications in northern New England. Charter Communications would also still provide cable service in New York, Massachusetts, and parts of the Carolinas. Hodulik called the effective monopoly a win-win for shareholders of Comcast and Verizon. Customers are likely to hold a different view.
• Charter <-> T-Mobile/Sprint or Dish Networks: As the number two player, Charter already envisions offering wireless phone service through an arrangement it has with Verizon. But in a “converged” world, why rent someone else’s network when you can buy your own. Deutsche Telekom has been a motivated seller since AT&T tried and failed to buy T-Mobile USA and Sprint’s largely uninspiring performance may make it an easy sell for Japan’s Softbank. The wildcard: Dish Networks. Charter might want Dish’s huge number of video subscribers to win itself better volume discounts for cable programming.
• Never forget about Altice, laying the foundation for another wave of buyouts starting in 2017. So far, Altice seems interested in the handful of remaining independent cable companies — Cox, Cable One, Mediacom, and the few others increasingly becoming anomalies in the consolidated cable marketplace. Cox and Mediacom may have to be coaxed to sell much the same way Cablevision was — by overpaying.

Hodulik also believes some side mergers may also turn up, especially a Dish/T-Mobile deal that would bring Dish’s large wireless spectrum holdings into T-Mobile’s network. T-Mobile could also sell Dish programming by streaming it over the internet and/or mobile devices.