AT&T; + T-Mobile = More Questions Than Answers

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When AT&T; announced its intentions to buy rival wireless provider T-Mobile it ignited a firestorm around whether this news is a positive or negative development for America's communications infrastructure. I believe the truth lies somewhere in the middle.

Obviously competition for cell service takes a hit as there's one less competitor, leaving only three major players: AT&T;, Verizon, and Sprint. And there's no clear hope for more competition on the horizon.

At the same time, to some degree, competition around next generation wireless services may improve as this deal should accelerate AT&T;'s deployment of 4G as T-Mobile is out ahead of them in this area.

There's some chance this deal will have a negative impact on the FCC's hopes for raising a lot of money through spectrum auctions as there'll now be one less bidder.

Yet by adding T-Mobile's spectrum and coverage to its own, AT&T; is also expanding the reach of its network to serve more customers with better service.

But this is where things get really interesting. AT&T; argues in favor of this deal by saying it will improve their operations by adding spectrum, extending reach, and streamlining operations.

Well if you take this mindset a step further, doesn't it mean that consumer interests will be better served by further consolidation? What if the entire wireless industry consolidated? Wouldn't that deliver the most robust, most available, most streamlined network?

I ask this more theoretically than anything as it's hard to imagine this happening, in particular because an unregulated monopoly seems like an untenable situation and our government has shown little appetite for strong telecommunications regulations, but it is something worth considering. It makes me wonder if we'd be better served by a monopoly than a competitive marketplace.

It also raises the question of what happens if Verizon or AT&T; wants to buy Sprint? Would that be too little competition? If so, does that mean this is the end of wireless consolidation?

This line of thinking has me thinking about how much competition we need in order to trigger the marketplace dynamics that can protect consumer interests without government regulation.

On the flip side, I also can't help but ponder if more competition is necessarily a good thing. Do we want a bunch of providers building lesser networks, or fewer providers building better networks? This may be a false choice, but we also have to be realistic about the fact that at this point there doesn't seem to be any clear path towards achieving a wireless America where there's a ton of competitors offering world-class service.

For now, I side in favor of letting this deal pass as I'm not sure that having four wireless providers is necessarily any better than having three.

Yet I think we need to use this as an opportunity to engage in a dialog around more clearly defining what we want the future of our country's telecommunications marketplace to look like. We too often seem stuck in talking about the kind of service we want citizens to have access to in the abstract without getting into the messy details of what kind of a system's needed to deliver that service.

As a final remark, my biggest disappointment about this deal is thinking about how far that $39 billion AT&T;'s using to buy T-Mobile could have gone in terms of fiber deployment. With it AT&T; could've connected more than 10 million homes with fiber, providing Americans with an evolutionary leap in service rather than an incremental step.

But I respect the right of private business to make their own decisions about what's best for their shareholders.

While there's no way this deal wasn't going to be controversial, my primary hope is that we can use this as a catalyst for discussions about our long-term future and don't get caught up in demonizing companies for trying to turn a profit in our capitalistic economy.

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This page contains a single entry by Geoff Daily published on March 25, 2011 3:23 PM.

All Broadband Is Fiber, The Only Difference Is How Deep It Goes was the previous entry in this blog.

Introducing Daily's Hierarchy Of Broadband Needs is the next entry in this blog.

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