Who’s the Federal Communications Commission fooling with all this talk of “designated entities,” or providing incentives-and frequencies-for small businesses, women and minorities in the upcoming PCS auctions?
The FCC, a victim itself in all of this as a result of a considerable amount of back-shoving from Congress, is perpetuating what quickly is becoming one of the biggest myths in the telecommunications industry: that is, that everyone-even the small player-has an opportunity to participate and (dare say it) succeed in the wireless marketplace.
That’s bunk!
Anyone who believes an entrepreneur or small business person can drop millions and millions of dollars to secure a license, millions more to build out a system, and still compete effectively and profitably in the Land of the Giants isn’t seeing things clearly.
My advice: move to northern California and pan for gold; you have a better chance of striking it rich.
I’ll repeat what I’ve said before: the wireless industry is getting bigger and bigger while becoming smaller and smaller every day. Consolidation is changing the face of telecommunications, and only the deep-pocket companies that have the wherewithal to put together a national brand-name identity to throw at consumers will dominate the industry. Likely, no more than four or five mega-operators will rule the roost when all is said and done.
That doesn’t leave much room for the so-called designated entities.
Everyone who’s anyone among the telecommunications giants is busy talking deals these days. Deals meaning mergers. Mergers meaning forces in the industry that intend to capture the biggest market share possible in terms of coverage area and customers, and intend to do it by pooling resources, capital and brand-name identity to build up existing cellular holdings and buy up as many PCS licenses as financially feasible. And the way everyone is talking with one another these days, that translates into a lot of finance.
The pending acquisition between AT&T Corp. and McCaw Cellular Communications Inc. set off a cataclysmic reaction throughout the wireless industry, and the aftershocks continue to knock the telecom giants up against one another-and they like it.
The latest word on the street is that Sprint Corp. has all but signed an agreement to merge its cellular business with those of Bell Atlantic Corp. and Nynex Corp., forming a powerful alliance that would surpass AT&T and McCaw in number of subscribers and pops. Services would be marketed under the Sprint brand name.
Regardless of what and with whom Sprint runs with, Bell Atlantic and Nynex already have forged an agreement to combine their cellular properties. U S West Inc. and AirTouch Communications have agreed to do the same with their cellular operations. Ameritech, too, is talking. And MCI Communications Corp. will be courted aggressively for its resources and brand-name clout.
The so-called designated entities will have a tough time surviving in the highly competitive, capital intensive and consolidating wireless arena. There will be little room for error, let alone competition. Perhaps another gold rush is right around the corner.-Bill Maguire
