MCI Communications Corp. is going to resell cellular service from arch competitor AT&T Corp? What is the world coming to?
Chaos, I say.
There is no orderly development in this brave new world of wireless telecommunications. Perhaps chaos is a side dish to progress.
Even as the large personal communications services operators are choosing their technologies and entering negotiations with equipment vendors to deliver infrastructure, participants planning to bid in the designated-entity auction are being told they’re going to have to wait again to start their auction because of a recent challenge brought by pioneer’s preference winner Omnipoint Corp.
On the surface, I tend to agree with Omnipoint’s accusation: Giving every designated entity the opportunity to be 49.9 percent owned by Big Business goes against everything the DE auction was supposed to try to accomplish.
But having said that, some developments have taken place recently that make me think not only should every small company have the right to be 49.9 percent owned by Big Business, small business will be required to have Big Business backing in order to have a spitting chance at being moderately successful in PCS.
These are trying times for small companies that want to be part of the nation’s successful wireless industry. AT&T is taking its long-distance telemarketers (their number must be legion) and telling them to go out and sell cellular phones for a buck, along with a nice service package. That smacks of marketing clout and intense competition to me. How does a designated entity compete against that?
And every company will have to compete against AT&T. Make no mistake-AT&T’s wireless business covers 80 percent of the nation’s population.
Even MCI is choosing to join them, rather than beat them, so to speak, by reselling cellular service from AT&T. MCI also inked deals with GTE Corp., a Baby Bell and a few other operators for good measure.
The resale pacts give MCI a presence in the top 100 markets and access to 75 percent of the U.S. population. MCI said it negotiated discounts between 30 percent and 40 percent below retail with the five cellular firms-that’s a decent discount.
The nation’s third largest long-distance carrier, Sprint, through its PCS consortium, has access to nearly 70 percent of the nation.
Let me restate that: three long-distance carriers-80 percent, 75 percent and 70 percent coverage across America. These companies have the deep pockets, the pricing packages, the service combinations, the marketing clout, the brand name recognition, the distribution channels and just about everything else they need to plow over any potential competition from a designated entity.
The game hasn’t begun, but it’s already over. Big Business won.
If I were a DE, I’d wait until that Mouse in Florida digests his TV station and then beg him to own 49.9 percent of my PCS operation.
