Government approval of Cingular Wireless L.L.C.’s proposed $41 billion purchase of AT&T Wireless Services Inc. has never really been in doubt, predictable consumer-group opposition notwithstanding.
Now it is a near certainty. A veritable cakewalk. A done deal.
The Justice Department and Federal Communications Commission can rest easy, if they’re not doing so already. Cingular Wireless CEO Stan Sigman can break out the bubbly. It’s lonely at the top, Stan. You’ll love it.
Interestingly and tellingly, approval of the blockbuster deal-which would marry the No. 2 and No. 3 mobile-phone carriers-has been made more certain by AT&T Corp.’s inevitable return to the wireless space via resale of Sprint PCS network capacity. That’s what parents do for wayward offspring. Expect the rehabilitated WorldCom Inc.-that is, MCI-to follow AT&T CEO David Dorman’s lead.
Do the funky math yourself. By the time Cingular Wireless and AT&T Wireless complete the transaction later this year, there likely will be more, not fewer, mobile-phone operators-real and faux-than there were in the United States when 2004 began. The new dynamic-imported from Old Europe where the new-age mobile virtual network operator model has proven successful-cannot be ignored by U.S. policy-makers.
The strategic embrace of bundling means industry consolidation among the six national mobile-phone network operators need not necessarily lead to reduced competition and consumer choice. MVNOs will fill some of the void, while adding some pizzazz to the wireless business.
On the other hand, the MVNO factor does not suggest Justice is ready to sign off tomorrow on a Verizon Wireless-Sprint PCS combo. At a minimum, the presence of MVNOs adds a new wrinkle to antitrust analysis.
While Cingular Wireless, a GSM carrier, is poised to replace CDMA-based Verizon Wireless as top dog, do not lose sight of the subtext in last week’s MVNO deal between AT&T Corp. and Sprint PCS. AT&T Corp., once a TDMA-GSM adherent whose powerful branding steadily diminished under the stewardship of AT&T Wireless, has crossed over to CDMA. Ditto for Virgin Mobile USA L.L.C., which also uses Sprint PCS’ network. Qwest Communications International Inc. also offers MVNO wireless via Sprint, but didn’t change technologies to do so.
Why the MVNO model? For a handful of reasons apparently. Undoubtedly, Wall Street and others will read more into the AT&T Corp.-Sprint PCS agreement than it being just one long-distance giant trying to emulate another.
It makes you wonder who’s getting the better deal, Sigman or Dorman? The deal and others like it coming down the pike-combined with flexible spectrum rules-also beg the question: Are wireless carriers gradually being transformed into glorified spectrum managers? Looks like a good business to me.
