My understanding of our elected officials in Washington has dropped below that of anything mathematical and the popularity of country music, thanks to how the Federal Communications Commission is handling the upcoming advanced wireless services auction.
What has sent that understanding over the top—or is that under the bottom?—is the way the FCC on one hand is bending over backwards trying to accommodate designated entities hoping to participate in the auction and presumably encourage more competition in the wireless space, while on the other hand rubber stamping virtually any telecommunications-related merger or acquisition proposal.
Don’t get me wrong, I’m all for the underdog getting a chance to go against the big dogs, but I think history has shown that the wireless telecommunications mountain is a bit too tall for small players to climb. How is a company with revenues of less than $40 million per year expected to compete against well-established telecom giants that have the deep pockets, name recognition and existing substantial customer bases of Cingular Wireless L.L.C., Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA Inc.? The U.S. wireless market is already north of 70-percent penetration and the top four carriers are serving 80 percent of those customers, and growing. That leaves few scraps for new blood.
Sure, some DEs have managed to make a go of it in the wireless business, but the list is too short and the number of those that have failed too long to make a real argument that more subsidies need to be offered. In fact, the most common roadmap for DEs is to sit on a license until an established and well-funded carrier comes along to acquire the spectrum. Pretty sweet deal if you can get it.
Indeed, if the FCC really wanted to inject competition in the wireless market, it would not be so stamp-happy in approving telecom M&A activity. The recent M&A frenzy has lopped the number of nationwide carriers by a third and is slowly taking out regional players one by one. Sure Cingular’s $41 billion acquisition of AT&T Wireless Services Inc. and Sprint Corp.’s $35 billion purchase of Nextel Communications Inc. puts them in a better position to compete against Verizon Wireless. But has anyone noticed that the almost weekly rate plan changes—once the hallmark of six nationwide operators competing for customers—has dried up. Now the only fun is supplied by No. 4 operator T-Mobile USA.
It makes me feel like I am trying to do long division with one hand while snapping along to Randy Travis with the other. Not a pretty sight.
