Maybe it’s good if AT&T buys Verizon’s divested markets

According to a Wall Street Journal report this morning, AT&T Inc. is very interested in acquiring network assets and customers Verizon Wireless has to divest as part of its acquisition of Alltel Communications L.L.C. Other reported interested parties include a pair of private-equity firms and an unnamed cable company. (Quick rhetorical question on the private-equity interest: Why do these investors think they can profitably run a wireless company when the previous private-equity owners of Alltel looked to dump their investment just a few years after acquiring a much larger wireless operation?)
Anyway, the interest of AT&T in acquiring the assets has drawn criticism from public-interest groups and smaller wireless operators that think that merely exchanging wireless properties between the two largest wireless operators is not in the best interest of the American public or the wireless industry. In general I agree with these arguments; over the past several years we have witnessed the wireless industry consolidate at an unprecedented rate.
But AT&T’s interest in Verizon Wireless’ divestitures falls short of sending me into a “we need more competition, not less” tirade. (I had a different opinion when Verizon Wireless announced plans to acquire Alltel because Alltel was a competitive offering to larger carriers and the breadth of its network reach gave it an ace in the hole when dealing with larger carriers still in need of roaming partners.)
The markets being divested are generally in rural areas where consumers might actually be happy to have access to a nationwide carrier and its corresponding network reach. In addition, as was the case when AT&T Mobility bought Dobson Communications Corp., this deal will bring the all-powerful Apple iPhone to rural markets that are often screaming that they don’t have access to the latest and greatest wireless equipment. (Sure this is part of a different issue regarding exclusivity agreements between device manufacturers and carriers, but as things sit now this has become standard operating procedure in the wireless industry.)
And with all of the 105 markets Verizon Wireless is being required to divest worth an estimated $3 billion, there are few companies with the cash on hand to pull off such a deal.
I think the real crux of the dissent, at least among current wireless players, is the continued desire by all operators to control as much spectrum as possible. Spectrum in this industry is power, and the more airwaves a carrier has in its portfolio the more advanced services and customers it can support – at least for those looking to actually remain a wireless player – or the more valuable that carrier is to potential acquirers.