Reader Forum: AT&T Mobility and T-Mobile USA – for better or worse?

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but maintain some editorial control so as to keep it free of commercials or attacks. Please send along submissions for this section to our editors at:dmeyer@rcrwireless.com or tford@rcrwireless.com.
In AT&T Inc.’s Federal Communications Commission filing, they painted a bleak picture of network capacity challenges, spectrum shortage, and the prospect of more dropped calls, slower speeds and fewer advanced applications if the acquisition of T-Mobile USA Inc. does not go through. More questions than answers are raised: Can we really believe there is cause for optimism with the merger, or does everybody lose? Will consumers see better quality of service and lower costs, or tighter bandwidth caps? How will the new entity work with regulators and suppliers? Does this solve the spectrum shortage? The only certain thing about the proposed deal is that if AT&T doesn’t adopt T-Mobile USA’s commitment to innovation, then all the pessimists will have been right.
Despite the possible merger, T-Mobile USA ads continue to bash AT&T Mobility, to the delight of naysayers. There is widespread concern that, if T-Mobile USA’s ties to Europe are severed, the innovation associated with those links will also disappear. Sprint Nextel Corp. is vocal on that topic. Representative Greg Walden, the chairman of the House subcommittee on communications and technology, questions whether the move would diminish the “vibrant and competitive” nature of the wireless market, saying that with fewer players there’s less opportunity for the type of creative innovation and invention that has previously been typical of this segment.
In a popularity contest, T-Mobile USA wins hands down. They consistently score higher than AT&T Mobility for customer service and satisfaction and it’s a moot point whether that culture and competence can be transferred to the larger organization. T-Mobile USA has a reputation for innovation whereas AT&T Mobility is still reeling from the “iPhone effect,” and a public perception of dropped calls, high prices and ineffective data service.
T-Mobile USA’s leading role in Deutsche Telekom AG’s near field communication-based “mobile wallet” initiative, announced at Mobile World Congress this February, has been widely publicized, with initial rollouts in Germany and Poland scheduled for this year and the United States following in 2012. If the U.S. rollout continues as planned despite the acquisition, AT&T Mobility could claw back some reputation as an industry leader. Certainly, AT&T Mobility has something of a vested interest in NFC since they partnered with Deutsche Telekom and Verizon Wireless in the original Isis NFC joint venture. If the NFC initiative falls off the schedule, though, doom-mongers will take this as validation.
While T-Mobile USA does indeed have a history of innovation, it hasn’t always sustained this leadership over the long term. T-Mobile USA broke boundaries when they backed the BlackBerry, promoting it as a universal business tool and riding high on its widespread adoption as an extension to the enterprise. On the other hand, the rise of the iPhone took some of the shine off this leadership.
Then there’s universal mobile access. Four years ago, T-Mobile USA promoted its Wi-Fi/cellular hybrid service as the answer to spotty network connections. These days, with flat-rate, lower-cost voice plans widely available, the usefulness of UMA has dropped off to the point where T-Mobile USA is only making it available on a few phone models. However, T-Mobile USA is credited with the rapid rise to popularity of the Wi-Fi hotspot, and their deal with Starbucks did much to raise the company’s profile. Looking to the future, though, AT&T Mobility’s espousal of Wi-Fi offload as a coverage strategy for high usage areas and T-Mobile USA’s status as a first mover in hotspot use suggests the possibility of interesting developments if the merger does go through. AT&T Mobility may be considering using T-Mobile USA’s spectrum to leverage carrier aggregation technology to increase LTE speeds and capacity. It is also rumored that the operator may follow T-Mobile USA’s Wi-Fi calling strategy to expand its existing Wi-Fi network in key markets, and enhance the availability and resiliency of their networks.
Challenging the vendor community
Unfavorable observers suggest that the principal losers from the deal would be U.S. consumers, who have benefited from T-Mobile USA’s aggressive voice and data pricing; some phone handset makers; and network equipment suppliers. There is an upside in this, however – except perhaps for some of the legacy vendors.
There is a faction supporting the view that consolidation in the U.S. market is the only way to improve both infrastructure and prices. The potential benefits of combining the two companies’ assets include bigger data center capacity, better network density and more available spectrum. Even T-Mobile USA’s 3G phone users, initially losers because they’ll need to replace those devices, may do better in the long run with AT&T Mobility’s plans to rearrange how T-Mobile USA’s cell towers work. The airwaves they use for third-generation services, or 3G, will be repurposed for 4G, which is faster. Handset manufacturers would certainly benefit from this transition.
There is concern that consumers may not benefit from lower prices with a larger entity, but the combined company would have sufficient heft to challenge its vendors on many counts. In its expanded form, AT&T Mobility would have more opportunity to influence pricing among its suppliers. Furthermore, they could become a game-changer by being more aggressive in setting a business agenda for technology vendors to support, rather than letting existing technology dictate the way that mobile broadband evolves.
But the mobile data explosion is forcing the industry to rely more and more on innovation as a way out of the crisis. Maintaining innovation among operators and vendors is key to improving service delivery, pricing, and quality. The urgent need for solutions designed specifically for future-focused networks is propelling new players into key operator deployments and opening opportunities for fresh thinking across the whole spectrum of data service delivery solutions. An operator with power, vision and a viewpoint on how the world of 50 billion connected devices should be shaped could drive sweeping innovations in the U.S. mobile broadband market. There’s a possibility that, with a focus on the future and the business issues it needs to solve, AT&T Mobility could be that operator.