More bad news for U.S. economic growth. In the face of multiplying obstacles deployed by Washington regulators, AT&T today abandoned its pursuit of T-Mobile. The most important outcome of the merger would have been a quicker and broader roll-out of 4G mobile broadband services. Now AT&T will have to find other paths to the wireless radio spectrum (and cell towers) it needs to meet growing demand and build tomorrow’s networks. T-Mobile is left in purgatory, short of the spectrum and long-term financial wherewithal to effectively compete.
Some say, don’t worry, assuming that another U.S. mobile provider will pick up T-Mobile. Not so fast. If Washington disallowed AT&T, it would do the same for Verizon. Sprint was pursuing T-Mobile before AT&T swooped in, but a Sprint-TMo combo makes much less sense. The spectrum-technology-tower infrastructure positions of AT&T and TMo were almost perfectly complementary. Not so for Sprint, who uses mostly higher frequencies, has always been a CDMA company (as opposed to WCDMA), and is already finding it challenging to raise the funds to build its own LTE network, given rocky times with partner Clearwire.
The U.S. mobile industry has been a shining star in an otherwise dark U.S. economy. But with Washington nixing the AT&T- T-Mobile merger, and given recent struggles at Clearwire and engineering disputes with upstart LightSquared, it’s not clear mobile will continue on its steep ascent. The FCC “staff report” opposing the AT&T-TMo deal didn’t even address the elephant in the room – spectrum. It’s odd. The FCC declared a spectrum crisis two years ago and repeatedly emphasized the urgent need for broadband expansion. Then, poof, not hardly a mention of either in its report. Not a good sign when the expert agency has taken its eye off the ball.
The industry is still full of potential, but there will be near-term disruptions as companies sort out new spectrum, business, and technology strategies. And as millions of un- and underemployed Americans know, time is money. Regulatory impediments and foot-dragging are especially harmful – and even infuriating – for an industry that desperately wants to grow. For an industry that is in many ways the bedrock of the 21st century American knowledge economy.
Beyond the disquieting roller-coaster in the mobile industry, one wonders more broadly about the American economy. Just what kind of business are we allowed to conduct? What investments are preferred – by whom? How far will the tilt of decision-making from private entities to public bureaucracies go?
— Bret Swanson
