Tuesday, March 8, 2011

Losing More Carriers

With today's report that Sprint/Nextel is considering buying T-Mobile, we're converting our Fat Tuesday beads to Worry Beads. It does look like a slow but sure path of consolidation toward a "Big 2" in the wireless industry. This deal could be limited to T-Mobile's parent company, Deutsch Telekom, investing in Sprint's Clearwire network to give T-Mobile a 4G footprint.

Consolidation keeps on rolling whether this deal happens or not. We were saddened to hear that Cap Rock Cellular of west Texas has sold out to AT&T. AT&T already has extensive operations throughout the state, but when Verizon Wireless jumped ahead in west Texas with the Alltel acquisition, AT&T needed to act. They become another new player in west Texas and that just may be a positive change to the locals, but it's just one more step toward making the big ones too big. This marks the 5th small Texas carrier that AT&T has grabbed, with maybe just one left, XIT Cellular.

We thought the small telephone cooperatives would be a strong voice for local wireless service, but the smell of money is too strong. Coincidentally, Cap Rock purchased their wireline operations from Southwestern Bell, a predecessor of the current AT&T. Independence is fleeting. I hope reasonably-priced wireless isn't.


Benjamin A said...

GSM, HSDPA, CDMA 1X/EVDO, WiMAX, iDEN, and maybe LTE all from one company! That is a crazy concept.

Oz Andrews said...

Ah yes. Sprint couldn't integrate the Nextel iDEN network into their operation. Now they think they can add a GSM network? Some of us learn from our mistakes.

William said...

Such a merger would force the new company to jump to LTE. It would be very impractical from a fiscal standpoint to operate so many different networks; iDEN would obviously be the first to go, but after that, it would be difficult to move 35 million Sprint or T-Mobile customers to GSM or CDMA. The parent company would have to choose one or the other until a a full scale LTE network would become available. If Sprint would do to T-Mobile what they did to Nextel, they would bleed off tens of millions of customers; and vice versa if T-Mobile did the same to Sprint customers. And sadly, these customers would likely all switch to the Big Two. It's conceivable that the combined company would lose several hundred thousand to possibly a few million customers right from the beginning; I know of many T-Mobile and Sprint customers whom refuse to switch from one company to the next. We'll see if anyone learned something as Bill mentioned. At the very least, this is a very risky move, but it can be pulled off if Sprint learned it's lesson from the Nextel debacle. Such a merger will either be a gold mine if done right, or a money drain if botched.