Will The New Ma Bell Be Forced To Cough Up A Wireless Competitor?

With all the talk and complaints about how the AT&T/BellSouth merger might decrease competition, some are thinking the end result may be quite different. The prediction is that the FCC may take note of the combined spectrum holdings of the two companies, recognize that AT&T is unlikely to compete with its own landline efforts using that spectrum and then force them to divest of it — potentially creating another competitor who competes with them. You could, for example, see T-Mobile making a serious play for the spectrum (which they desperately need). Sprint already has plenty of similar spectrum which they’re dying to use. In that case, you’d have the two primarily wireline powerhouses in Verizon and AT&T going up against the primarily wireless offerings from Sprint and T-Mobile (or someone else, should they buy that divested spectrum). Considering that some hope that the technologies to offer service in the 2.5 GHz area can really compete at the same level as wired broadband, it could actually make for an interesting competitive market. Of course, AT&T may fight pretty hard to keep that spectrum, recognizing that they’re basically going to need it. Losing it would eventually put them (and the Cingular subsidiary) at a disadvantage. Also, despite the claims of wireless being an equivalent technology, that’s unlikely to be the case. Fiber (if done right) should be able to blow any likely wireless offering out of the water for quite some time (especially if you expect each technology to improve — wireless is starting pretty far behind). In that case, we’d be down to competition between speed (via fiber) against slightly slower ubiquity (via wireless). I’d bet on ubiquity any day, but still need to be convinced that the wireless technology can actually handle enough traffic to actually be considered a competitor. This is why AT&T will probably make the case that it needs both technologies for the future — in order to offer both speed and ubiquity. So, with the way the FCC has been giving the telcos everything they want lately, it wouldn’t be surprising to see AT&T get to keep its spectrum too.

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