by Mike Masnick

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

from the divest-away dept

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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  • identicon
    DG Lewis, 4 Apr 2006 @ 11:09am

    Spectrum Divestiture? Not likely.

    Expect AT&T/BellSouth to make three arguments to counter any spectrum divestiture noises:

    First, they'll point out that the 2.5 GHz BRS/EBS licenses that BellSouth holds cover a limited area (Atlanta plus 5 BTAs in Florida - I don't know where CNET got the "published reports" that it's the second-largest owner of 2.5 GHz spectrum - that's Clearwire - or that it "controls spectrum in 50 of the largest markets", since it has only 6 BTA licenses), so holding them does not impair competition, and since AT&T has no BRS/EBS licenses, a merger is no more anti-competitive than is BLS holding them in the first place.

    Second, they'll argue that they are using and will further use the 2.3 GHz WCS licenses to extend broadband access to underserved regions and do disaster recovery (e.g., FastAccess wireless in New Orleans and Gulfport and BellSouth's latest announcement of FastAccess wireless as a broadband backup).

    Third, they'll argue that the 2.3 GHz WCS licenses they hold have an asset value of at least $240M and possibly as much as $3.8B, depending on the prices that get bid in the upcoming AWS spectrum auction, and that forcing them to divest (and therefore get less than fair market values for the licenses) would be an unjust taking.

    And given the merger-friendly and RBOC-friendly environment in Washington these days, as Mike points out, I'd be surprised if these arguments didn't carry the day. I'd even be surprised if there were any buildout requirements imposed as were done with Sprint-Nextel - AT&T/BLS will also point out that there are already buildout requirements for the WCS licenses.

    reply to this | link to this | view in chronology ]

  • identicon
    Larry, 27 Apr 2006 @ 5:37pm

    Little did the author of The Rape of Ma Bell The Criminal Wrecking of the Best Telephone System in the World know that Ma Bell would build itself back together again (to some extent).

    reply to this | link to this | view in chronology ]

  • identicon
    kenneth j. kubicki, 1 Jun 2006 @ 8:30pm

    ma bell back together

    as a retired manager of att/western electric co. kearny nj closed in 1985, i would rejoice if att would re-acquire lucent and bell labs maybe long lines possibly sandia. too much to hope for i guess. we do agree on one thing however a phone company pre-divestiture that ran like a fine swiss watch. in ww2 kearny employed 25,000 people and worked 24/7 . when it closed it still had 12,000 employees at 1 location.I understand that rhe bell labs property at holmdel will be turned into condos. where are we going with technology

    reply to this | link to this | view in chronology ]

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