AT&T’s retreat from T-Mobile deal is a chance to make wireless future brighter

December 21, 2011

This week, AT&T did something few companies that powerful ever do: It retreated. As you may know, the cellphone carrier in March put plans into motion to acquire its competitor T-Mobile to the tune of $39 billion.

The merger would have made AT&T the largest carrier in America, and it would have also arguably created a duopoly where AT&T/T-Mobile’s only true competitor would have been Verizon. That kind of arrangement is usually bad for consumers, and it’s definitely bad for other companies, such as Sprint, which are in the same market and trying to keep a hold of their customers.

But something weird happened on the way to the bank for AT&T — regular people, journalists and policymakers started speaking out about the merger. Sprint, of course, was expected to oppose the deal — who wants to be the only girl at the party without a date? But I don’t think AT&T expected anyone else to think that its acquisition of T-Mobile was a bad idea.

Unfortunately for AT&T, that is what people said. And, amazingly, government agencies started asking the hard questions — first the Department of Justice filed a complaint in an attempt to block the deal, then the Federal Communications Commission came out against the plan.

Within a few weeks, the merger started to fall apart. This week, it was killed entirely, leaving AT&T to pay T-Mobile’s parent company, Deutsche Telekom, a hefty $4 billion breakup fee. More interestingly, however, is that the companies are going to have to enter into a bandwidth-sharing deal, in which each carrier will allow the other’s devices to roam on its 3G networks for the next seven years.

A few months ago, I suggested that instead of battling over coverage areas, perhaps carriers should start thinking about ways they could work together to serve their customers better. At the time, I suggested that perhaps government intervention was required to cook up a long-term plan for wireless build-out and to ensure that all of the parties played nicely.

But maybe it’s easier than that.

As I pointed out in that earlier piece, the future of wireless in America is superfast 4G networks (LTE or Long Term Evolution, as they’re known). The only catch is that we’re headed down the same road we’ve been rolling on with earlier networks. Even though all of these companies will be using some portion of the 700 MHz radio spectrum, they’re busy making sure devices for their networks will be incompatible with the others.

That means less coverage, fewer device choices, longer contracts and likely higher rates for service — a scenario that is bad for consumers.

Things don’t have to be this way, and if the backlash to the merger between T-Mobile and AT&T tells us anything, it’s that there is a legitimate and serious concern in this country about ending up with monopolies — a worry that’s voiced not only by people in our industry but by real consumers who want more choice.

I think we need real options to make our wireless future brighter — and I think it’s important that the carriers commit to making it happen. Better wireless in this country doesn’t just mean you can watch an episode of “Glee” whenever you want (not that that isn’t a big perk). A sophisticated wireless network in this country is imperative for businesses, schools and, yes, regular human beings.

Should AT&T take its ball and go home? In a weirdly aggressive statement, the company said that because of this lost deal “customers will be harmed and needed investment will be stifled.”

I can’t shake the feeling that that’s what would have happened if the deal had worked out.

It’s time for our service providers to start taking responsibility for their industry. Last time I checked, AT&T and Verizon weren’t operating at a loss. In fact, they’re both running highly profitable businesses. If they’re really worried about spectrum constraints and bad user experiences, they should put down the swords for a moment and start working together to fix the problems.

Otherwise, I propose my previous, exceedingly simple fix: Government regulations (and the required herding) to get all of our carriers on the same page. A mandate from the people (remember, that’s who our government is supposed to work for) that we start making the decisions that are right for our citizens, not just for the bottom line of a few companies that happen to be in control of an increasingly precious resource.

Wait, what’s that, AT&T, Verizon, Sprint and T-Mobile? You don’t like the idea of the government telling you what to do with your businesses?

Oh, maybe you should get together and talk about it.

Topolsky is the founding editor in chief of the Verge ( www.theverge.
com
), a technology news Web site , and the former editor in chief of Engadget. He is the resident tech expert for NBC’s “Late Night With Jimmy Fallon.”

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