With such a preposterous variety of apps on a multitude of smartphones to choose from, it can be easy to forget that they all access the internet mainly through four companies — AT&T, Sprint Nextel, T-Mobile and Verizon Wireless.
Much of what we do really is moving to the cloud, and as that happens, your wireless plan will dictate the performance and capacity of the apps you’ll use to access it. Competition in the wireless market dictates not only the cost of access, but everything from how much music you can stream per month to whether you can tether your laptop to your phone’s internet connection.
AT&T’s proposed acquisition of T-Mobile from Deutsche Telekom for $39 million is just another business news story in one sense, because companies are always buying each other — big deal, so to speak. But the idea of consolidating the wireless market from the Big Four to the Big Three has a special resonance to anyone with a reason to like cheap wireless data, in part because fewer providers means fewer options at higher prices, and also carries net neutrality implications.
Anyone with a smartphone should be delighted that the proposed merger will face opposition in Congress, the Federal Communications Commission, the Department of Justice, and concerned citizens’ groups — and that the approval process will likely take at least a year in any event.
For starters, an anonymous FCC official told the Wall Street Journal on Wednesday night, “There’s no way the chairman’s office rubber-stamps this transaction. It will be a steep climb to say the least.”
Meanwhile, as one would suspect, Sprint Nextel CEO Dan Hesse says he plans to tell Congress that an AT&T with 79 percent of the U.S. wireless market would wield too much power. “I have concerns that it would stifle innovation and put too much power in the hands of two,” said Hesse during a public appearance at the CTIA wireless conference this week.
The DoJ, too, must approve any merger of this size from an antitrust perspective.
In its defense, AT&T says (.pdf) its proposed merger will “advance America’s leadership in mobile broadband [at a] critical time — at the beginning of [the] transition to [higher-speed] LTE [networks],” as well as providing “critical infrastructure for economic growth,” accelerating business productivity, attracting investment and jobs to communities with its unionized workforce, changing “the delivery model for education and healthcare,” and providing a rather nebulous “competitive advantage for America.”
AT&T’s protestations to the contrary, opposition to this deal will be mounted on multiple fronts, between Congress, the DoJ, the FCC, and citizens’ groups, which could apply stringent conditions on the deal or bar the merger completely.
Some would say that’s a good thing — and not just so that we can enjoy cheaper wireless data.
As analysts urge carriers to flex their muscle (subscription required) to avoid the “post-carrier future” predicted by MobileCrunch, it’s worth remembering that the FCC’s net neutrality ruling leaves wireless companies to do as they please when prioritizing traffic. That means Google’s or Apple’s music app might work perfectly on the same network where a promising start-up’s app sputters and stalls, due to the better-funded company’s traffic being given priority over that of smaller players.
Smartphones and tablets are taking over more and more of the functionality of the traditional computer, so the diminution of net neutrality rules as our connections move from wired to wireless is already worrisome. Giving one company 4/5ths of the U.S. wireless market would only make it more so.