AT&T’s War for T-Mobile Is Over. Now Let the Spectrum Wars Begin

In the latest development in what’s been one of the biggest tech stories of 2011, telecom giant AT&T has finally withdrawn its bid to acquire T-Mobile. Amidst mounting criticism from nearly all sides and antitrust tangles with the Department of Justice and FCC, AT&T acknowledged its $39 billion bid was simply not going to happen.

The concession is being hailed as a win for customers. Countless reports over the past months have laid out the drawbacks such a merger could have a created — namely a virtual duopoly between market leaders AT&T and Verizon, which would have accounted for 80 percent of the mobile market. Many analysts believed the decreased competition between carriers would lead to increases in phone and plan prices. The thinking is simple: more competition equals lower prices.

This is all very true, however it seems that for those afraid of a duopoly between AT&T and Verizon, there’s a bit more going on in the mobile world that can have big implications for everyone.

As more and more customers buy bulkier data plans, mobile phone networks are becoming increasingly clogged up, and companies are looking to buy up more airwaves to support them. More and more, fast and reliable data speeds are vital for consumers and enterprises, and it’s becoming clear that the current inventories of airwaves cell companies have will soon be incapable of supporting the demand. (Despite the collapse of its deal with T-Mobile, AT&T still appears set on acquiring more wireless bandwidth, and is now rumored to be working out a deal with satellite TV provider Dish Network.)

In an effort to solve this problem, the U.S. House of Representatives earlier this month passed a bill allowing the FCC to auction off wireless airwaves (commonly referred to as wireless spectrum) that are voluntarily released by TV broadcasters. The problem, wrote San Jose Mercury News columnist Troy Wolverton, is that the big, rich wireless companies like Verizon and AT&T will likely end up as the clear-cut winners of the auctions, and “we’re likely to end up with an even less competitive wireless market.” Even if the House bill is not signed into law, it’s not a stretch to imagine a world in which mergers and acquisitions in the name of greater access to wireless spectrum are the rule of the day. This, too, just like the proposed AT&T/T-Mobile deal, would diminish competition, leaving only the biggest and strongest carriers to rule.

The Justice Department has taken note of the “spectrum wars.” According to Bloomberg, the DOJ is investigating whether Verizon’s recent deals with a group of cable companies to buy parts of their airwaves violate antitrust laws. Said Mark Cooper at Consumer Federation of America, “This agreement is diminishing competition in every way.” Sound familiar?

While AT&T’s decision to withdraw its bid for T-Mobile might be a win for customers in the near term by keeping prices down, it appears the “spectrum wars” will claim casualties of their own. With AT&T and Verizon the most likely winners, the T-Mobiles, Sprints, and MetroPCSs of the world will likely get pushed out, unable to support the necessary bandwidth 21st century customers need. Also sound familiar?

Image used under Creative Commons by Flickr user buggolo.

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