July 14, 2011 12:03:00 PM
A couple of weeks ago AT&T Mississippi president, Mayo Flynt, passed through Columbus and spoke with me about the pending merger between wireless carriers AT&T and T-Mobile. The merger is currently being reviewed by the Federal Communications Commission.
Mr. Flynt says the merger is "all about spectrum." The term spectrum refers to communication airwaves. Spectrum is divided up for all types of wireless communications: television, cellular phones, radio, Wi-Fi, even baby monitors.
The exploding use of smartphones has created a spectrum crunch. AT&T''s mobile data traffic has increased 8,000 percent since the iPhone was introduced in 2007 and is expected to continue to skyrocket. Flynt says wireless carriers need more spectrum to be able to handle this growth.
Remember when broadcast TV made the switch to digital a couple of years ago? That was part of an ongoing effort to reshuffle the way the spectrum is allocated. Television was moved to another part of the airwaves. The portion of the spectrum that television used to occupy was auctioned off in 2008 and was largely purchased by wireless carriers to accommodate this explosion in growth.
Verizon and AT&T are the only two major carriers who bid in the 2008 auction for spectrum space. Neither Sprint nor T-Mobile attempted to increase their spectrum holdings in this auction.
Opponents of the merger say the combination of the No. 2 and No. 4 carriers will reduce competition and leave Verizon and AT&T holding an effective duopoly. The fact is that Verizon and AT&T already have about 64 percent of the national wireless market share. T-Mobile has 11 percent of the market share. Even without the merger, AT&T and Verizon are in a different league than Sprint and T-Mobile. In fact, on a local level, I argue AT&T and Verizon stand more competition from regional carriers like CellularSouth. CellularSouth has a reputation for offering affordable plans and great service while AT&T ranked dead last in a 2010 customer satisfaction survey conducted by Consumer Reports. (CellularSouth opposes the merger.)
AT&T is preparing to roll out their new 4G network; 4G promises faster speeds and less latency than its predecessors, 3G and 2G. Flynt says all of that spectrum they are compiling is needed to roll out 4G while still offering 3G and 2G service to people using older phones.
The interesting thing about this merger for Mississippi is the potential it holds to bring broadband Internet access to nearly the entire state. Our state''s population is not concentrated; Internet service providers are already offering broadband access where profitable. (There are large areas throughout the Golden Triangle that do not have access to broadband.) Without a government mandate, broadband providers will not expand to cover the entire state since it is not profitable. Broadband access is essential for economic development, education and general access to information.
Should AT&T offer 4G to their entire planned coverage area, broadband will be available in virtually every corner of the state, including some of the most poverty-stricken areas of the country.
A study earlier this year revealed Arkansas and Mississippi lead the nation in households that have cut their traditional telephone lines in favor of a cell phone. The study concluded that people in our state simply don''t have the money to have both types of phones.
Combine a diffuse population who is comfortable with the use of cell phones and widespread wireless broadband access and you have the potential to give Internet access to a lot of people. Yes, data access for cell phones is expensive, but so is traditional broadband access. The first step in bridging the digital divide is making broadband available.
Any approval of this merger should include the stipulation that AT&T follow through with their proposal to deliver 4G to 97 percent of the country.
Peter Imes is the operations manager at The Dispatch. You can email him at email@example.com or follow him on Twitter at @pimes.
Peter Imes is the general manager at The Dispatch. You can email him at firstname.lastname@example.org or follow him on Twitter at @pimes.
frank commented at 7/14/2011 12:48:00 PM:
This merger should be blocked and so should have several of the other recent telecom mergers. We broke up AT&T in the '80s and the new competition that move created is what made cheap long distance and data services available in the first place. Now we are allowing the telecoms to reassemble themselves into giants and removing the competitive forces that keep prices down and capabilities up. Observe the price of your cell phone services as the companies gain strenth. Has the price dropped? Has the service improved? Better value for your money? I don't think so...
In the LONG term, and this includes Mississippi, the consumer will be better served if competition is maintained. To support this merger based on some expectation of a short term gain is a fallacy.
i love dr pepper commented at 7/14/2011 1:55:00 PM:
I sure wish AT&T would get service at the base! They are losing a lot of customers because of this.
4him commented at 7/15/2011 7:16:00 PM:
I wish AT&T would get their service straight. I have been with them since 2000 and recently I have had more dropped calls, call faileds, and poor connections. Lately, even driving on Hwy 82 overpass at Military Rd I am getting dropped everytime. The only reason I haven't switched is I do not want to sign another 2 yr contract with anyone.