Why Verizon Was Allowed to Buy Wireless Spectrum and AT&T Wasn’t

Why did Verizon Wireless just get regulator OK to acquire wireless spectrum from cable television companies, whereas AT&T got turned down in its attempt to acquire T-Mobile for the same reason? And why is it still important for regulators to solve the growing wireless data spectrum crunch?

The truth is, we are running out of available wireless data spectrum. The sudden explosion of smartphones and so many apps is changing the wireless industry.

On one hand this is an amazing growth opportunity even as we outrun the wireless data spectrum we have. On the other hand, this shortage will have a negative impact on every carrier and every customer who uses apps on smartphones.

Right now things seem fine, right? Don’t be fooled. We are in the calm of the center of this wireless data spectrum hurricane.

Eye of the Storm

The reason the pressure is off of AT&T is because last year the iPhone started being sold on every major carrier, like Verizon Wireless, Sprint and even C Spire Wireless. And over the next few years, more carriers will offer the iPhone. That has created a period of calm.

That gives AT&T, and in fact every company, a little breathing room to solve this brewing crisis, which will come back sooner rather than later.

The FCC and United States Department of Justice said no to the AT&T T Mobile merger because it was more than just a spectrum deal. It would also take one major competitor off the playing field.

At this point in the wireless industry, after years of acquisitions and mergers, there are few wireless carriers left.

In fact, AT&T and Verizon together already account for 70 percent of the marketplace. The other 30 percent is split up among a number of other carriers, like Sprint, T-Mobile, C Spire, US Cellular, Tracfone and several others.

So the proposed AT&T deal would have done two things. It would give AT&T spectrum, which likely would have been approved, and it would take T-Mobile off the competitive playing field, which was why it was not approved.

Verizon’s Play

The Verizon acquisition of the cable television wireless spectrum was also sticky. It was not an acquisition, but still Verizon and Comcast had taken this way too far. Example: You could walk into a Verizon Wireless store and buy Comcast television.

Two arch competitors now playing nice? That is not good for the competitive playing field. And it would have gotten worse over time.

This was one of several important issues that regulators just could not ignore. The negotiations between Verizon, Comcast, SpectrumCo and the U.S. regulators tried to iron out these issues.

The regulators now say they have done this, so the acquisition of spectrum can occur.

Remember, this deal is only about the acquisition of spectrum. It is not an acquisition of companies. The companies are still in place as always.

So that’s why Verizon its deal while AT&T did not.

Room for Maneuver?

This spectrum gives Verizon some wiggle room, but just some.

The wireless data spectrum shortage problem is still real, still growing and will still have a negative impact on the entire industry.

That’s why it’s very important for the industry players and U.S. government regulators to develop a short-term and a longer-term solution to this growing problem.

This cannot be ignored or every customer and every carrier will struggle like AT&T did in the first few years of this iPhone and smartphone revolution.

Additionally, the solution cannot just be for carriers to acquire spectrum for themselves. In that case there will be winners and losers, and fewer competitors will have a serious impact on the competitive playing field, prices and quality.

What to Do?

So what solutions have we kicked around lately?

Remember the Lightsquared strategy last year to be part of the solution? Why can’t we have more solutions like that? This company wanted to build out a national wireless data network and sell access to all the carriers. Made perfect sense until the whole thing fell apart. Actually, I don’t think AT&T and Verizon even liked the idea, but Sprint, C Spire and many others did.

What about another idea like Lightsquared? Even some kind of industry-wide partnership. It still makes sense.

There are other ideas, like one from a small company I spoke with last week called “Quantance.” It’s trying to unclog the wireless data networks by raising speeds on handsets. It’s already testing on two major carriers, one in the U.S. and another in Europe. Sounds good, but still only part of the solution.

Another idea I have been talking about is a sure solution, short- or long-term. All carriers should pool their wireless data spectrum together, and all carriers can buy access to it. That gives all wireless carriers equal access to spectrum and the ability to compete.

Clock’s Ticking

There are so many ideas. We must start acting on what’s good for the entire industry before it’s too late.

If we want to keep all the wireless carriers in business and competing in this new wireless data world, they must have access to spectrum. Every competitor, large and small, national and regional, has to have access to wireless data spectrum.

Either that or over the next few years all that will be available is just AT&T and Verizon. Now, if you are an executive from either of those companies, that sounds great. But if you want a large and healthy industry with many competitors to keep pricing low, innovation high and customer service good, that is a disaster.

So while AT&T and Verizon struggle to get as much wireless data spectrum to meet their rapidly growing needs, we should also pull the camera back, look at the entire industry, and develop solutions that will benefit every carrier and every customer.

That is the kind of solution we need today and into tomorrow. taking the Nook to Britain. This is the first time the Nook stepped outside the USA.

B&N.com will sell the Nook Simple Touch and Simple Touch with glow light. These are the company’s e-readers. This does not include their tablet.

British retailers have not been named yet. Barnes & Noble will also be launching the new website in Britain.

The Nook has been a leader in U.S. markets, driving the transformation of the book industry. It has around a 27 percent market share of the e-book business in the United States.

Its big competitor is Amazon.com Kindle. It already sells in many countries around the world, and Amazon just announced it’s now selling in India. Since Amazon.com is successful overseas, I think we can expect Barnes & Noble to be successful there as well.

This means there is a whole new world of opportunity out there for the company.

There are a number of smaller competitors as well.

I expect the next Nook tablet to be available later this fall.

E-Commerce Times columnist Jeff Kagan is a tech analyst and consultant who enjoys sharing his colorful perspectives on the changing industry he's been watching for 25 years. Email him at [email protected].

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

E-Commerce Times Channels

Study Finds Best US Mobile Internet Connectivity in Northeast

Eight of the top 10 states for mobile Internet coverage are in the Northeast, according to an analysis released by a consumer product and services comparison website.

The best mobile Internet coverage, though, isn’t in a state at all but in the District of Columbia, WhistleOut revealed in its analysis.

Placing behind D.C. were Delaware, New Jersey, Rhode Island, New York, Pennsylvania, Massachusetts, Ohio, Maryland and North Dakota.

WhistleOut also identified the worst states for mobile Internet connectivity. That dubious distinction goes to Alaska, followed by Wyoming, Nebraska, Mississippi, Maine and Vermont.

In ranking the states, 75 percent of the score was based on median mobile download speeds and 25 percent by 5G coverage.

Economics of Connectivity

Regional variations in service are related to the economics of connectivity, explained Anshel Sag, a senior analyst with Moor Insights & Strategy. A single cell tower in New York City can serve many more users than a similar tower built in a rural area.

What’s more, he told TechNewsWorld, “In rural areas, there is more need to dig infrastructure to support new cell towers and it takes more time and money to send engineers to update or deploy infrastructure.”

US Mobile Internet connection speed ranked by state

Mobile Internet connections ranked by state [Credit: WhistleOut]

Those economics mean that rural areas won’t be at the head of the line to receive the latest technology.

“Not surprisingly, wireless vendors are focusing their initial 5G efforts on urban and suburban areas that have the greatest concentration of customers and users,” Charles King, the principal analyst at Pund-IT, told TechNewsWorld. “But that means that smaller towns and rural areas can remain underserved for years, and some places effectively never get access to new service.”

Craving Connection

King added that the 3G networks that first enabled effective mobile Internet connectivity nearly 20 years ago massively changed communications and entertainment.

“For the vast majority of people and organizations, mobile connectivity represents the norm today,” he said. “Just consider what happens when mobile networks or services are disrupted.”

Just how important the mobile Internet is became apparent during the ongoing pandemic.

“People are staying connected with their family and friends, who they can’t see because of the pandemic, through the mobile Internet,” observed Sherri Riggs,the social media specialist at WhistleOut. “That connection is something we’re all craving and needing right now.”

“We’ve also seen a huge strain on broadband connections in the United States during the pandemic,” she told TechNewsWorld. “Having a mobile broadband Internet connection to back that up is something lots of people have been relying on the last few months.”

Lifestyle Changer

Sag maintained that mobile connectivity drives a lot of the economy and gives people and companies the mobility and access to information that they need to make better decisions more quickly.

“COVID-19 has exposed how important mobile Internet connectivity has become when cellular operators had to borrow fallow spectrum from players like Dish to prevent significant slowdowns to their networks due to significantly increased usage,” he said.

The mobile Internet will also be important for the lifestyle of the future, noted Atlanta-based technology analyst Jeff Kagan.

“We need to remember three things when we leave the house today — our keys, out wallet and our cell phone,” he told TechNewsWorld.

“Going forward, we’re only going to have to carry our smartphones because it will do everything,” he said. “In order for that to work, we’re going to need the mobile Internet.”

5G’s Contribution

What’s more, the mobile Internet is going to need 5G to keep technological development going forward.

“The significant boost in download speeds offered by 5G will clearly impact mobile entertainment and gaming,” King observed.

“In addition,” he continued, “5G is likely to lead to the development of ever more robust mobile applications, as well as newer or emerging solutions, including IoT and connected homes.”

“In other words,” King added, “next gen mobile solutions absolutely need 5G.”

Sag asserted that 5G connectivity will take the mobile Internet to more than just smartphones and tablets.

“While it does exist in many other places like planes, trains and automobiles, those implementations are bespoke in many scenarios and do not scale in a way that can be implemented everywhere,” he explained.

“5G enables all types of devices and services to access the Internet and become more intelligent and aware of their surroundings to maximize efficiency or improve the efficacy of the service itself,” Sag continued.

The mobile Internet powered by 5G will become faster, more reliable and available in more places, he added.

“New applications and services that were previously unthinkable or impossible with 4G will be possible with 5G,” he said, “and I believe many of those will exist in the factory, on the farm, in the classroom, in the car or even inside of a headset.”

Game of Hype

Riggs pointed out that 5G is more than just about speed. “The biggest advantage 5G offers over the other generations of the mobile Internet is capacity,” she explained.

“A single 5G tower will be able to support many more people than a 4G tower,” she continued. “The sheer capacity 5G offers consumers will greatly improve everyone’s Internet connections.”

She predicted that by the end of 2021 the majority of the country will have access to 5G from every carrier.

“Will it be 5G with gigabit download speeds?” she asked. “No. But the high-band 5G will be available in most major cities across the country.”

Before 5G’s potential to improve the mobile web is realized, though, consumers will have to put up with a lot of sizzle and not much steak.

“To put it kindly, the carriers’ claims have been optimistic and tend to paper over the fact that reliably constant 5G connectivity is fairly rare,” King observed.

Kagan noted that whether it’s 3G, 4G or 5G, the carriers are in a marketing game. “They have to win against their competitors,” he said. “A carrier can’t say that it’s not moving at lightening speeds. If it does, customers will go elsewhere.”

“They offer 5G, but it’s not available everywhere yet,” he continued. “And where they offer 5G, it’s not as fast as it’s going to be. It’s just the game. That’s the way it’s always been played in the wireless game for decades.”

John P. Mello Jr. has been an ECT News Network reportersince 2003. His areas of focus include cybersecurity, IT issues, privacy, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, theBoston Phoenix, Megapixel.Net and GovernmentSecurity News. Email John.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

More by John P. Mello Jr.
More in Wireless Networking