Mobile mega-merger woes

WAN consolidation always a double-edged sword

Industry analysis by expert Joanie Wexler, plus links to the day's wireless news headlines

The Department of Justice's decision to formally cry "antitrust!" and sue to block AT&T's acquisition of T-Mobile USA caught the wireless industry by surprise this week.

AT&T, reportedly reeling from the filing, may come back with a counter deal that includes concessions to make the mega merger more palatable to the cause of competition in the cellular industry.

Or not. For now, we don't know what will happen.

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The Department of Justice's decision to formally cry "antitrust!" and sue to block AT&T's acquisition of T-Mobile USA caught the wireless industry by surprise this week.

AT&T, reportedly reeling from the filing, may come back with a counter deal that includes concessions to make the mega merger more palatable to the cause of competition in the cellular industry.

Or not. For now, we don't know what will happen.

EXPERTS: AT&T acquisition of T-Mobile may not be dead yet

Here's the thing about carrier mergers: They are a double-edged sword. The age-old mantra in networking is that a network's value increases exponentially as the number of entities attached to the network grows. (This is a paraphrase, and I think its essence can be attributed to Ethernet inventor Bob Metcalfe.)

On one level, then, the union of two nationwide mobile networks running the same base cellular technologies (GSM and its successor 3G and 4G technologies) could stretch network coverage and thus make it more valuable to all who connect to it. Having one cohesive network owned, operated, managed and secured by a single entity has its advantages in terms of operational costs and consistency in the user experience.

On the other hand, the coverage benefits can be achieved by simple roaming agreements. And the Federal Communications Commission mandated data roaming among mobile operators in April mirroring a requirement for voice roaming in place since 2007.

I'm running out of hands, but there's another issue to consider. You may recall that there was this nifty industry-standard connection called the Network-to-Network Interface (NNI) in the frame relay world 15 years ago. It was created so that different frame relay operators' networks could be inter-linked, thereby expanding the reach of any given enterprise customer's coverage. AT&T refused to implement it, however, because it didn't want to make service-level promises over the quality and performance of a network it had no control over.

That was understandable and perhaps even noble. But it did leave areas of the country without frame relay service options.

The same could happen in wireless, because the nationwide carriers' networks for the most part cover the same, most populated areas of the country. In one sense, it's more efficient to run one network than multiple networks all doing the same thing in the same places.

But then you're back to a Ma Bell situation, where the network is highly controlled, but innovation and any incentive to keep prices in line get squelched. An independent T-Mobile puts competitive pricing pressure on the likes of Sprint and MetroPCS - and thus indirectly on the Big Two - and that's good for consumers.

AT&T's biggest agenda is that it wants T-Mobile's spectrum. Some analysts reportedly think the carrier will behave like the con man who marries the rich widow for her money and then -- um -- "disposes" of her to collect.

A take-the-spectrum-and-run scenario would be an unfortunate outcome.

Read more about wireless & mobile in Network World's Wireless & Mobile section.

Joanie Wexler is an independent networking technology writer/editor in Silicon Valley.