Wednesday, June 29, 2011
Written by Cherry Fisher May
Whether your issue is job growth, dropped calls, next generation technology or lack of rural access, this acquisition is a winner.
AT&T Chairman and CEO Randall Stephenson aptly compares the creation of the mobile Internet to the invention of the combustion engine. “I think it’s driven the same amount of commerce as what we saw back in those days,” he said in a recent speech about his company’s proposed acquisition of T-Mobile USA. The comparison is powerful but doesn’t quite capture the essence of this moment. Although combustion engines certainly changed how life was lived and business was done over a hundred years ago, today’s hand-held mobile devices are even more pervasive, having altered the lives of everyone from second-graders with smartphones to engineers with iPads. This technology and its tools are often collectively referred to as an ecosystem; unfortunately, it is based on a limited resource — bandwidth — and demand is exploding exponentially.
The FCC, which controls the assignment of radio frequencies for everything from baby monitors to X-ray machines, reports that the growth of airwave-dependent devices is burning through available bandwidth so fast that “mobile data demand will exceed available capacity by 2013.” Eventually, the agency will have to figure out a way to expand the spectrum within which these essential tools can operate, but that will take some time and carriers like AT&T are looking for faster solutions.
Stephenson’s company is utilizing multiple strategies, and the $39 billion T-Mobile acquisition plays a big role. Even as negotiations on this deal began, AT&T was poised to make significant investments in its wireless and wired networks, including for 2011 an upgrade of more than 700 existing cell sites in Louisiana with another 30 new ones to be added. In the past two years, the company has put more than $2.8 billion into infrastructure in the state and plans an additional $8 billion nationwide. In addition to augmenting capacity, these investments create badly needed jobs, but even that isn’t enough to get ahead of the growth curve.
The T-Mobile acquisition is described as a “fast, efficient and certain solution to meet consumer demand for mobile broadband” in large part because of the compatibility of the networks. The former competitors co-exist within the same spectrum bands and also share the same network technology. Stephenson says the engineering efficiencies between the two companies will immediately increase capacity and scale from the existing networks. (Target date: March 2012.) It will also expedite the availability of next generation technology (4G LTE) to the combined customer base, covering more than 97 percent of the U.S. population, which is especially important to rural customers and great news for a state like Louisiana.
The rural broadband benefits of this mega-deal are, for me, among its strongest selling points. Imagine the education portal that advanced wireless broadband connections will open in thousands of rural schools across the country along with life-long learning opportunities for adults. Rural businesses and entrepreneurs will be better equipped to compete globally, and telecommuting will be a new employment option for country folk. Telemedicine will improve health care in rural communities, allowing physicians to manage patients remotely. Talk about a game-changer.
With endorsements from labor unions, Silicon Valley and agricultural organizations — and positive press piling up from national tech experts — AT&T’s acquisition of T-Mobile appears to be one of those rare deals that truly is a win-win-win. It works for customers, shareholders and employees of both companies and will result in economic growth and innovation throughout the country, especially in Louisiana.