The Government is fighting the last war – why it is blocking TMobile/ATT merger for the wrong reasons

The long drawn out saga that is T-Mobile being acquired by AT&T got caught in an unexpected snag this past week when the US Department of  Justice (DOJ) filed a lawsuit to block the move. The DOJ pointed to competitive and fear of lack of choice for consumers as its primary concerns. But are these legitimate or are they fighting the last war? What do I mean by this?

There is a famous saying that often times nations and their generals fight the last war when it comes to preparing for the next war. The French and British in 1940 were prepared for trench warfare, another version of the First World War, only to be caught behind a fortification that was never used by the Blitzkrieg unleashed by German panzers. NATO and the United States is sometimes seen as fighting the Cold War today – B2 Bombers, Seawolf Submarines or the Crusader self propelled howitzer. To me this is similar to the DOJ focusing on what communication companies fought the last war over – cellular coverage. Similar to fighting over who controls the POTS lines (plain old telephone service). When voice was carried primarily by twisted pair cooper lines, it did matter who was able to bring that service to you. What happened? Cable got into the game as did satellite, now you could get your communications via other means. Oh and cell phones. There is not the same level of concern today about who controls the land line communications, because it has been wrestled away from telephone companies.

The same is going to happen with cellular. Maybe not tomorrow, but it is coming. For that reason I think the DOJ is mistaken to focus on trying to maintain T-Mobile as a disruptor – forcing the likes of Verizon, AT&T and Sprint to stay competitive. Yes the likes of T-Mobile play a role, but so do companies like Metro PCS. The real players that force the cell companies to innovate are the Googles, Apples even the Microsofts of the world. Pushing through the ability to build “super wifi” and the like. As this technology becomes more pervasive what will happen to all those cell towers? The load will be lessened on the providers’ networks but their control of our communication spend might also be lightened. Consumers will be able to potentially choose other means to access the web, send messages or gasp…talk on the phone via a wifi network. Skype anyone? Consumers are already moving away from pure voice and leveraging IM and SMS as a preferred method of communication.

The DOJ is fighting the last war. Competition and innovation will not be accelerated because there are 4 main cellular players, but because Google voice, Skype and Super Wifi to name a few, are technologies and players that are working on new ways to allow consumers to communicate with one another. Look at the iPad 2 – it has a camera and with a simple Wifi connection you can easily Skype with anyone in the world, so much for needing to be on the AT&T network.

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Filed under Current Events, Technology, Wireless

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