Attorneys general in 11 states recently threw their weight behind AT&T’s effort to acquire T-Mobile. The leader of the group, Arkansas’s Dustin McDaniel, wrote that “[t]here are significant economic and public benefits to this merger.”
McDaniel and his colleagues are right. The merged entity will move our nation closer to achieving universal mobile broadband deployment — and that’s good news not just for phone-obsessed consumers but for the country’s economic prospects, too.
Few sectors of our economy have grown as quickly as wireless telephony. Just a few years ago, wireless carriers offered little more than voice service. But by 2010, Internet-enabled smart phones comprised more than 40 percent of all mobile phone sales. In the year prior, the number of U.S. mobile web users doubled. And over the last four years, data traffic on AT&T’s network alone expanded by a whopping 8,000 percent.
By 2014, 60 million more devices will log onto America’s wireless networks.
To accommodate this explosion in demand, wireless providers have developed roughly a quarter of a million cell tower sites across the country.
And yet, today’s wireless networks are far from perfect. Slow data speeds and dropped calls are still too common even on the latest smart phones.
Consumers have made clear that they want more of everything — more speed, more capacity, and more data services. But building the infrastructure to provide these services has proved difficult. Each new cell tower site must be bought, planned, and approved by a bevy of government officials. It’s a slow process.
That’s where the proposed merger comes in. The networks of both AT&T and T-Mobile operate on the very same technology, so integrating the two should be swift. Ultimately, AT&T expects to offer coverage and service to an additional 55 million Americans — reaching more than 97 percent of the population.
But AT&T isn’t acquiring T-Mobile just to add to its customer base. It’s also picking up a host of wireless spectrum and transmissions infrastructure — the virtual and physical real estate that transmits our wireless data.
That’s important for consumers, as wireless providers can’t bolster their networks without additional airspace and facilities through which to send increasing amounts of data.
Spectrum is particularly valuable, as there’s only a finite amount. Buying T-Mobile’s inventory of represents the fastest way for AT&T to expand its wireless capacity. And it promised to use that block of spectrum to undergird a new 4G mobile broadband network.
Indeed, by purchasing T-Mobile, AT&T is making the sort of investment in its network infrastructure that consumer advocates consistently request. But rather than building that network from scratch, AT&T is buying it.
When all is said and done, the company will have pulled off five years’ worth of network expansion virtually overnight, AT&T CEO Randall Stephenson claims.
So AT&T will have a more robust network after the merger. But won’t consumers have to pay more to access it, with one less wireless provider competing in the marketplace?
Technological progress may render that question moot. The next generation of wireless networks will operate at broadband-level speeds. And that, according to the Federal Communications Commission (FCC), will increase competition in the market for high-speed data delivery.
As the FCC explains in its National Broadband Plan, the “upgrade of the wireless infrastructure is promising because of its potential to be a closer competitor to wire line broadband.”
In other words, with both wired and wireless carriers competing in the new market for broadband service, consumers will have more choices — and could pay less as a result.
Hispanics and other minorities would benefit in particular from these sorts of changes. Hispanics and African-Americans are among the heaviest users of mobile broadband. In 2008, they were more likely than members of the general population to have downloaded music, video, or other multimedia to a mobile device. As a result, they’d be among the first to profit from more robust mobile data services.
The proposed merger of AT&T and T-Mobile could usher in a new era of technological progress — and extend innovative telecom services to millions more Americans.
Gus West is president and board chair of The Hispanic Institute. www.thehispanicinstitute.org