Loud and Clear

27 October 2004


FCC OKs Cingular’s Bid for AT&T Wireless

The FCC has approved Cingular’s bid for AT&T Wireless, allowing the $41 billion deal to go ahead. The entire commission approved the deal, but the two Democrats on the panel did object to a few parts of the arrangement on the grounds it would be anti-competitive in certain areas. And while they do have a point when it comes to market share in localized areas, competition in cell phones is more likely to occur over what the customer’s plan provides rather than what the plan costs.

The biggest complaint consumers have (after not being able to get a signal at all) is the stupid limits placed on the amount of air time their plans entail. At the end of this long and tedious road, mobile phones will have a flat rate for unlimited usage at any time. Voice over Internet Protocol phone services (e.g., Vonage, Optima) already do this for those using high-speed internet connections. The fact is that it costs almost nothing for the service provider to carry the marginal minute of conversation. Yet people have to watch their minutes lest they suffer “overage charges.”

Presently, there are three different approaches to dealing with this industry-wide standard of idiocy. Free nights and week-ends are common to most plans (nights beginning at 9 pm, sometimes even 7 pm; week-ends are Friday night through Sunday – though T-Mobile’s week-end starts Thursday nights on some plans). Another approach is Sprint’s nominal fee for 100 extra minutes. Cingular tackles the problem from the other end by allowing unused minutes to roll-over to the next month, which makes higher fee contracts (with more minutes) more attractive.

Text messaging and photography options represent popular add-ons, and this is where the basic fee will get topped up to the benefit of the service provider. At least, one company offers streaming video for many manufacturers’ units, and 2005 is likely to offer even more. Internet access is becoming rather commonplace, largely on the ignorance of the public to security problems with wireless access.

In the end, the merger of Cingular and AT&T Wireless is less important that the technological development of the national mobile network. There are still large swathes of America (mostly in the west) where cell phones are as useful as scuba gear in the desert, and only the biggest of the big will be able to change that. In a way, mobile phones resemble the auto industry. The money is in the newest and flashiest hardware, not in providing the roads. Expect more mergers among the service providers before this is all over.

© Copyright 2004 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.

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