On Wednesday, the Department of Justice filed suit to stop the acquisition of T-Mobile by AT&T, because of concerns over the deal being "anti-competitive" and "reducing consumer choice."
This may indeed be the case. But underlying this fight is one that will become a major pain point for everyone who depends on wireless connections to the Internet: the spectrum crunch.
Mobile devices are quickly becoming the platform of choice for connecting to the Internet. And as demand for mobile wireless access has skyrocketed, the available chunks of Federal Communications Commission-licensed spectrum have become a snug fit for wireless networks. At an event I covered in Washington back in May, FCC Chairman Julius Genachowski said demand for spectrum has been increasing at an annual rate of 3,500 percent, while the supply has been held flat by the laws of physics. And the ceiling is closing in fast.
"When we feel the crunch, it will be very frustrating to consumers, and it will affect the pricing of spectrum," he said. "And if we wait until the real crunch hits to fix the problem, we'll be in a mess, because you can't fix it in a week."
Genachowski has proposed new ways of redistributing spectrum, like using "two-sided auctions," in which "we can attract existing license holders who could supply spectrum into auction for a share of the proceeds." In the meantime, the scramble for spectrum has started to look like a dystopian teen novel -- The Bandwidth Hunger Games, if you will.
LightSquared , a company trying to create a nationwide combination satellite and 4G wireless network for which it would sell access wholesale, is perhaps the first "tribute" thrown into the spectrum death match. The company has run afoul of GPS device makers
that use spectrum that interferes with LightSquared's phones. (The GPS manufacturers see it as the other way around.) The spectrum LightSquared owns and is trying to use for 4G wireless services is adjacent to the frequency used to transmit GPS signals.
The Federal Aviation Administration has let its voice be heard in this, as well. It claims LightSquared's networks, if deployed, would kill 794 people over a 10-year period. Talk about a killer app.
AT&T, on the other hand, is sucking the spectrum out of the air to keep competitors from breathing.
T-Mobile's data network coverage doesn't have any areas not currently served by AT&T's data network, so the deal wouldn't give it a broader reach. Instead, the combined networks would be essentially doubling up on spectrum licenses in much of AT&T's current coverage area. AT&T chief technology officer John Donovan has said his company needs the additional spectrum to complete the rollout of its 4G LTE network, because it is facing "exhaustion" of its currently licensed spectrum.
While trying to gobble up T-Mobile, AT&T is also trying to get the FCC to sign off on a transfer of spectrum licenses
from Qualcomm's failed FloTV venture. The FCC has put the transfer under 180-day review. If both its deals went through, AT&T would hold nearly twice as much licensed spectrum as Verizon.
And all that spectrum won't necessarily translate to good service for customers. As Senator Al Franken wrote in a letter to the FCC
in late July, "AT&T owns more spectrum than any other company, yet AT&T has been plagued with delays in rolling out infrastructure to support spectrum it has been allocated."
That's not a recipe for the most efficient use of a limited resource. With so much potential economic growth tied to a mobile Internet, an AT&T acquisition of T-Mobile can't be a good thing for anybody other than AT&T.
— Sean Gallagher is an award-winning IT journalist and the former head of InformationWeek Labs. Gallagher is now an independent journalist and technology consultant based in Baltimore. He can be reached at: email@example.com.