A Minority Investment Is the Best Solution

 
 
By Wayne Rash  |  Posted 2011-09-07 Print this article Print
 
 
 
 
 
 
 



T-Mobile USA, it seems, has already examined the prospects of a successful merger with AT&T, and is prepared for life without AT&T, regardless of what its parent in Bonn might be up to. Preparing to go it alone is probably T-Mobile's best bet for long-term success right now. The merger is pretty much gone, despite what AT&T's bluster might suggest.

Plus, there will come a time when AT&T will have to fork over all that new spectrum that it promised as part of the consolation prize if the merger didn't pass muster with the feds. That new spectrum will likely satisfy T-Mobile's needs for Long-Term Evolution (LTE) technology.

T-Mobile has LTE? Indeed, it does. In Europe, T-Mobile and Vodafone are the big LTE providers. While Deutsche Telekom may not have moved its LTE technology to the U.S., the company has it in abundance in Germany and elsewhere in Europe. Once the merger issue is resolved and given enough spectrum, there's no reason T-Mobile USA, still owned by DT, can't simply use the parent company's existing LTE technology in North America.

Of course, it will take a while to build out LTE in the U.S., given T-Mobile's late start, but it has 42M bps Evolved High-Speed Packet Access (HSPA+) to provide for interim high-speed data connections. So a move to LTE is certainly possible for T-Mobile; it has the technology and the knowledge. But would parent firm DT want to invest more money into the U.S. market when it's trying so hard to divest its U.S. property so it can take its cash and go home to Germany? It might.

Let's say, for example, that Google has decided that it doesn't really want to be a carrier in addition to making phones. Now, suppose that in return for a significant investment in T-Mobile, Google asks for the LTE build-out so that it has a faster way to deliver the data and search services it sells. Suddenly, DT's financial exposure to the U.S. market is reduced, it has someone else to pay for the LTE deployment, and it will have a lot of marketing help in adding subscribers and selling services.

While it won't grant Deutsche Telekom's wish to bail out of the U.S. market, it will make it a lot less painful to stay in. And it will give Google a way to ensure that it has the medium to distribute its products without being limited by AT&T's Draconian data plans. Suddenly, it's looking like more of a win-win for everyone involved, and a minority investment by Google probably won't even trigger an FCC hearing. Who could ask for more? 

 




 
 
 
 
Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazineÔÇÖs Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.
 
 
 
 
 
 
 

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