While wireless industry experts and customers have mixed feelings about the latest wireless carrier merger reports, most agree that carrier consolidation is inevitable.
Cingular Wireless LLC has offered more than $27 billion to buy AT&T Wireless Services Inc., according to the Associated Press and several other published reports. Were such a merger to happen, the combined company would create the nations largest wireless carrier, surpassing Verizon Wireless. Officials at AT&T in Redmond, Wash., and Cingular in Atlanta declined to comment last week, but customers are being told not to worry.
“I met with AT&T and inquired about these reports, and they dont seem too concerned at this time,” said John Halamka, CIO of Caregroup Heath Systems, a network of Boston-area hospitals that uses AT&T Wireless as its primary wireless carrier. “However, it does seem that there will be a lot of mergers and acquisitions in the wireless market over the next few years, simply because there are too many vendors currently, all building out separate networks.”
Other customers agree, but that doesnt stop them from employing several carriers at the same time.
“We use Sprint [PCS], Verizon and T-Mobile [U.S.A. Inc.],” said Jorge Abellas-Martin, CIO of Arnold Worldwide, in Boston, and an eWEEK Corporate Partner. “Sprint gives us the best deals, Verizon the best coverage and T-Mobile for international service.”
Service integrators report that mixing and matching wireless services makes it unnecessarily difficult to design enterprisewide solutions for customers.
“Yeah, I hate that,” said Craig Miller, chief technology officer of Dimension Data North America, a technology services company in Reston, Va. “It makes money for guys like us who have to integrate all these things, but its a suboptimal solution. It makes the decision complex, which is scary to our customers.”
Next page: Why Cingulars bid makes most sense.
AT&T is rumored to be courting bids from other carriers, but analysts contend that Cingulars bid makes more sense than others would. Both AT&T Wireless and Cingular run networks based on GSM (global system for mobile communications) technology, meaning a merger would make basic technical sense. Furthermore, Cingular could benefit from AT&T Wireless enterprise service expertise.
When confronted about a lack of enterprise services, Cingular officials generally point to Mobitex, the companys long-standing data-only network, which was virtually the only network to function reliably on Sept. 11. 2001. But building out its next-generation GPRS (General Packet Radio Service) voice and data network has been a different story, and enterprise service offerings on this network have been few.
“AT&T is stronger on enterprise services,” said Tole Hart, principal analyst at Gartner Inc. in New York. “Cingular hasnt been successful in porting [the Mobitex customers] over to the main business. Their focus has been more on the consumer side. They havent been quick to introduce new devices. Their sales focus is definitely not as strong as other companies.”
Mobitex runs older models of Research in Motion Ltd.s BlackBerry pages, which are popular with enterprise customers. But all of RIMs latest models support both voice and data on newer networks, including AT&Ts.
“AT&T Wireless seems to be the only carrier that is really pushing the data in the GSM camp,” Abellas-Martin said.
Cingular has been trying to keep up. Next month the company will announce widespread availability of the BlackBerry 6280 and 7280, which support both voice and data on the GPRS network, officials said. AT&T Wireless also offers these models.
“It might help those who use Cingulars BlackBerry if AT&T expands their network,” said Robert Rosen, CIO at the National Institute of Arthritis and Musculoskeletal and Skin Diseases in Bethesda, Md., who also is an eWEEK Corporate Partner.
Still, some analysts say while a merger might simplify the industry down the road, the immediate problems might outweigh the benefits.
“I dont see why bigger in this case would necessarily be better,” said Phil Redman, vice president of mobile and wireless research Gartner. “It would take 18 to 24 months to sort out which licenses theyd keep and what brand they would use. … Theyre very different companies with very different management styles and very different histories. Big mergers dont necessarily work. Look at AOL Time Warner.”