I recently started thinking a lot about wireless bandwidth when both AT&T and Verizon began to compete head on through the scope of their various wireless data plans in my post New AT&T/Verizon Data Plans: It’s Time to Renegotiate Enterprise Wireless Data Costs. The bottom line is that wireless data consumption is growing at an enormous – I might even say at an insane – rate, and it is a real question whether AT&T or Verizon is up to the real challenges of meeting this growth. Now AT&T has presented us with an interesting scenario.

Should the AT&T deal to acquire T-Mobile USA fail – and the only reason it would is if the Justice Department (and FCC and FTC) kills it on antitrust issues – AT&T would need to pony up not only $3B to T-Mobile USA parent Duetsche Telecom AG, but some spectrum rights as well in that case. That is one hefty break-up fee…but it suggests a high degree of confidence on AT&T’s part that the deal will eventually take place. Following what will likely be a lot of noise from Sprint, and the usual sabre-rattling by Justice, complete with bold statements of having secured high profile concessions from AT&T to insure both consumer and competitive protection, the deal will take place. And the number 2 and number 4 wireless telcos in the USA will become number 1.

Instead of the big 4 providing approximately 90% of all wireless service, we’ll have the big 2 and little 3. It doesn’t really change the competitive landscape. Since Verizon and Sprint both use the same network technologies (arguably, Sprint has the most state of the art wireless capabilities along with WiMAX) will it be long before we only have the big two left? And is there really any difference between having these 4 competitors today or the inevitable 2 in this case? I truly don’t see it myself.

I’ve been a Cingular/AT&T wireless customer since early 1993. That’s 18 years, and in truth I’ve never had a lot to complain about. There is always negative noise about AT&T customer service but even there I’ve never had a complaint. That said, what I do complain about is that AT&T’s network is a serious laggard, especially relative to other countries. Period. When is 3G not 3G? When it’s AT&T. When is 4G not 4G? Most emphatically when it’s AT&T. That’s not to say that T-Mobile doesn’t suffer from its own GSM-based issues. In truth the two networks are mostly in lockstep with each other from a technology perspective. True 4G simply will not happen until both companies move into full scale LTE – that is the bottom line on 4G here.

A great many ‘consumers’ have already voiced their opinions on the deal – many, if not most, collectively run along the lines of…’Hey, I was just about to drop AT&T and go over to T-Mobile…now I’ll just end up with the same bad customer service, the same higher costs and the same less overall services I’ve always hadt with AT&T…or maybe I’ll go to Verizon.’

It misses the real point though. Spotty 3G service and what I personally believe is overblown rhetoric on AT&T’s customer service is totally yesterday’s news.

The real question that need’s to be answered is whether or not the combined AT&T and T-Mobile can deliver – on a very timely basis – the true next generation wireless network. Will the merger lead to a true 4G (LTE) wireless environment with rock solid coverage across most of the civilized wireless USA world? AT&T needs to give Verizon real technology competition. That is the competitive layer that truly matters – and it is the only competitive layer that will lead to real and substantive gains in net wireless bandwidth and quality of coverage.

Sharp Focus on LTE and 4G

To my mind pure next generation wireless technology is the ONLY issue worth debating. AT&T will make the necessary Justice Department ‘regulatory’ concessions – there is absolutely no doubt about that. The company has already arrived at this state of affairs - AT&T already knows what will be asked and it already knows what it will give up. The rest will all simply be the usual posturing.

For enterprises already living in a mobile world  - and for consumers from the perspective of these consumers as enterprise customers – business success hinges on the availability of true 4G bandwidth over the rest of the decade. Verizon has a real technology lead on speeds and feeds and general coverage scope (there’s a map for that). But it also has  its own technology issues. AT&T and T-Mobile have had to ‘paper over’ through marketing gimmicks what their networks are really capable of in order to at least give the illusion of maintaining parity with Verizon. Verizon has been and remains a small step ahead on bandwidth – an edge that continually threatens AT&T’s business.

Does the equation make sense? Yes, it does.

So, aside from the immediate headline grabbing antitrust story, what I hope will be explored in depth instead is whether or not AT&T and T-mobile can QUICKLY deliver on the true 4G technology and expand their coverage to truly compete with Verizon. Both the mobile enterpise and consumers will win if they are able to do so.

Is true 4G really that important? Yes, it is. Just take a look at the wireless traffic numbers I noted in a recent blog post, Wireless Data Traffic Growth in the Years 2010 – 2015. Wireless data growth will be insane – it is on an enormous uphill trajectory, and the key wireless carriers MUST be able to handle it all. Wireless expense management (WEM) is clearly going to be a critical component of your mobility planning.

Will costs rise? Very likely consumers will see costs increase somewhat, at least initially. Later on, however, as AT&T and Verizon end up going head to head with true 4G service, the speeds and feeds issue falls out of the equation and the two will need to compete directly on price and value-added services. And they will.

Enterprises, meanwhile, as I’ve already noted, need to plan out a long term strategy relative to negotiating their wireless data costs. As the entire world rapidly goes mobile wireless data costs become the real elephant in the room – being caught unprepared is not going to win you any friends.

Now is the time to start both the planning and the negotiating.

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