The Real Prize in the AT&T, T-Mobile Merger

Eden Praire, MN — Mar 24, 2011 / (http://www.myprgenie.com) — Some people slept through the FCC deliberations in December when they approved new Internet regulations that were designed to prevent large telecommunications companies from destroying and squashing their competition. These rules were dubbed “net neutrality” rules and were designed to prevent companies from blocking access to legal content. But, the rules are really for wired systems. Why is this important?

Ken Thurber, author of Big Wave Surfing: Extreme Technology Development, Management, Marketing and Investing says it’s important because someone at AT&T was wide awake and saw a big loophole that they’ve started to drive a truck through. Thurber says “this big loophole in the rules has attracted limited substantial comment. But while others slept, AT&T has devised a big wave strategy with their proposed merger with T-Mobile. Currently AT&T is both a wired and wireless carrier. After its proposed  merger with T-Mobile it will become primarily a wireless [read unregulated] carrier.”

According to Thurber it’s all about the regulations. The basic rules will prohibit discrimination, by companies that provide high speed Internet Service, from access to content, including blocking Skype service. The idea is that the rules will keep information moving on the Internet and will allow customers to better understand how companies run their networks.

From a technical point of view, it is clear that some set of rules is needed as any serious router used in the backbone of broadband services has the ability to provision quality of service (QOS) functions that allow the ISP (Internet Service Provider) to control the traffic flow over their circuits on the backbone any way they like. Further, functions exist within the backbone to allow the companies to reroute traffic to avoid DoS (Denial of Service) attacks and that very capability can also be used to throttle traffic in other ways.

Thurber goes on to say “none of the above is the real problem. The real problem is that these tough-sounding rules primarily apply for wired systems. The idea is that cable and phone companies will not be able to give priority to their offerings like their TV or movie shows. But, wireless systems did not get the same level of rules because it was felt that they were just starting to evolve. If you can end up dominating an unregulated market before the regulators figure out what happened, you gain a substantial competitive advantage.”

Thurber continues. “Talk about letting the fox into the chicken coop! The growth today is not in the wired internet! The growth is in wireless services and mobile devices. These devices and services are what is fostering market growth. If wireless needs no regulation then why are the phone companies getting rid of their unlimited data plans? Try to buy an unlimited data plan from AT&T. They no longer exist. When the merger is complete unlimited data plans will be history.”

Thurber thinks AT&T sees the obvious benefit of the merger as a land grab for market share by acquiring more subscribers than anyone else. But it’s also trying to be king of the hill in an unregulated market before anyone can stop them. “We are seeing an intersection of three technology trends that will be big money makers if the current players can just shut out their competitors: tablets and smart phones as basic computer devices, mobility of basic computer devices, and augmentation of the computing power of basic computer devices via the cloud.”

“The only hope for the future is a neutral wireless net! The Internet has thrived because of its Wild West nature that provided equal and fair access to all players. The FCC handed the big players a substantial advantage over future innovators. This proposed merger is one result of their ruling. The only hope for technology big wave surfers is to band together and get Congress to fix this mess. Otherwise, we will see a consolidation in the industry as more than phone companies merge their capabilities.”