TMCnet CEO Rich Tehrani’s (News - Alert) blog June 28 struck a major -- not minor -- chord with me.

It noted the challenges facing Sprint CEO Dan Hesse’s attempts to have the FCC deny AT&T’s acquisition of T-Mobile (News - Alert) as his and allies’ time is running out. It also referenced a Bloomberg Businessweek article from the same day that detailed Hesse’s many travails and stirred up the already heated interest in this matter. It reminded me how fast the time is running out. Soon the FCC will decide on the arguments by supporters and dissenters, determining whether the deal should happen and if so what its structure would be. It also reminded me how far we have come in the wireless industry in the U.S. and had me wondering if it was worth the trip.

The history of the evolution of the U.S. wireless industry structure, as opposed to cataloging technology changes, is long and convoluted. To briefly recount, it started with the court-ordered breakup of Ma Bell in 1982. In evaluating what assets to divest, AT&T (News - Alert) decided to give the so-called “Baby Bells” (Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis, Southwestern Bell, and US West aka, the RBOCs) AT&T’s analog Advanced Mobile Phone (News - Alert) System (AMPS).  AT&T thought the market for mobile telephony appeared limited to people in cars. Wireless services were not seen as being as strategic as other parts of the AT&T empire. It was a decision they came to regret. The market took off and in 1994 AT&T made a blockbuster purchase of McCaw Cellular, which was renamed AT&T Wireles. Ironically, Hesse would come to lead it. But I digress.

It was determined by policy makers that the mobile services market needed to be competitive from the start. Spectrum was set aside for “wireline carriers” (those owning utility landline networks) in a given market to operate cellular services. New entrants were given different frequencies in local markets first awarded by lottery. And other spectrum was set aside for minority-owned enterprise and emerging technologies with rules on how they would be awarded evolving over time. Fast forward. Following challenges to every aspect of spectrum allocation, lotteries and licensing issues, billions being spent on spectrum auctions (millions to consultants on game theory), and an avalanche of industry consolidations, here we stand.

Forget for a moment about the business perspective on whose proverbial ox gets gored. Set aside opinions about whether Hesse’s stance to fight in the states, rally the troops and engage consumer groups ultimately works. I look at all of this from the prospect of having only two dominant providers who pose a threat to ultimately becoming not just a duopoly in wireless but one threat also dominates the local wireline business in the U.S. (sharing it with cable companies) and critical parts of the long-distance physical network as well. What hath we wrought in all these years?

I am all for letting markets work with light or no government intervention. However, history says duopolies find it beneficial to manage price as well as the pace of network upgrades and innovation (let’s call it for the sake of argument CapEx and OpEx) when there is no critical mass of competition to cause them to do otherwise. We all lose in this scenario. The obvious reasons have been cited in the filings at the FCC, things like:

• Barriers of entry are created for others building new networks, potentially exacerbated in this case by AT&T’s ownership of critical backhaul facilities.
• The potential for walled gardens, based on adherence to one or the other duopolists’ network implementations and business practices, could stifle innovation with significant ripple effects in adjacent markets. The last thing we need is some version of what TMCnet CEO Rich Tehrani has not so lovingly called over the years, “The Splinternet.”
• Equipment vendor markets would be disrupted as buyers disappear and the winners use their increased buying power to extract problematic terms.
• As consumer choice is narrowed, price competition could disappear.

What tends to be given lip service but is a very serious matter is that competition in the U.S. has served as a proxy for the creation and execution of a national broadband policy. And with mixed results. We marvel at the technology we create and the apps that our phones use, yet countries with real broadband policies have deployed networks to far greater percentages of their population (including those in rural areas). In a global economy where countries’ fortunes rest so critically on their communications infrastructure, not just for businesses but the entire populace, this puts all of us eventually at a competitive disadvantage.

I resonate with Hesse’s cry that competition, when real and given a chance, works. As a citizen, I don’t care if this position is more business-based than necessarily altruistic. Given a lack of policy guidance based on national needs, the network providers need to be constantly pushed past their comfort zones or all can suffer. Unfortunately, history in such matters tends to adhere to the golden rule, as in “he who has the gold, rules!”  Let’s hope not. If we were better served by a duopoly, all of those billions spent on auctions and acquisitions would have been best spent going into network modernization where something of tangible value, and not just shareholder value, could have been created.

One can only hope the FCC, in its evaluation of the merits and disadvantages of this deal, carefully takes everything into consideration.  We shall see if this turns out to be a case of back to the future. 

Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent, Telcordia, HP, Siemens (News - Alert), Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.