The cycles of history

Question for those who have long considered the wireless industry to be the embodiment of competitive behavior: What will be the new ideal?

A replacement is required because the beginning of the new year marked the end of an era for wireless. As the industry overall was distracted by the allure of high-speed data and the technologies that support it, the wireless sector was completing the final stages of a transformation that could have significant bearing on the future of competition.

The event that signaled the shift is still not a done deal, but it's estimated to be valued at upwards of $60 billion when it finishes. It is the bidding battle over AirTouch Communications, one of the last remaining wireless entities of any note that is not Bell-related. At last look, Bell Atlantic and Vodafone were the front runners in the acquisition frenzy, but regardless of which carrier emerges as the victor, the implications are largely the same.

Despite the aim of mishandled government spectrum auctions, despite the sincere intentions of start-up entities that wanted to do something different with wireless, despite efforts to develop wireless technology platforms that could support wireline replacement and data offerings, wireless service has become little more than a voice commodity controlled by the biggest of the big. The value of being able to offer large buckets of minutes without borders or roaming charges, has all but stifled service innovation and stamped out opportunity for regional competitors.

That leaves us wondering what happened, where things changed. Just a few years ago disgruntled Bell company names were leaving their jobs to pursue wireless-based efforts, drawn by the promise of FCC auctions and the chance to shape a business plan and culture in non-monopolistic ways.

The underlying idea was that those new business efforts were not going to stop at offering voice services: The new generation of wireless was expected to produce companies that used new spectrum licenses to create advanced fixed and mobile networks that could support voice and data services and ultimately evolve into viable replacements to incumbent network operators. Few of them materialized.

The way things are shaping up also begs the question of whether we are in the midst of a historical cycle. The wireless transformation is reminiscent of the years leading up to the passage of the telecom act and the forced re-opening of competitive opportunity in the wireline sectors. Will it become necessary at some point in the next decade for the wireless industry to be somehow regulated and revamped to give upstart competitors a fighting chance?

Certainly, no small operation is going to survive the Bell- and IXC-driven tsunami that has overtaken today's wireless field. The few that do remain are likely to be little more than appetizers for one of the giants-AT&T Wireless Services; Sprint PCS; the likely consolidation of Bell Atlantic Mobile, GTE, PrimeCo Personal Communications and AirTouch; the wireless-challenged but well-funded MCI WorldCom; or the still-regional wireless operations of BellSouth and SBC Communications.

These monsters are allowed to thrive because right now the consumer is still the beneficiary. As the three or four national providers of wireless service options feign duking it out, their size and their other profitable interests allow them to drop service prices lower and lower to compete for customers. Industry watchers predict the 3cents minute is not far off.

But what happens when they have control-when their huge shadows have forced all independents to close their doors or be acquired? Will their main interests still be offering customers the lowest possible per-minute price? Will they improve their customer care operations for fear of losing out to a more customer-centric competitor? Probably not.

The carrier environment has become one in which being a multiservice operator-an integrated communications provider-is the only way to ensure steady profi t and growth in customer numbers. The pressure of being a service provider in today's volatile business and customer climate often necessitates strategic mergers and acquisitions to create operating scale and service scope.

But the huge proportions to which wireless entities are growing has simply eliminated any glimmer of competitive opportunity in wireless. I repeat: What will be the new ideal?