The proposed AT&T/T-Mobile merger is shaping up to be an iconic business case saga and a judicial milestone. Who would have thought that nearly 40 years after the U.S. Department of Justice convinced a judge to break up "Ma Bell" that the DoJ might be able to convince another judge to tell that same company you can't get too big again?
But of course AT&T can get big again, and become so dominant again that it is a feared monopoly that must be dealt with — if it should be so lucky. But getting there will take build, not buy.
Getting so large that you could control a market to the real or potential peril of the consuming public happened a lot in the industrial age, with railroads and oil, and even the movie business, which was ordered in 1948 to divest itself of theaters. But that was at a snail's pace. These days eyebrows are raised by the Microsofts and Apples and Googles of the world who manage, in what seems like a blink of an eye, to provide goods or services so many people want that competitors have a hard time keeping up.
Unlike the industrial age, it seems like anyone with the right idea and execution (and garage) can do it. Who could have imagined Apple would become the most significant handset maker in the world. Frankly, who could have imagined Apple at all?. Or that Google would come up with mobile phone software that now sets the pace? Or even that Microsoft, when it decided it wanted to, would choke investor-beloved Netscape to death in no time?
Mergers can be a fast way of taking the lead or getting back on track. But they seem better suited for a zero-sum game, as when Sirius and XM radio tied up so satellite radio wouldn't die because there wasn't really room for two players at that stage of the tech's evolution. Or when Thompson and Reuters combined to become as big as Bloomberg had become.
On the Internet, we are at the leading edge of a land grab, a gold rush, oil mania [insert cliche here]. There is absolutely no doubt that wireless is going to be the most important medium in the history of this world. There is already an insatiable appetite for it among the haves, which are largely in the Western world and concentrated in urban centers, and who will only be wanting more/faster/cheaper.
And then there is the rest of this planet which isn't nearly there yet but will have to get there. It just will have to.
It seems unthinkable now, but we didn't really know that the Internet would resonate. It had been around for more than two decades before AOL started minting customers. Then the World Wide Web provided an "aha!" moment to the indifferent masses. We didn't really know that "expensive" broadband would be so widely adopted. But we absolutely do know that Internet everywhere is a sure thing. We know absolutely that the Internet herd wants to range free. It's happening because our phones allow us to always be on, training wheels which impelled us to want an even better mobile Internet experience, which in turn created monstrous demand for tablets, which had been stillborn many times before.
The building out of its wireless network, ostensibly the primary reason for AT&T's interest in the merger, is a decent enough fiscal rationale. T-Mobile's non-U.S. owners don't seem to have the taste for the fight in the U.S., and have bigger fish to fry elsewhere. Fair enough.
But as big as the deal is, big enough to maybe be an anti-trust impossibility under U.S. law, the thinking is small.
As Fake Steve Jobs "told" AT&T Chairman and CEO Randall Stephenson way back in 2009:
This is a time for unspeakable boldness. To bet the house, the farm and your children's future on what is a sure thing: There will be a huge market for a fast grid which is everywhere and allows us to do anything we needed to be home for half generation ago to do.
I'm no finance guy or spectrum nerd, but I'm sure a hedge fund manager's personal assistant and an engineering undergrad could explain to me in patient words of one syllable why I may be wrong. And I hope they will in the comments.
But it sure seems to me that the play here isn't to spend $39 billion to buy up someone else's property; It's to take that $39 billion, leverage that to the hilt and tell your shareholders that your laser-like focus will be to become the go-to source for mobile Internet access, and that you will do that by inventing, re-inventing and going where no one has gone before.
If you aren't putting every penny that you beg, borrow or steal into this (read your phone bill lately?), and can't convince the people holding tens of billions of dollars on the sideline in this jobless recovery that there is gold in them thar wireless hills, then, no, actually, I can't hear you now.
This post first appeared on Reuters.com
