Cellular Merger Madness

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I was genuinely surprised when AT&T saw the answer to its service problems being to spend $50 Billion acquiring Direct TV.

$50 Billion is enough money to install ONE MILLION CELL TOWERS. Think about it. If AT&T had installed one million cellular towers there would be five-bar coverage inside your nearest volcano. With one million more cell towers they would be so close you could string cables between them and zip-line from coast to coast. Seriously, I don’t think you could physically install one million more cellular towers in America.

I have to ask the question of why good coverage isn’t important in the cellular industry. I have no answer for this. If AT&T had just installed 100,000 Towers (at a tenth the cost of buying a Direct TV) they would have had such good coverage everybody would want their service. Why didn’t they do that? Why is coverage so unimportant?

It’s similar to T-Mobile’s potential merger with Dish network.

The public just accepts that companies merge and that there is a reason for it. Probably. Some reason. Isn’t there?

But I keep wondering what the real reason might be for a merger between Dish Network and T-Mobile. I mean, how the heck does that make any sense? Where is the synergy in that deal?

I can’t imagine what savings, what technological advancement, what marketing benefit there might be to such a combination.

I don’t see such a deal as anti-competitive. I just don’t see any business logic to it.

I would prefer it if these cellular companies would just focus on cellular – at least until they get it right.

Next time you drop a call on AT&T, just remember: You could have had ONE MILLION CELLULAR TOWERS for the same price as AT&T paid for Direct TV.

Colin Berkshire