ÜberTech


AT&T and T-Mobile Merger: Do Enterprises Win?

AT&T and T-Mobile Merger: Do Enterprises Win?

Summary: Enterprises have very different priorities than most consumers regarding their mobile service. So this proposed merger of AT&T and T-Mobile might actually be a good thing for most of them.

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For mobile consumers, the $39 billion merger of AT&T and T-Mobile is probably bad. Prices, especially for existing T-Mobile customers, have a good chance of rising, while customer service is likely to fall.

For enterprises, however, this could actually be a good thing.

(Full disclosure: Sybase is an enterprise customer of both AT&T and Verizon Wireless in the United States because of our in-house use of iPhones. However, we only have partnerships with Verizon and its parent company, Vodafone.)

Enterprises are less cost-sensitive than consumers. Quality-of-service is more important, especially for the muckety-mucks and revenue-generating salesfolks who typically travel the most and whose time is super valuable.

The cell tower sites and additional spectrum that AT&T gains by acquiring T-Mobile will give AT&T the opportunity to boost call reliability (fewer dropped calls) and data speeds (more consistent 3G, and, eventually, 4G) and increase its total coverage area. It was in the first and third areas that AT&T had long been losing to Verizon. And with Verizon's release of 4G prior to Christmas, AT&T fell behind there, too.

More bandwidth is crucial because the federal government has, argue critics, been slow about releasing new spectrum for carriers to acquire. Meanwhile, the building of new cell tower sites continues to come under fire nationwide from NIMBY-minded residents worried about cancer risks (not proven) and property values (also not certain - towers can be camouflaged as trees, for instance).

Second, while T-Mobile vows to remain independent for now, it's still likely that AT&T and T-Mobile will use their combined economies of scale in order to standardize on similar handsets, since their underlying technology is the same (GSM), points out Dan Hays, a partner with PRTM, an international management consulting firm.

At the very least, this will slow the explosive growth in the number of available handsets on the market.

That will help enterprises swamped today by the wide variety of phones and tablets they are asked by employees to support as part of their Bring Your Own Device policy. Again, don't expect the handset market to shrink drastically, just not grow as fast as before.

Om Malik argues forcefully that the merger "is just bad for wireless innovation, which means bad news for consumers. T-Mobile has been pretty experimental and innovative: It has experimented with newer technologies such as UMA, built its own handsets and has generally been a more consumer-centric company. AT&T, on the other hand, has the innovation of a lead pencil and has the mentality more suited to a monopoly: a position it wants to regain."

Om's right, but his argument just doesn't apply to big businesses and organizations. They value innovation, for sure, but only up to a limited point in certain areas. More innovation in the form of more devices, more service plans, more technology upgrades, is a hassle.

For sure, no Fortune 1000 wants to be stuck be using obsolete technology. But the cost of ensuring high quality of service in the face of constant change can bankrupt even the most cashed-up IT organization. Think of how many corporate workers are still on a 10-year-old OS like Windows XP (raises hand).

None of this means that enterprises shouldn't view their mobile strategy as an opportunity for differentiation or innovation. Devices still need to be managed well, and apps can be deployed that help companies perform tasks faster and cheaper.  It's just that enterprises want their carrier to be a stable utility like the water company that only delivers big bang upgrades that enterprises can plan for well in advance, so that they can focus on the internal innovation that really matters to them.

Topics: ÜberTech, Wi-Fi, Verizon, AT&T, Smartphones, Networking, Mobility, iPad, iPhone, CXO, Banking

Eric Lai

About Eric Lai

I have tracked technology for more than 15 years, as an award-winning journalist and now as in-house thought leader on the mobile enterprise for SAP. Follow me here at ÜberMobile as well as my even less-filtered musings on Twitter @ericylai

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