AT&T Looking to Deny Clearwire Sprint

AT&T Corp. is trying to get officials from the Federal Communication Commission to deny approval of the merger between Sprint Nextel and Clearwire Corp. In other news, AOL LLC decided to phase out its MyMobile service, while the state of Georgia announced a contract with Clearwire for WiMAX wireless services.

Focal Points:

• Officials at AT&T have gone to the Federal Communications Commission (FCC) to ask them to deny the merger between Clearwire Corp. and Sprint Nextel. AT&T currently has the largest mobile customer base of any US carrier. AT&T argues that the joint venture would eventually use spectrum leased from cities, schools, and nonprofit organizations and that this spectrum is not accounted for in the merger proposal. The merger between Sprint Nextel and Clearwire is being funded with the help of an addition $3.2 billion investment from Bright House Networks, Comcast Corp., Google, Inc. Intel Corp., and Time Warner, Inc. AT&T believes that this merger would be under much closer scrutiny if the FCC took into consideration Sprint's currently unused spectrum.
• Officials from AOL have indicated that they are planning to shut down a number of its products and services. Among the services considered for phase out include its MyMobile application. AOL is likely taking these actions to get the company ready for sale. Some of the other applications and services they are considering eliminating include Xdrive (a file backup service), AOL Pictures, and Bluestring. The AOL program executives stated that AOL will halt further investments in AIMWorld and will sunset MyMobile next year. AOL is doing this to improve AOL's long-term viability, investing in its revenue producing products, such as mail, mapping, messaging, and portal. AOL executives said they will also emphasize interoperability with devices such as Apple, Inc.'s iPhone and Research in Motion Ltd.'s BlackBerry.
• The Milledgeville, Georgia city council has recently voted to have Clearwire develop a municipal WiMAX network for the city. This is an outgrowth if Clearwire's recent WiMAX development efforts in Atlanta. Milledgeville received an $862,000 grant from the Georgia Technology Authority in 2006 to make Milledgeville a model community to leverage technology for the purpose of improving economic development, as well as improving educational and governmental connectivity. The plan is to use WiMAX as a subscription service, with various pricing plans based on specific needs.

Experton Group believes the FCC is likely to approve the merger between Sprint Nextel and Clearwire for the purpose of WiMAX services. Even with this merger, AT&T and Verizon will continue to dominate the wireless landscape. However, the presence of a new wireless medium will threaten their dominance and increase competition.

This will lead to better prices and choices with consumers and business, which makes it very likely this will be approved. IT executives should review their use of existing AOL services and plan on migrating off of services that are likely to be terminated.