Dance of the Network Operators
Independent Correspondent, Oliver Cox, examines the implications of
AT&T purchasing a European network provider and what it means for this
American company as well as their European counterparts.
The American communications giant AT&T,
as expressed in much-discussed reports,
may wish to purchase a European network provider. The most likely junior for
such a takeover is the dominant UK network, EE – representing the acquisition
of wider international clout for the second largest network provider in the US.
These rumours coincide with British government’s auction of the radio bands
which are to be used for 4G connectivity. This means that AT&T would be
dispatching its legions to a market freshly competitive thanks to newly
available sections of EM spectrum.
The Network-Operator Foxtrot
Should this deal go ahead, it would mean the
purchase of the current monopoly provider of 4G in the UK by an important 4G
provider in America. Although EE’s British monopoly is soon to be dispatched by
the 4G auction. AT&T is well-adapted to the astounding data-usage which is
associated with 4G connectivity, notably through billing schemes, meaning that
the combination of this experience with EE’s could be formidable.
EE is owned by Deutsche Telekom and France
Telecom. These telecoms giants emerged from the 1990s privatisation-fest and
the respective German and French state telecoms companies. In a historical
quirk, the takeover would mean EE’s appropriation by the inheritor of the
original Bell network (the company in which Alexander Graham-Bell was Chief
Electrician) from these European ancients.
The Markets
A takeover of this nature would mean an
interesting new bridge in the interconnected world of telecommunications
markets. The European market for mobile telephony has very
little American presence currently which may be a reflection of the
differences between the American market and the European. The USA represents a
wide plain of even regulation whilst Europe is a mountain range of individual
national regulatory systems and infrastructure. 4G is available for millions in
America, while in Europe the provision is partial. Some Spanish cities have 4G,
for example, while in Britain customers are about to gain access to the system
from multiple firms.
Nevertheless, AT&T finds itself cramped
in its American expanse unable to grow by purchasing competitors due to
competition laws. The situation is probably worse in the United Kingdom, where
only four network operators do business. However, it is the international
nature of this move which promises freedom for AT&T, in that they can grow
without antagonising regulators. Moreover, companies in the EU are currently
considering a simplification
of the different varied infrastructures which are in use. The creation of a
more even environment would mean easier competition between the companies and
major efficiency savings. AT&T’s purchase would provide an ample foothold
in this promising market.
AT&T Ownership of EE?
The main query which customers should pose
is: what would AT&T ownership of EE actually mean for EE’s service? EE is
an entity unto itself. It is a combination of the subsidiaries owned France Telecom
and Deutsche Telekom; with this in mind initially a takeover by AT&T
doesn’t necessitate drastic changes.
Recently EE has been rather a trailblazer,
introducing 4G ahead of all the other UK providers, unlike AT&T which was
behind the dominant Verizon Wireless for 4G introduction. EE now proudly offers
video
voicemail, something of a standard for AT&T. Transatlantic comparisons
can be difficult, but in many respects the UK market plays catch-up with US,
meaning that an AT&T run EE could present advanced ideas and a more
vigorous market.
Enter AT&T for the 4G-Campaign
It should be noted that the UK carriers will,
after the 4G auction is complete, deploy their pricing phalanxes – EE’s 4G
prices have fallen
in anticipation. AT&T’s purchase would probably take place during
this fray. In this sense AT&T could purchase membership of a privileged
period of 4G-provision for eager British individuals and businesses. From
another perspective it could be buying membership of a particularly
unpredictable and fast changing market as the network operators adjust to the
new technology. Furthermore, if AT&T buys EE it will find itself competing
against the British giant Vodaphone which – in another pirouette of the dance –
owns 45% of AT&T’s US competitor, Verizon.
While AT&T does not “…comment
on rumors and speculation“, this opportunity looks particularly
advantageous for the company. Entry in to a market which is about to be
rationalised by European firms, through the UK, where the customers are very
keen for lucrative 4G connectivity, should be an inspired move.
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