The reverberations from a mega-merger involving AT&T Wireless Services Inc. could easily spark repercussions in Illinois, Finland, South Korea and a number of other mobile-phone hot spots. The creation of a new wireless powerhouse in the United States might affect the fortunes of Motorola Inc., Nokia Corp., Samsung Electronics Co. Ltd. and the rest of the mobile-phone industry.
If AT&T Wireless were to merge with Cingular Wireless L.L.C., Vodafone Group plc, NTT DoCoMo Inc. or any of its other rumored suitors, the newly formed carrier would have a major new impact on the mobile-phone landscape in the United States. The more subscribers a carrier has, the more control it can exert over its handset providers. Thus, a new player in the U.S. market could easily propel Nokia to the top of the market, or just as easily do the same to Samsung.
“Any merger combination will almost certainly require new handsets (compatible by frequency in most cases and possibly by technology like TDMA moving to EDGE or even GSM) to the installed base of customers,” said Albert Lin of American Technology Research.
Depending on which AT&T Wireless suitor won out, the results on the world’s handset providers could vary greatly.
If Cingular manages to score AT&T Wireless’ dance card, the combined carrier would overshadow Verizon Wireless as the largest carrier in the United States. However, neither Cingular nor AT&T Wireless have shown a favored handset provider. Indeed, AT&T Wireless to date has relied on handsets from a number of vendors, from GSM powerhouse Nokia to Asian upstart NEC Corp. However, if Cingular were to scoop up AT&T Wireless, the combined carrier could surely exert more control over its handset providers than they can separately.
On the other hand, if Vodafone or DoCoMo were to merge with AT&T Wireless, the result probably would favor Asian handset vendors. DoCoMo commands complete control over its handset vendors-mostly Asian companies-and Vodafone too has shown an inclination to rely on the wares of Japan’s Sharp Corp., among others. If either Vodafone or DoCoMo were to score a deal with AT&T Wireless, Nokia would likely be left out of the loop. However, Nokia’s products generally score high marks with end users. Whichever suitor ends up with AWS may yield to the popularity of the Nokia brand.
But perhaps the most important issue has to do with a carrier’s control over its handset providers. Some of the world’s largest carriers, such as DoCoMo and Vodafone, have worked to gain control over their handsets and install their own proprietary software in the devices-thus more directly controlling their subscribers’ wireless experiences. If AWS merges with another carrier, the new player could look to exert similar control.
“This puts Nokia’s North American market share most immediately in jeopardy,” said John Jackson, with Yankee Group. “Asian vendors are demonstrating the ability to address North American and European operators’ demands with highly customized devices, likely sacrificing margins for market share.”
