Agents of change are at work.
Some are obvious and tangible, like Sprint Nextel Corp.’s questionable decision to sack bygone chief operating officer Len Lauer for sad financial results at a company whose chief executive officer has yet to articulate a coherent vision for this “‘merger of equals.” The cutesy characterization of the acquisition was perhaps an early tip-off of what, in Don Rumsfeld-speak, might be called moral and intellectual confusion about the transaction-more precisely, making it work.
Sprint Nextel is experiencing a costly identity crisis. Isn’t that Gary Forsee’s job to fix? No manager will be able to successfully integrate Sprint and Nextel until the No. 3 mobile-phone carrier decides what it is today and what it wants to be in the future. If it fails to do so, Sprint Nextel could go into further free-fall, leaving others to write the carrier’s next chapter.
Another current of change is being generated by U.S. District Judge Emmet Sullivan. Sullivan jarred the telecom establishment by deciding not to rubber stamp the Justice Department’s 2005 conditional approvals of the SBC Communications Inc.-AT&T Corp. and Verizon Communications Inc.-MCI Inc. mergers. While analysts are not predicting the mega-deals will be unwound, they warn about collateral damage to the proposed $67 billion AT&T-BellSouth Corp. deal. That would give Sprint Nextel a little something to cheer about.
How about the telecom equipment market and the possibility of would-be consolidation coming undone? It’s getting louder, all the caustic chatter in France and the United States about purported downsides (under-funded pensions, CDMA’s uncertain future, post-9/11 foreign ownership security risks etc.) to Alcatel Inc.’s $10.4 billion offer for Lucent Technologies Inc. The clock is winding down. Could get interesting come Sept. 7.
Next, the advanced wireless services auction. Is it coming together in the final stretch or prime to be struck by legal lightning? Council Tree Communications Inc. et al this week is scheduled to file the opening brief in their court challenge to the Federal Communications Commission’s decision to revise designated-entity rules. Council Tree failed to convince the 3rd U.S. Circuit Court of Appeals to halt the Aug. 9 start of the AWS auction, after complaining the ruling-as well the awkward regulatory process employed to reach it-undercut DE opportunities in Auction 66 and all but decimated the small-business program. At oral argument in June, FCC lawyers scoffed at the notion, pointing to scores of DEs that had pre-qualified for AWS bidding.
Now, however, there are signs DEs could end up accounting for only a tiny amount of the multibillion-dollar total in an auction dominated by national mobile-phone carriers. Meantime, a separate health-related AWS lawsuit that also unsuccessfully sought to put Auction 66 on hold remains alive and well, awaiting word from Supreme Court in early October. Remember the NextWave Telecom Inc. auction morass?
Then there are the November mid-term congressional elections, which could unwind GOP control of Congress. That would get DNC Chairman Howard Dean wound up. As if he needs any provocation.
