YOU ARE AT:WirelessSprint Nextel, Clearwire, VZW and Alltel in the volatile economy: Adam Smith's...

Sprint Nextel, Clearwire, VZW and Alltel in the volatile economy: Adam Smith’s invisible guiding hammer

Much has been written and speculated about what telecom-tech policy might look like under an Obama or a McCain administration. But more likely it will be the volatile economy in the near term that dictates terms for wireless companies and others as opposed to federal mandates decreed from on high in official Washington.
It would be tough to swallow for the White House, Congress, FCC, the courts and all-powerful lobbyists, which are used to believing they are the providential instruments for determining how the world turns. The problem is, much of what is being dealt with by top policymakers is new territory.
While humans are powerless against the mightiest of hurricanes, at least experts know how to predict and prepare for them as well as how to address their consequences once they end. Not so with the complex, globally interconnected economy, though policymakers and erudite economists confidently profess to understand the inexplicable when financial markets are humming along. But when things go south, the economic wizards seem virtually clueless and hold out only educated guesses on how to right the ship. Welcome to contagion nation.
Sure, the FCC can – and probably will – approve the Sprint Nextel-Clearwire deal regarded as critical to bringing U.S. WiMAX to life. But it doesn’t guarantee a thing at this point. The sickly, thrashing economy could make or break a bold undertaking that arguably would be uncertain even during the best of times.
Fitch Ratings said the credit crunch presents a risk to Verizon Wireless’ $28.1 billion offer to buy debt-laden Alltel and to regional wireless carriers. Fitch said the risk is not just in terms of the availability of future capital but also with regard to some 85 markets that won’t be freed up through divestitures if the Verizon Wireless-Alltel tie-up falls apart.
What makes the current situation especially pernicious is that it’s a confidence of crisis encompassing both the financial and political systems. The president’s and Democratic-controlled Congress’ approval ratings were dismally low long before we woke up to the reality that we are in the biggest economic crisis since the Great Depression. Eventually the country will probably recover from the latest orgy of excess, until the next one comes along. Don’t ask when.
All in all, what a wonderful start to the next 25 years of the cellular industry. Perhaps the greatest tribute to this revolutionary technology is that it’ll take a helluva lot more than a recession to prompt anyone to ditch their beloved cellphone. It’s with us for the long run. It is now a part of us.

ABOUT AUTHOR