Another FCC Miscalculation Means Less Wireless Investment — Why Build When You Can Rent?

In the wake of the failed AT&T/T-Mobile merger, it’s interesting to look at Sprint’s recent decision to change its coverage map in Oklahoma and Kansas.  Sprint’s plan is to move major sections of these states onto roaming.  Sprints network, just as other wireless carriers networks, are becoming very taxed.  More and more people are using their wireless phones for voice and data, making the network become more strained.  So in order to ease the pressure on their own network, Sprint is opting to piggyback their customers onto their competitor’s networks, thus forgoing the need to build out their own infrastructure.

Why is this interesting?  Because Sprint put up a major fight to the proposed merger, which could have spurred billions of dollars in infrastructure investment by the two companies, creating better service and better coverage for customers of both companies.  Instead of investing in infrastructure and attempting to improve service for customers, it appears as if Sprint is taking the opposite route and downgrading service for their customers that reside in non-urban settings.

By switching so many customers onto a roaming plan, Sprint is taking advantage of an FCC rule that forces wireless companies to offer their networks to competitors for roaming services.  Many were critical of this rule at the time of its drafting, and warned of a situation that could foster less investment, less innovation, poorer service for customers, and increased costs to consumers.  It appears that with Sprint’s decision, they may be proving many of the critics of the FCC rule right.  In effect, the detractors were worried that some wireless providers would simply say, “Why buy (in this case, build), when you can rent?”

Although Sprint’s decision won’t affect Sprint customers in the form of immediate price increases (most Sprint customers have roaming built into their plans), it could be a major blow to customers of not just Sprint, but to wireless consumers everywhere.  This decision could lead to higher prices and poorer service in the long run, as more and more consumers are piled onto the same network, without any investment into new networks.  The FCC roaming rule doesn’t seem to provide wireless providers any incentive to build out their own networks, when it’s just as easy and much cheaper to take advantage of existing networks built by competitors.

Alternatively, it appears AT&T may be ready to pay a high premium in order to secure more broadband, in order to roll out its LTE network to its customers.  There are signals that AT&T may be interested in purchasing Dish Network in a deal that would be worth well over $5 billion.

The FCC’s stated goal has been to increase broadband access to everyone, and about the need to increase spectrum to increase the accessibility of high-speed Internet to everyone.  If the Sprint announcement is a sign of things to come, then it looks as if the FCC could have made a miscalculation in the most appropriate way to make wireless broadband accessible to more people.

FacebooktwitterredditlinkedinFacebooktwitterredditlinkedin