The wireless wars being waged by AT&T and Verizon Wireless and their allies have special importance for San Diego for several reasons.
With Qualcomm Inc. as the leading light, San Diego’s wireless cluster features hundreds of companies — employing thousands of workers — that are world class leaders in advancing the state of the art in wireless technologies. What happens in the wireless wars impacts San Diego and vice versa.
As a subset of the war between the big wireless brands, there has been an ongoing battle for the technological hearts and minds of consumers who are asked to choose between wireless technologies knows as CDMA and GSM.
Verizon and Sprint support CDMA-based networks; AT&T and T-Mobile USA Inc. support GSM-based networks. To bring this back home, CDMA was invented in San Diego by Irwin Jacobs and his associates. Jacobs is, of course, a founder and former chairman of Qualcomm, whose business today is tied closely to various forms of CDMA technology.
With that as a backdrop, it is worth looking at the outcome of a couple of recent battles in the larger wireless wars that promise to shape the industry for years to come.
The first and most widely publicized event is AT&T’s aborted attempt to acquire T-Mobile. With grumblings from the Federal Communications Commission — but not an official finding of fact — the proposed takeover of T-Mobile by AT&T would effectively create a duopoly in the market, with AT&T and Verizon dominating the business, the agency has indicated.
The FCC fretted that as AT&T was attempting to acquire more wireless spectrum, the outcome would result in reduced competition and consumer choice, and higher prices, compared with a market largely controlled by the four national competitors that, along with a handful of regional providers, serve the U.S. wireless market.
But it turns out that the maneuvering by AT&T, T-Mobile and the FCC was a sideshow.
While the industry, regulators and most of the media were focused on what was shaping up to be a titanic battle between big business and big government over the future of our smartphones, the people at Verizon, with a little help from their friends — or is it their enemies, it is hard to tell — cut a deal that promises to recast the wireless business in the most unexpected ways:
Verizon said Dec. 2 that it acquired the unused wireless spectrum of cable operators Comcast, Time Warner Cable Inc. and Bright House Networks for $3.6 billion. At the same time, these four players, and long-time rivals (Verizon sells broadband landline services in direct competition with these companies), agreed to be business buddies and cross-sell their services in an end-run move around regulators that would give The San Diego Chargers a winning season.
So, while the world watched AT&T face off against the FCC, archrival Verizon picked up exactly the kind of additional wireless spectrum AT&T was seeking with the acquisition of T-Mobile — without even ruffling the feathers of those eagle-eyed FCC regulators.
With this move, Verizon neatly broke from the pack and scored a Super Bowl-winning touchdown. Only in this game, with this victory, Verizon won’t be the champ for just one season; it may well be unbeatable for the foreseeable future.
What does all this mean for San Diego? A resurgent Verizon is undoubtedly good news for Qualcomm. And it will most certainly intensify the wireless wars. That should benefit San Diego’s wireless sector as it sells arms to the combatants.
Reo Carr is editor-in-chief of the San Diego Business Journal.