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Summary:

The Rural Cellular Association on Tuesday welcomed its newest member, T-Mobile USA. Even by the largest stretch of the imagination, T-Mobile can hardly be considered a rural operator, but in this age of mega-carriers the distinctions between rural and urban hardly matter anymore.

AT&T and T Mobile announce merger in New York

Deutsche Telekom's and AT&T's CEOs look like the best of friends here, but things have changed since the merger between AT&T and DT's T-Mobile USA failed.

The Rural Cellular Association on Tuesday welcomed its newest member: none other than T-Mobile USA. Even by the largest stretch of imagination, T-Mobile, with its national metro market focus, can hardly be considered a rural operator. But in this age of mega-carriers the distinctions between rural and urban and between nationwide and regional hardly matter anymore. It’s AT&T and Verizon Wireless versus everyone else.

In fact, the RCA’s ranks have been swelling with operators with a distinctly urban grittiness. MetroPCS, which focuses on the country’s largest cities, joined last year, but the kicker was when Sprint’s application was accepted last April. Around that time, the RCA started using “competitive carrier” as a stand-in for “rural carrier” in many of its communications. The reason T-Mobile probably didn’t sign up as well was because at the time it was trying to become a mega-carrier itself, wrangling with U.S. regulators to approve its acquisition by AT&T.

Now that AT&T-Mo has been scuttled, any allegiance T-Mobile once held to its large-operator brethren has disappeared. In the last few months, it’s opposed Verizon’s purchase of the cable operators’ spectrum and lashed out at AT&T for trying to get the spectrum auction rules changed. That’s exactly the kind of heat the RCA likes to deliver against the nationwide operators.

So why are T-Mobile’s and Sprint’s interests suddenly aligned with the rural carriers against AT&T and Verizon? It’s a question of sheer size. As Sprint CEO Dan Hesse put it in a New Year’s post for GigaOM, Verizon and AT&T have grown so large they have ascended to a carrier class of their own, creating a de-facto duopoly in the U.S. mobile market. Meanwhile, according to Hesse, there has been plenty of competitive innovation coming from the smaller players like Sprint and T-Mobile, but the larger Ma Bell and AT&T became the more easily they could ignore the dwindling threat of smaller operators.

If you view the wireless market through that lens, then it makes sense for the rurals to band together with smaller Tier I operators to gang up on AT&T and Verizon — even if “small” in this case means having 55 million (Sprint) or 33 million (T-Mobile) customers. When you’re dealing with two outsized incumbents that collectively connect nearly two-thirds of the U.S. population, large is a relative term.

  1. Given that these carriers already treat their consumers like sheep, I’d say the rural comparison isn’t that far off! ;-)

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    1. Kevin Fitchard Tuesday, March 13, 2012

      Ha!

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  2. Stevenson Nwokenkwo Tuesday, March 13, 2012

    Interesting, I like the sound of this. A T-mobile/Sprint Combo will give them the edge certainly; however, good point though, Lucious hmmm…

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    1. Kevin Fitchard Tuesday, March 13, 2012

      Hi Stevenson,

      Well, a direct tie up probably wouldn’t work. Their technologies are incompatible. But cooperating on regulatory issues definitely makes sense. What benefits AT&T and Verizon, doesn’t necessarily benefit Sprint and T-Mobile anymore.

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