Uncommon Wisdom

Jul 7 2009   12:03PM GMT

Carrier handset antitrust review threatens LTE capex

Tom Nolle Tom Nolle Profile: Tom Nolle

The Department of Justice (DoJ)is apparently opening an inquiry into competitive practices in the telecom industry, a move that’s been tried before but failed because of turf objections from the FCC and its congressional supporters.

The likely target of the probe is wireless behavior, and in particular the special exclusive handset deals like the ones by AT&T and Sprint for the iPhone and the Palm Pre, respectively. There has not been any serious antitrust review of U.S. operators since the Telecom Act, and the chance such a move could come now will certainly strike fear into providers and will likely have some impact on capital spending plans.

At particular jeopardy is the LTE rollout, which is driven by smartphone deployment. Whether operators would move faster or slower if handsets were competitive is not clear, but because no regulation is likely for a year, there is a risk of “wait-and-see-ism” setting in. That would virtually guarantee provider capex would fall sharply in both 2009 and 2010.

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