Cingular’s US $41 billion acquisition of AT&T Wireless is a done deal. Judging by the opinion of the U.S. Department of Justice (DoJ), which gave its go-ahead on Monday Oct 15, having two huge behemoths atop the wireless service provider stack is a good thing for competition. The Federal Communications Commission followed suit in approving the merger the following day. As a result of their rulings the new Cingular will have to divest itself of operations in 16 markets in eleven swing states, and will have to forego bidding in the next wireless spectrum auction.

You Haven’t Lost a Choice
The merger marks the creation of the largest wireless carrier in North America. Cingular’s subscriber count when the transaction closes will be roughly 47.5 million, eclipsing Verizon Wireless’ 42 million. The rest of the roster of Tier 1 wireless carriers rounds out with companies that are half their size. Sprint PCS (approx 17 mm-‘direct’), T-Mobile (approx 15 mm) and Nextel (approx 14 mm).

Regulators argue that, in most markets of any size, prospective wireless customers will have as many as seven service providers from which to choose; and perhaps more if you include Mobile Virtual Network Operators (MVNOs) like Boost and Virgin. However, there is a crucial difference between the two supercarriers and the rest of the pack. With the exception of the wireless subsidiaries of Alltel and QWEST, Tier 2 and Tier 3 carriers are on inherently unequal footing with Cingular and Verizon Wireless because they are (a) smaller – with 1 million subs or fewer and (b) limited in the services they can offer.

You’ve Gained a Diversified Corporate Parent
When you take into account wireless and wireline terminations, both Verizon and the new Cingular have combined wireless and fixed line accounts north of 100 million lines each. While their parochial wireless carrier competitors form their battle plans around competitive prices for ‘bundles’ of wireless voice, data and entertainment services, SBC, BellSouth and Verizon have the ability to serve up their ‘quadruple play’ by combining wireless, wireline, broadband Internet and televised entertainment in all their permutations (local or long-distance).

Just ask yourself who will be more advantaged as broadband, high-speed wireless connectivity – exemplified by Verizon Wireless recently launched EV-DO link – becomes more broadly available. Proponents of the quadruple play (meaning Cingular’s parent companies and Verizon) have more products to sell and more leverage points from the services they offer to existing customers.

The Consumer Advocates Have it Right
The traditional voices representing wireless subscribers – including Consumers Union and the Consumer Federation of America –bemoan the steady erosion of competitive communications markets. Loss of a large competitor takes away the incentive of others to keep prices down and introduce innovative new services – especially in markets where BellSouth or SBC are the wireline incumbents.

They have it exactly right. It should not be lost on the telecommunications service-buying public that the Top 3 wireless service providers are owned by fixed line parents although it can be argued that the footprint of Sprint’s local services companies is not conducive to a compelling quadruple play and it is much less aggressive in its approach to the ‘consumer’ market, compared to some of the formidable offerings to enterprise customers.

The three large incumbents (BellSouth, SBC and Verizon) are irreversibly changing the topology of conversational access. In the days of dial-up they found solace in all the second residential lines that they installed to support Internet access. Now that subscribers can choose between DSL and cable modems for higher speed access, there is nowhere near a one-to-one ration of lost second lines to DSL uptake.

Wireless migration is next. As individuals make their wireless handsets into their primary telephones, incumbent fixed line providers stand to lose again. That’s especially true for the 100,000 or so people in North America who go so far as to port their fixed line number to a wireless account. Glomming together wireless, wireline, broadband and entertainment is ‘stickiness’ personified. It’s all about one-upping the cable companies – who, without a wireless offering – have to settle for a mere triple play involving Cable, Broadband Internet and fixed line phone.

So What’s the Conversational Access Angle?
When an incumbent telephone company’s customer leaves the ‘friendly confines’ of the fixed line network by going wireless, the incumbent loses economic incentive to aggregate and maintain the directory database. All this happens just when it loses the long-standing direct feed from the company’s order entry and the system that links phone numbers to line assignments and billing systems also fed the directory database.

Loss of revenue is one thing. Losing touch is quite another. Incumbent carriers are beneficiaries of an 80+ year legacy that includes automatic inclusion of one’s name and address in association with one’s telephone number in a directory listing. VoIP service providers have no such legacy; nor do wireless service providers. In the first instance, subscribers very often build their own personal directories embedded in the VoIP client software. As in the case of Skype, users build “buddy lists” much like those employed as part of popular instant messaging services. As for fixed line customers who migrate to wireless services, their listings are unavailable to the querying public unless and until they “opt in” to the wireless 411 services database.

Today the number of disenfranchised are relatively miniscule. Most wireless customers already have at least one wireline number associated with their name and addresses. The candidates include residential telephone numbers or the extensions at which they can be reached at their place of business. What’s missing is a mechanism that integrates wireless, wireline, e-mail, and IM address spaces. While the politically correct ‘open standards’ answer to this is ENUM, the reality is that, even though the Red Sox have won the World Series, we’re still waiting for ENUM to reach end-user awareness.

Consumers Call it Their Address Book
Each end-user has her own answer to the ‘name-space aggregation’ problem. It’s called an address book (aka buddy list or PIM). It has traditionally been either a PC- or a handset-based solution – emphatically not a fixed line story. However, when British Telecom introduced a VoIP-based service called ‘BT Communicator with Yahoo Messenger’ in July, it marked a major brand marrying telephony and directory as part of its migration to VoIP. Likewise, the Verizon’s much-awaited iobi service (now available in the Northeast) suggests network versions of an address book will be baked into NextGen fixed-line services – even if they come from incumbents.

As Cingular absorbs AT&T Wireless, we see (yet) another household name become absorbed by a brand that didn’t exist five years ago. This change in branding is driven by ecosystem changes, and behind those are major modifications in back-end systems. There is new ease and additional incentive for consumers to do the previously unthinkable and sever all links to an incumbent’s residential fixed line services. In the context of Conversational Access, it’s time for serious and constant evaluation of what happens to an individual’s ‘network identity’ when she (knowingly or unknowingly) ‘cuts the cord’ and goes wireless or VoIP-based.

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