U.S. Wireless: Still Too Crowded?

BusinessWeek ponders whether the U.S. is still too crowded with five players "as scale and scope become even more important to survival." Cingular's turnaround is cited over the past few years as a prime example of this new wireless order.

The article notes that Cingular recently "announced that revenues for the first quarter were up a solid 7%, to $8 billion. More surprising, Cingular said that its customer defection rate was 1.7%, or about half of what it was in the past." John M. Celentano at Capex Alert said, "Cingular is on a roll."

The article discusses consolidation in the U.S., but points out that five major carriers "is still higher than the number of major players in the national markets of Europe, where the norm is two or three." Jeffrey Williams at Jeffrey Williams & Co. said, "I don't know that there's room for this many wireless players."

Celentano added that "I think we're approaching a peak in market penetration now."

Williams believed "Alltel management would like to find a buyer, and that Verizon Wireless and Sprint each would make good fit. All three companies use the same wireless technology, and the geographic fit would be good in either scenario." He also thought "one or two more giant wireless deals are possible, too," and "an alliance between Verizon and Sprint would make strategic sense."