Changes in the cell phone industry

By Rebecca Rattner - August 17, 2006

In the past few years mergers and acquisitions have resulted in a consolidation in the cell phone industry. Larger companies have used their resources to effectively eliminate competition and extend markets and coverage.

Verizon Wireless, which has invested the most in their network, is widely believed by industry experts to offer the most extensive coverage in the Northeast.

The most recent merger, announced on August 15, 2005, was Sprint and Nextel. Although the two companies have merged they continue to rely on different technologies and remain separate companies with separate plans and cell phones.

Sprint uses CDMA technology and Nextel uses iDen technology. The different technologies all do basically the same thing, they break the sound into different kind of bits and transmit them somewhat differently. Though the Nextel technology does have the walkie-talkie feature, the technology thus far generally has not allowed for phones as small as those compatible with the other technologies.

ATT, T-Mobile, and Cingular all use GSM technology, which is the most used in the world and is the predominant technology used in Europe.

In October 2004, Cingular won FCC approval to buy ATT wireless for $41 billion. Cingular bought ATT because both companies used compatible technology. This allowed Cingular to absorb ATT into its network.

According to the Cingular company web site, the merger allows for enhanced communication coverage, allowing ATT and Cingular users to share all available cell phone towers.

Though there are now many small regional companies, most experts predict that in the future those businesses will be acquired by larger companies. This consolidation trend is likely to continue for a long time.