In the late 70s, a regional electronics distribution firm, Arrow, made a bid for its larger rival, Cramer. As the two negotiated the merger, customers logically started moving their business to Arrow. In the process, Cramer became weaker (and less valuable) and Arrow used its leverage to reduce the offering price. It was in Arrow’s interest to drag out negotiations to further weaken Cramer and in the end their strategy worked. Arrow bought Cramer for pennies on the dollar, is now a world-wide distributor and Cramer was erased from the map.
The 80s saw Osborne Computers pull a similar stunt, this time self inflicted, by announcing a newer and better version of their product. People stopped buying the original version while waiting for the “new and improved” version. Without an income stream, Osborne ran out of money and closed without ever shipping the new version of their product.
And in the 90s Delta worked the time factor in their purchase of Pan Am. Pan Am was bleeding money and needed Delta’s financial infusion. Delta had time in their favor, and more than once changed the terms of their agreement. After Delta had negotiated what it wanted (international routes), they changed their mind about a Pan Am acquisition and Pan Am ceased operation within hours. The vultures picked up the pieces for pennies on the dollar.
Today, AT&T is making an offer to buy T-Mobile. The federal government is opposed to the acquisition and has requested documents, hearings and more information. Meanwhile, jittery T-Mobile customers are leaving in droves not knowing if the phone they buy today will be supported after AT&T takes over. This delay and uncertainty weakens T-Mobile and further strengthens AT&T’s position. Our federal government, in its zeal to maintain a competitive marketplace with four major cell providers, is in fact, hastening T-Mobile’s demise. There will be no T-Mobile two years from now.
Why do I care? Among the four major cell phone carriers, only T-Mobile offers UMA. UMA gives GSM phones the ability to use local WiFi as an alternative to the cell signal. Which means that even if you’re in an area of poor coverage, as long as you’re near a WiFi signal, you get “Five Bars.” Most work places have WiFi, my friends all have WiFi and I have WiFi at home. Bottom line is I have “Five Bars” just about any place I need to use a phone. “Can you hear me now?” just doesn’t apply to me.
AT&T, the only other major GSM supplier, has shown no interest in offering UMA.
UMA is a terrific technology – I really hate to see it (and T-Mobile) go away with no suitable replacement on the horizon.