While the big wireless players -- AT&T
Although the two groups do compete, it's on a different scale. MetroPCS's and Leap's potential subscriber footprints aren't as big as the bigs, and they are going after a different market. They are angling for the smaller fry, the prepaid monthly customer. Not as profitable as the whopper caught on a two-year contract hook, but a customer just the same.
So there's been a kind of an easygoing-but-don't-get-too-comfortable detente between the majors and the minors. Until now. The small regional wireline carriers have decided to move into the second-tier wireless turf, and they are doing it with the help of the big boys.
Last February, CenturyLink
And on Monday, Louisiana-based wireline carrier EATEL struck a deal to offer its customers 4G connectivity through LightSquared's LTE network. EATEL already has a fiber-to-the-home network, so this agreement could allow it to offer a quadruple-play (voice, Internet, video, and wireless) package. Getting LightSquared's LTE network up and running has problems. The radio-frequency spectrum it plans to use is so close to the frequencies the Global Positioning System uses that the GPS industry is trying to ban LightSquared's network.
How MetroPCS and Leap will react to this space invasion remains to be seen. I think it will definitely have an impact, though, and not a good one. The ability to offer faster networks and the most sought-after mobile devices are big advantages for the wirelines. I like the opportunities these deals give them. CenturyLink, in particular, is a company I have started to feel warmer toward. So CenturyLink will get an Outperform from me in Motley Fool CAPS.
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Fool contributor Dan Radovsky owns shares of AT&T and Frontier. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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