AT&T (NYSE: T) and Verizon (NYSE: VZ) may be the biggest mobile carriers in the U.S., but if they think their sheer size can dictate the rules of the wireless game in the States, they should take another peek behind them. That object looming larger in their rearview mirrors is the Rural Cellular Association, and it is determined to protect the interests of its 100-plus member carriers by mitigating the current mobile duopoly's outsize influence.
The RCA's latest roster addition is Clearwire (Nasdaq: CLWR). It joins T-Mobile USA, which became a member in March, and Sprint (NYSE: S), which came on board almost a year before that. Clearwire's addition is important because the RCA now has every significant wireless carrier in the U.S. -- less the two mobile giants themselves.
Until recently, the RCA bylaws limited its membership to those carriers with fewer than 10 million subscribers, but it realized it needed more clout than those smaller carriers could bring to protect its members' interests. So the organization reset the upper limit high enough to welcome companies like Sprint, with its 48 million subscribers, and T-Mobile USA, with its 33 million -- but not high enough to let in AT&T, at 104 million, nor Verizon, with its 93 million.
The importance of Clearwire's addition, though, isn't its size -- it only has 1.3 million retail subscribers to go along with its 9.7 million wholesale customers -- but rather the united front the RCA can now bring to bear in the inevitable fights over whatever spectrum frequencies the Federal Communications Commission will offer up in the future.
Right now, the RCA is at the forefront of the opposition to Verizon's recent large spectrum acquisitions. For $3.9 billion and some cross-marketing agreements, Verizon bought a large cache of wireless spectrum from several cable companies. The giant carrier has to show that this deal won't have an anticompetitive effect. If it can't, however, that spectrum will again be on the table for possible purchase by the RCA members.
Clearwire hopes to get a boost from joining the RCA, but the perpetually on-the-brink mobile broadband provider definitely got a shot in the arm late last week when investment company Crest Financial bought a 5.9% state in it. Crest cited in its filing that it thought Clearwire was presently undervalued. Clearwire is still majority-owned by Sprint.
Whoever comes out on top in the carrier battles, there will always be a need for mobile devices -- and the parts that make them work. The Motley Fool has released a free report called "The Next Trillion-Dollar Revolution." Don't miss out on this report. Get it today!
