I apologize if this has already been posted.
Wireless Conflict of Interest
Telecom Companies Sometimes Sit on Important Consumer Data
By Andrew Seybold
Special to ABCNEWS.com
April 12 — This week I would like to propose to you that there is presently a conflict of interest within the financial analyst community when it comes to wireless service operators.
STORY HIGHLIGHTS
The result of this conflict is that instead of providing their readers with their true findings and beliefs they have decided to remain quiet for the next few months.
What am I talking about? Today there are three digital wireless technologies in use in the United States and there is a fourth on the horizon for third-generation networks.
There are differences in these technologies. Differences that can be measured.
Quantifiable Differences
These have to do with the number of voice and data calls that can be handled per cell site, the quality of the voice service, the amount of territory that can be covered by a single cell site, and a number of other variables.
These calculations can and have been made by all of the financial analysts who cover the wireless space. They all know that one of the technologies provides better numbers in these calculations than the others.
They also know that this technology has a clearer path to third-generation services than the other two. Yet these analysts, with a few exceptions, are remaining quiet when it comes to which network is deploying which technology and the implications of these deployments.
Why are they remaining quiet when they have research they should be sharing with us?
The answer is where we get into the conflict of interest issues.
Where are the Details?
Sometime during this year three of the top five wireless operators are going to be filing for an IPO. Since these three IPOs will be three of the biggest ever offered, and since so many different companies are underwriting them, the analysts at these companies are keeping quiet until the IPOs have been issued.
Even then they may not provide us with the information they have because of the volatility of the market.
It's hard enough for us to figure out which way the markets are heading and many of us rely on the financial community analysts to help us sort out who is going to win and who is not.
I know that analysts are not always right, and as editor-in-chief for Forbes: Andrew Seybold's Wireless Outlook, I don't always get it right, but still we rely on these folks to help us sort things like this out.
You can bet that if only one of these companies were filing for an IPO you would hear a lot of noise from the financial analysts but since there are three: Verizon, AT&T Wireless and Cingular Wireless, there is apparently too much at stake for them to do their usual analysis.
Verizon's chosen technology path is CDMA, AT&T has chosen to be all things to all people supporting TDMA, GSM/GPRS, EDGE and UMTS2000 or WCDMA and Cingular Wireless is, today, sticking with TDMA although I suspect that will be changing shortly.
When you crunch the numbers and do the math it turns out there are many advantages to CDMA2000 when deploying a wireless network and the financial analysts all know this by now.
But there is too much at stake for their companies for them to come out and say that. Instead they will stay mum on the subject. However, keeping silent when you know something is, to me, the worse form of conflict of interest.
If they could claim that they do not understand the differences that is one thing, but to understand them and keep quiet because of the amount of money involved in the IPOs is another.
Andrew Seybold is a consultant and top computer industry analyst. He is considered by many to be the leading authority on the mobile computing industry. He's based in Campbell, CA. |
