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AT&T expends network with acquisition of Dobson

AT&T has been quite busy over the last couple of weeks. But hey, that’s what you have to do when you’re launching a state-of-the-art gadget and your competition is working harder than ever to stay ahead of you. Another of the concerns about AT&T — beyond the slow EDGE network that we discussed earlier — is that its network coverage, well, sucks. It may be okay in some parts of the country, but it’s especially crappy in rural areas. While this many not affect a large portion of their users, it does represent an area in which the company can expand and generate more subscribers.

So what did AT&T do? Why, they bought a rural service provider. Dobson Communications Corp. services 1.7 million subscribers that cover rural areas of 17 states: Alaska, Arizona, Illinois, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Texas, Virginia, West Virginia, and Wisconsin.

AT&T and Cellular One — Dobson’s provider — have worked under a roaming agreement for years. They would each pay the other to use their network, which provided better service for both companies’ subscribers. The merger of the companies brings that network under one umbrella, saving AT&T millions in roaming costs.

Analysts think that this move will spur even further rural and suburban provider acquisitions. The ball started rolling with AT&T’s acquisition of BellSouth, and was furthered by Goldman Sachs Group Inc. and TPG Inc. purchasing Alltel. Other companies that are likely future targets of takeovers: Rural Cellular Corp., Centennial Communications Corp., U.S. Cellular Corp., Alaska Communications Systems Group Inc., and Cincinnati Bell Inc.

We have to admire the way AT&T is building up its network. They’ll certainly be able to provide better coverage in the future, which is especially going to help those iPhone junkies. The only problem we foresee is the increased power AT&T will have. Will this mean a greater cost for consumers down the road?

[Bloomberg]