At the tail-end of last year, Sprint and Nextel announced an even-handed merger which, despite Sprint's ownership of long-distance and local service businesses, was widely characterized as a deal that smartly combined two of the top five wireless carriers in the country. Because neither firm has a Bell company cash cow supporting it, the deal looked to be a bold statement confirming that the future of the telecommunications industry would be a wireless one. With major ILECs gaining a rapidly increasing amount of revenue from their wireless subsidiaries while continuing to lose local access lines, the Sprint/Nextel merger was a deal that asked why telecom companies should count on anything more than wireless.

In that regard, two major deals announced about 14 days apart in the first two months of this year appear to refute that bold statement — not only making it look dated but also downright misguided. SBC Communications' move to acquire AT&T and Verizon Communications' bid to purchase MCI speak of a future in which more customers will be able to buy bundled, discounted quadruple-play services from a single service provider. The ability of a combined Sprint/Nextel to do that will be limited. With their acquisitions, Verizon and SBC also will be able to compete more on par with Sprint/Nextel in the long-haul data backbone and long-distance voice business.

In addition, while Sprint will gain new business customers, Nextel's true value in what is currently the most desirable market segment — white-collar business enterprises — always has been questioned. SBC, however, appears to be gradually adding depth to its enterprise efforts, first with partial subsidiary Cingular Wireless acquiring AT&T Wireless, and more recently with its own gambit to buy AT&T. Those deals bring not only enterprise customers but also more wireless and wireline service choices for those customers. Verizon realizes the same gains with its deal. Certainly, Sprint always has been able to go to enterprise customers offering the advantages of national wireless and national long-haul wireline voice and data service, but until now, that was something that the two largest incumbent local operators in the country couldn't match.

Critics of the deals orchestrated by SBC and Verizon like to say that they have made a mistake by investing in the slowly dying long-distance business that will take too much time and effort to save. But the deals also eliminate prospective local and long-distance competitors in their own regions — a short-term gain. Moreover, these two companies have realized that telecom competition is rapidly becoming about network breadth and service depth.

It would be a mistake to say the Sprint/Nextel merger will be in trouble because it will be one of the largest carriers in perhaps the fastest-growing market segment. But not so long ago, betting everything on wireless seemed like a pretty good idea. Now, either the rules have changed or a couple of companies are out there changing them.