AT&T: no room for both Clearwire, LightSquared

There's not enough room for both Clearwire and Harbinger Capital-backed LightSquared in the U.S. telecommunications market, according to a top AT&T executive, who said they'd be better off consolidating.

Clearwire rents network space on a wholesale basis to other wireless services such as Sprint Nextel, which uses the space to sell high-speed wireless services. Sprint is a 54 percent owner of Clearwire. LightSquared wants to enter the wholesale wireless market. Both have struggled to drum up additional funding needed to either expand or begin building their wireless networks. John Stankey, the head of AT&T's enterprise business, said the best hope for U.S. mobile wholesale providers may be to get swallowed up in a merger as the U.S. market is hardly big enough for one wholesaler, let alone two.

"We have two people staking out a wholesale play in the market. It's hard in economic theory and it's hard in past practice in telecommunications to ever find a market where two wholesale players ever competed effectively," Stankey said. "There really isn't a profitable wholesale model in wireless today. Do you know one that's making money? Do you know one that's on a trajectory to make money? Do you know of one that's not in jeopardy of running out of money in the next 12 months?" If it is each companies' goal to gain a return on the massive cost of building a network, Stankey said he "could see a case that suggests there would be further benefit to additional consolidation in the wireless marketplace."