It's no secret that AT&T Wireless is about to be swallowed by another major wireless operator. Just who will get the prize couldn't be determined as of this writing, but the deal is almost certainly going to happen in some form. It will amount to a major merger for the cellular world-and it likely won't be the last.

But if wireless is such a happening thing, how come the industry is consolidating (not shrinking, mind you-just consolidating)?

Part of the problem goes back to the early days of PCS spectrum, when it was decided to partition the spectrum into relatively small chunks and thus set the stage for a potentially vast number of carriers. And, indeed, the United States is the only country in the world with six nationwide wireless operators.

The partitioning looked like a good idea at the time; but as the market matures, the excessive competition that results from the proliferation of competitors becomes a falling tide that lowers all boats. Investment in new technologies grows just too expensive without a large enough subscriber base to pay for it all. Consolidation builds critical mass. Assuming we still have three or four majors left when this process is complete, we should still have enough competition to ensure the proliferation of at least some adventurous new services (like Edge and 1xEV-DO) and reasonable prices.

As for the possible consolidation scenarios, you might see companies merge along spectral lines (filling in gaps in coverage), technology lines (commonality means improved economies of scale), population lines (getting lots of new users in otherwise difficult territories), or simply because the bean counters have pointed out tax advantages we mere mortals can only dream of. Regardless, expect at least one more major deal this year. AT&T is just the first pickle out of the jar, and that's always the tough one. Getting left behind in this game can have serious stock-valuation consequences, and CEOs hate that.

While consolidation brings pain on the job front, it's a good bet the remaining carriers will have the financial strength to take the risks inherent in an evolving industry.

Craig J. Mathias is principal of Farpoint Group (Ashland, Mass.).