his rating while his firm was advising AT&T on its now failed bid for T-Mobile.)

Here's a rundown on his assessment of what happens next for the telecom sector generally and for AT&T in particular:

• He still thinks the industry needs to consolidate. Otherwise, he writes, "companies like Sprint, Leap and MetroPCS could struggle." He adds that a "re-invigorated T-Mobile USA could be a consolidator over time or a driver of price competition and eroding cash flow."
• AT&T, he says, could look to resume buying back shares. He notes that leverage today is 1.5x on a trailing 12 months basis, and that to keep it flat would imply a $4 billion buyback in 2012.
• He also thinks AT&T will look to buy wireless spectrum. "If AT&T were looking for near-term spectrum capacity and density we believe LEAP and PCS could be good sources, and longer-term spectrum held at DISH and Clearwire could be attractive."
• T-Mobile, he says, is struggling without the iPhone and needs to stabilize. It also needs a 4G strategy. "For 4G wholesaling capacity from Lightsquared or Clearwire could be a possibility, as well as potentially partnering with DISH," he write. Competitively,  he says, the company could may get more aggressive in both postpaid and prepaid.
• The break-up of the deal, he adds, is good news for tower companies like SBA Communications.
• He also wonders if AT&T and/or T-Mobile could attempt to prod regulators into killing Verizon's pending spectrum purchase deal with the cable companies.
• Dish, he thinks, could be a target for AT&T; it also could partner with one or both of Sprint and T-Mobile.
• He suspects that Leap and PCS could look to combine to save costs.

So, back to the downgrade.

"AT&T is well positioned on the wireless side to capture the coming wave of data devices and currently supports both the GSM iPad as well as all of the eReaders that are sold wirelessly enabled in the U.S.," he writes. "However, AT&T’s wireless margins continue to be pressured from smartphones and more specifically iPhones. The high subsidy costs could pressure wireless margins for some time. Eventually we expect to see churn and ARPU benefits, but only once smartphone penetration levels off or replacement cycles elongate. In wireline, AT&T has seen slowing consumer revenue losses as data and video become more important, and stabilization in enterprise trends which should improve with the economy. We view AT&T favorably given its solid cash flow characteristics, potential for stock buybacks and low EPS multiple, but continued pressure on wireless margins, need to acquire spectrum and invest in its network keep us on the sidelines. "

In today's trading:

• AT&T is actually up 39 cents, or 1.4%, to $29.13
• Sprint is up 13 cents, or 6%, to $2.29.
• Dish is up $2.05, o4 8.2%, to $27.19.
• Clearwire, which was trading higher earlier, is now down 11 cents, or 5.2%, to $1.92.
• Verizon is up 56 cents, or 1.5%, to $39.19.
• Leap is up 42 cents, or 5.4%, to $8.17.
• MetroPCS is up 27 cents, or 3.4%, to $8.22.
• SBA is up $1.53, or 3.9%, to $41.10.