Every since I heard the news of AT&T’s $39 billion offer to buy T-Mobile USA I have been in shock, but I also have been doing my own digging into whether this will actually happen or not. Now just because AT&T and T-Mobile have agreed to this does not mean it will happen. There is still plenty of legal tape that has to be gone through. The Department of Justice (DOJ) and the Federal Communications Commission (FCC) also have to agree to this deal between the two carriers. The DOJ and the FCC have to decide whether this business agreement between the two parties involved is in the best interest of not only the consumer, but also the cellular industry.
Overall, I do not see this deal being good for us, consumers, for several reasons. First, we really would not have a choice regarding our cellular service. Either we pick Verizon (CDMA) or AT&T (GSM). There would not be much “shopping around” anymore. Second, would be money. With only two major carriers left prices would more than likely start to climb, which is not good for us the consumer or for the cellular business itself, especially due to economy these days. IF we, the consumer, can not afford the service then the companies do not exist.
However, as my good friend Rich reminded me there are two sides to the coin, with the bad comes the good. The merger of these companies could be a good business decision for consumers due to many factors. First, would be better cellular service. By AT&T merging with T-Mobile we should see faster data speeds and better coverage. AT&T stated that they are willing to commit to expanding their 4G LTE to an additional 46.5 million Americans. This includes rural and smaller communities for around 294 million (95%) of the United States population. Along with also providing T-Mobile’s 34 million subscribers with 4G LTE. Second, AT&T also stated that they would also spend more than $8 billion over seven years, enabling the nation’s high-tech industry, innovation and economic growth. Overall, the merger of these companies could enhance the cellular industry.
More after the break
Now, looking at it from the view of companies such as Sprint, this merger could make it hard for other cellular companies. Sprint, right now, is the third largest cellular provider and T-Mobile is fourth. With T-Mobile taken out of the picture Sprint gets knocked into last place, and who wants to be in last place. If you remember yesterday Sprint made a statement regarding AT&T’s deal with T-Mobile.
“The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry. AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80% of the US wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete. The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.”
As you see above, Sprint’s statement hit this whole mess right on the head when it comes to other cellular companies that could be affected by this merger.
Let’s take a look a moment to view what I believe may happen IF this deal is approved.
IF this deal is approved then AT&T will be the largest cellular service provider in the United States, along with having a monopoly of the GSM/Edge/HSPA service. Verizon would be knocked down to number 2 overall (number 1 in CDMA), and Sprint would be almost non-existent at third largest.
With Sprint being almost non-existent, Verizon could easily turn around and make an offer to Sprint. In my opinion, it would be in Sprint’s best interest to accept the offer from Verizon. Now with Verizon’s buy out of Sprint and AT&T already being in control of the GSM side, we would be down to two carriers, AT&T (GSM network) and Verizon (CDMA network).
What I am hoping for is that the Anti-Trust Laws will hopefully put an end to this possible merger. Even though there are benefits if AT&T and T-Mobile were to merge into one big GSM power house, these laws were put in place to protect consumers and competition. Most states and the federal government have laws such as these to prohibit practices that deprive us, the consumer, the benefits of competition. With out competition between companies we can possibly look forward to higher prices for products and services, along with less personal choice.
As it has been stated several times since this deal between AT&T and T-Mobile took place, we are looking forward to a year if not longer before the final outcome is reached. Sprint has the option of filing a lawsuit against this, as does Verizon, and many other parties involved. We as consumers can also put in our two cents regarding this deal since it does affect us also. Regardless, we will not know the final outcome for quite awhile, but trust that we will keep you informed on any news as it comes available.