AT&T announced today that they will buy T-Mobile USA from Deutsche Telekom for $39 billion. The purchase, if approved, will allow AT&T to overtake Verizon Wireless as the largest mobile network in the United States.
The merger will mean a combined user network of more than 128 million subscribers, while AT&T will gain access to the 1700Mhz AWS Spectrum purchased by T-Mobile in what was considered a high-stakes FCC auction.
The merger, once approved by the FCC will mean the U.S. is left with just three major carriers, AT&T, Verizon and Sprint. That lack of competition has some consumer advocates worried that higher prices could be on the horizon, however AT&T is expected to continue T-Mobile contract pricing for existing customers until their contracts expire (AT&T pricing tends to be higher than T-Mobile pricing). However, as the U.S. Government Accountability Office has pointed out, subscriber costs have dropped by 50 percent from 1999 through 2009, a period of many wireless company acquisitions.
The move will also mean a loss of jobs for some company workers with AT&T expected to save $40 billion over the next three years by shutting down overlapping retail outlets and using existing T-Mobile cellular towers in place of building new towers which will hurt the retail and construction sectors. The company will also shudder millions in marketing costs by combining the company's marketability.
If the deal fails to be approved by governmental regulators, AT&T Wireless has agreed to pay Deutsche Telcom a massive $3 billion breakup deal, which means AT&T will be pushing hard against regulators to approve the deal. As part of their efforts, AT&T is promising federal regulators that they will push out their 4G technology to 95% of the country, including rural and small town areas.
For carrier subscribers worried about the switch over and the usefulness of their devices, AT&T will simply gain control of T-Mobiles 1900Mhz cellular towers which will continue to offer service in most cases to users and their devices. AT&T can then choose to broadcast their own 850Mhz devices on those towers as they deem necessary.
What do you think about the merger of T-Mobile with AT&T. For their part T-Mobile has won numerous awards for their excellent customer service, something AT&T would do well to learn from.