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Wow! I have to say I didn’t really expect this move so soon. I mean, eventually somebody had to buy T-Mobile USA, because it has faced FIVE years of no growth. Now it appears to be official that AT&T has committed to purchase T-Mobile USA from their current owners, Deusche Telekom AG. This deal costs AT&T about $39 Billion for the cash-and-stock trade, which will amount to about 8% ownership of the company. Many are worried about this deal, and praying that the FCC won’t approve it. Indeed this will be something to watch, as AT&T faces big money losses if it doesn’t get this approval. The deal is likely to face many regulatory hurdles with the FCC, and it’ll be interesting how it pans out.

 

The purchase of T-Mobile USA from it’s current German owner will be a definite step up on competition, namely Verizon Wireless. Verizon, as most of you know, is the largest network in the United States at the moment, and seems to have the lead in regards to launching LTE, the new upcoming standard for 4G mobile broadband. Although the service is not found in many markets, it clear that Verizon will have more 4G coverage up and running than AT&T can get out. A question must be asked though: Will this transition make this team a powerhouse that’ll dominate the market instead? Randall Stephenson, AT&T’s Chairman and CEO is counting on it, stating in a press that this move will bring LTE to more than 294 million people in the USA. This certainly seems likely too, considering T-Mobile has had a 4G network going for a while (but simply lacked the coverage and customer base for it to really shine). With AT&T acquiring such assets, it’s very possible to see the two big powerhouses in mobile communications battling it out for first place in the future LTE market.

But what exactly does this merger do for us customers? What is really going to happen with issues such as Unlimited Data (since T-Mobile Customers have Unlimited Data with their 4G), or about the types of devices that will be allowed on AT&T’s network once service switches? Many Alltel Customers were required to get new handsets when Verizon acquired their towers nearby, and these same people sometimes found themselves getting the short end of the stick as well. For the most part, positive things could come of this for current AT&T customers. Where I find myself worried, however, is with those poor folks on T-Mobile.

Obviously, there is no way AT&T can force you to go onto their network. The acquisition of a company doesn’t automatically mean that they acquired all of their customers automatically. There is a process that will take place, and during that time, T-Mobile customers will be given the option to stay and merge into an AT&T Service agreement, or leave. Plain and simple, nobody is making you stay. That being said, there are going to be A LOT of current T-Mobile USA customers coming to AT&T. The bad news though, is that every single one of those customers that are currently using T-Mobile’s 3G or 4G network, will need new handsets to be on AT&T. That’s a pain in the butt. Marguerite Reardon of CNET makes a great point:

Regulatory issues may be only one hurdle the companies face as they look at integrating the two wireless networks. While it’s true that T-Mobile and AT&T each use GSM technology, the carriers also use different bands of spectrum to deliver their services. Specifically, T-Mobile uses the spectrum it bought in the AWS spectrum auction in 2006 to build its 3G wireless network.

AT&T also acquired spectrum in that auction. And it is using this AWS spectrum to build its LTE network. AT&T uses its 850MHz and 1900MHz spectrum to deliver its 3G service. Part of the reason that AT&T wanted T-Mobile in the first place was to get more of the AWS spectrum for its LTE network.

Meanwhile, T-Mobile has no additional spectrum to deploy LTE, since it’s been using the AWS spectrum for its 3G service. What this means is that once AT&T and T-Mobile merge, AT&T will have to move all of T-Mobile’s existing 3G customers (which includes the supposed 4G HSPA+ customers) to AT&T’s 850MHz and 1900MHz spectrum. This means T-Mobile customers will need new handsets, since the existing T-Mobile 3G HSPA and 4G HSPA+ handsets will no longer work on the AWS spectrum.

Another thing that will need to be considered for those existing T-Mobile Customers that need to change handsets, is their data plans. AT&T does not offer an unlimited data option, and they aren’t likely to allow the millions of T-Mobile customers to grab it either. T-Mobile had data plans in excess of 10GB per month, and some data plans were even as cheap as $10 per month.

 

AT&T offers a similar 200MB data option (featured above) for $15 per month, a 50% increase for customers coming from T-Mobile. The company also currently supports these 4G plans with three awesome 4G handsets for their customers, all of which will have to be replaced with an AT&T compatible handset when the merger actually takes place, which is estimated to be anywhere between 12-14 months to be complete (pending FCC Approval). This will likely drive some T-Mobile customers to decline AT&T’s invitation, unless they are actually given 4G handsets from the new provider that will replace their old ones (not likely, but you never know).

Some people already believe that AT&T is playing down Android devices, or essentially ruining them. I’m not sure I understand the claim, but rumor has it that this merger is bad for Android devices, because of the limitations that some newer Android devices seem to have on AT&T’s network. One Facebook Page, seems to believe this will aid in the destruction of Android, and that users should join and rise against this merger because of it. While I can’t say I agree with anything stated in this claim, I can understand the frustrations that Android users must feel on their new devices, when they get the Yahoo search engine instead of Google, and iPhone 4 can easily take full advantage of the network speeds that are available when they cannot (some handsets are limited to a mere 300kb/s upload speed, nearly 20% of the iPhone 4 capability).

There is also the issue of competition. With the merger occurring, this takes the competitive edge out of the mobile market just a little bit. In the USA, our choices for major carriers just went from four, down to three. While this doesn’t seem like too big of a deal, remember that the more competition in the market, the better things are for the customer. I’m not saying it’ll happen, but this could lead to higher prices, lower quality service, and overall worse deals for the end-users, purely because there are less companies to compete with. The same would be true if Verizon bought out Sprint (possible, but very unlikely due to technical difficulties). That merger would leave just two. It’s likely the FCC would step in before it got to actually be two companies, but three is still pushing it. Can you imagine what the price of the automobile would be for us if all we had to chose from were three different makes? Not only would this stifle innovation in the automotive industry, and lower the potential quality of the autos, but the prices would likely be higher, because there is simply less to compete with. It’s the same with all types of business, and this merger is no exception.

 

I’m, of course, unlikely to see any real changes because I’m with AT&T already. It’s likely I’ll actually see the most benefit with this merger, since my service is only about to become enhanced further with more towers, more personnel at the phones (which people frequently need to contact), and a faster launch into the LTE world. I’m interested to hear what you think on this. There is really only three ways to feel here: Either you LOVE the merger, You HATE the merger, or you think it’s a mixed bag, and some people are getting screwed while others are getting a great deal.

READ THE FULL PRESS RELEASE HERE

UPDATED: Here is from the perspective of another one of our authors, who happens to be a T-Mobile Employee. CLICK HERE

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