AT&T/T-Mobile Merger: What it Means for the Industry

Jun 14, 2011 — Allan Pulga

AT&T announced plans to buy out T-Mobile USA back in March (see Merger), but a lot has happened since then, according to Maisie Ramsay of Wireless Week.

May 31 was the deadline for filing an opposition to the FCC about the merger and up until that day, more than 15,000 comments were sent about the merger, Ramsay wrote.

"The volume of comments surged by the thousands last week as people flocked to a website set up by Free Press that made it easier for consumers to voice their opposition to the deal, with more than 10,000 comments filed through the site in a single day last week."

Ramsay did a good job of outlining the context and implications of the deal. Some of the key points:

  • Sprint rumors: There was talk of Sprint buying out T-Mobile last summer, but AT&T brought more cash to the table, buying T-Mobile for $39 billion.
  • AT&T's objective: "The deal was about capacity," she wrote. "By acquiring T-Mobile, with its parallel spectrum holdings, identical network technology and the complementary cell tower placement, AT&T put itself on the fast track to bulwarking its network against an onslaught of mobile data consumption."
  • Opposition: Sprint was one of the first to speak out against the merger, followed by the Rural Cellular Association and Cellular South, and consumer advocacy groups like Public Knowledge and Consumers Union.
  • Their take: "Those against the deal claim it will quash competition, raise prices, limit consumer choice, result in job cuts and ultimately reduce incentives to bring out innovative new products," Ramsay wrote. "Some also have pointed out that many of AT&T's rationales for the deal – namely improvements to its network and an expansion into underserved rural areas – could be accomplished without taking over T-Mobile."
  • Could the deal be blocked? It's anybody's guess, Ramsay writes. "The wireless industry has been on a steady path to consolidation for the past decade without much interference from regulators... On the other hand, the FCC has expressed concerns about consolidation within the wireless industry. Perhaps AT&T's attempt to purchase T-Mobile will be one step too far."
  • Supporters: "AT&T will have to prove to regulators that it is in the public interest to approve the merger," she wrote. The company has boldly claimed the deal "will preserve and promote competition" rather than harm it. Nine governers have gotten behind the merger, aware that expanding AT&T's LTE network to an additional 55 million people will please their constituents. AT&T's promise to expand broadband access has led a number of small business groups to support the deal as well.
  • Deadlines: "Stakeholders (had) until June 10 to issue their rebuttals to oppositions to the merger and replies to those comments are due June 20. The FCC isn't expected to issue a decision on the deal until March 2012, at the earliest."
  • What it all means: "If approved, AT&T's buyout of T-Mobile will have a wide-reaching effect on the wireless industry. The combined company will become the largest wireless operator in the country with about 120 million subscribers. The deal also will give AT&T and Verizon Wireless a combined 80 percent share of the U.S. wireless market."

Topics: Wireless Trends, Mobile Industry

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