ATT Purchase of T-Mobile: What Customers Should Expect

By CIOinsight  |  Posted 03-22-2011 Print Email
If regulators approve the proposed purchase of T-Mobile by AT&T, analysts outline the plusses and minuses for business customers and consumers.

It could take as long as a year for U.S. federal regulators to sort through the proposed $39 billion acquisition of T-Mobile by AT&T. The deal -- which would unite AT&T, the country's second-largest carrier, with T-Mobile, its fourth-largest -- must get the approval from the U.S. Federal Communications Commission, the U.S. Department of Justice and other regulators.

Analysts say that if the deal is approved customers of both carriers can expect improved service and a increased number of mobile-device choices. On the downside, customers might experience higher prices and less innovation, according to analysts.

Analyst Ken Hyers, with Technology Business Research, said the acquisition should be a positive one for AT&T's business customers. "AT&T's enterprise customers will have a larger, more robust network to roam on," he told CIO Insight sister publication eWEEK. "And being a GSM network" -- the technology favored abroad over CDMA -- "this is going to provide them with larger global roaming capabilities."

While it's not a sexy topic, TBR's Hyers said that "T-Mobile has done a great job with backhaul," laying down not T1 but actual fiber, speeding and complementing AT&T's move to an LTE 4G network.

"T-Mobile has been ahead of the curve, and that's the reason that AT&T is paying such a premium," Hyers said. "They get a ready-made network with 35 million or so customers, they get spectrum, lots of assets, and they're compatible technologies." While Verizon and Sprint depend on CDMA (Code Division Multiple Access) technology, AT&T and T-Mobile are both based on GSM technology.

The effects of the deal, announced March 20, are likely to be "slightly negative from the perspectives of price, service and innovation, since the decrease in competition will reduce motivation to improve any of these things on behalf of customers," Roger Kay, principal analyst with Endpoint Technologies, told eWEEK. In the plus column, T-Mobile customers can expect a larger portfolio of devices from which to choose.

Gleacher & Company analyst Stephen Patel wrote in a March 21 research note that AT&T's broad lineup of BlackBerry smartphones from Research In Motion could become available to T-Mobile customers. The carriers' combined subscriber bases, which would total nearly 130 million people, could also be good for Microsoft's Windows Phone, in addition to RIM's BlackBerry OS, he added, explaining that such a vast customer base "could enable a more balanced market share for multiple ecosystems" and make it less likely that two ecosystems -- Google's Android and Apple's iOS -- take over the U.S. market.

For more, read the eWeek article AT&T, T-Mobile Customers Should Expect Perks, Drawbacks: Analysts.


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