397 Comments

Summary:

AT&T is buying T-Mobile USA for a whopping $39 billion in cash and stock. The questions are who wins and who loses in this deal. It is hard to find winners apart from AT&T and T-Mobile. Here a list of who loses this deal:

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The lull of my lazy, rainy weekend was broken by the news that AT&T plans to acquire T-Mobile USA for a whopping $39 billion in cash and stock. Who wins and who loses in this deal? It’s hard to find winners, apart from AT&T and T-Mobile shareholders. Here is a list of who loses, in my opinion, in this deal:

Consumers. The biggest losers of this deal are going to be the consumers. While AT&T and T-Mobile are going to try to spin it as a good deal to combine wireless spectrum assets, the fact is, T-Mobile USA is now out of the market.

T-Mobile USA has been fairly aggressive in offering cheaper voice and data plans as it has tried to compete with its larger brethren. The competition has kept the prices in the market low enough. This has worked well for U.S. consumers. With the merger of AT&T and T-Mobile, the market is now reduced to three national players: AT&T, Verizon and Sprint.  Net-net, U.S. consumers are going to lose.

Phone Handset Makers. Before the merger was announced, the handset makers such as HTC and Motorola had two major carriers who could buy their GSM-based phones. They just lost any ability to control price and profits on handsets because now there is a single buyer that can dictate what GSM phones come to market. Even with LTE becoming the standard for the 4G world, it would essentially be a market dominated by three buyers (should Sprint go with LTE), which would place handset makers at the mercy of the giants.

Sprint. The nation’s third-largest carrier was in talks to buy T-Mobile according to Bloomberg, but AT&T’s offer has now pushed Sprint to the bottom of the pile in terms of size and potentially spectrum assets if it goes through. If it doesn’t go through, then Sprint now has a price it has to match in order to get its hands on T-Mobile. Plus, Sprint and T-Mobile often stood against AT&T and Verizon on a variety of regulatory issues, so if AT&T succeeds, Sprint will stand alone on special access and other issues.

Network Equipment Suppliers. The carrier consolidation has proved to be a living hell for companies that make infrastructure network equipment. Alcatel-Lucent, along with Ericsson and Nokia Siemens, are suppliers of gears to both AT&T and T-Mobile USA. With a single customer, they will lost ability to control their own fate and are going to see their profits suffer as a result.

Google. I think the biggest loser in this could be Google. In T-Mobile, it has a great partner for its Android OS-based devices. Now the company will be beholden to two massive phone companies — Verizon and AT&T — who are going to try to hijack Android to serve their own ends.

Don’t be surprised if you see AT&T impose its own will on what apps and service are put on its Android smartphones. I wouldn’t be surprised to see the worst phone company in the U.S. (according to Consumer Reports) tries to create its own app store and force everyone to buy apps through it.

It doesn’t matter how you look at it; this is just bad for wireless innovation, which means bad news for consumers. T-Mobile has been pretty experimental and innovative: It has experimented with newer technologies such as UMA, built its own handsets and has generally been a more consumer-centric company. AT&T, on the other hand, has the innovation of a lead pencil and has the mentality more suited to a monopoly: a position it wants to regain.

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  1. Unconcerned Andy Sunday, March 20, 2011

    Dude it’s gonna be ok. Go eat some fruit or something. This will give AT&T a very nice upgrade to their network and t-mobile users will finally get a decent phone. Yay :)

    1. Thi s article maybe biasd, but its right its bad for consumers. I’ve got a landline from att and they just jacked rates nearly 50%. They will do the same for cellphone plans. Have you heard why att’s network sucks…too many users. Att will charge more for less service with this.

      1. They can’t jack up plan prices unless they’re willing to lose their customers to Verizon. So relax. Competition is still alive and well, it’s just that the pool is now smaller.

      2. Of course it’s biased. It’s an opinion piece. That’s the point.

      3. Arik, unfortunately there are many who cannot go to Verizon because they need phones that reliably function outside of the US on business and personal trips. Those of us who need GSM/UMTS phones either have to buy a second device for use abroad, or suck up whatever this new combined company gives us.

      4. MCI (aka Verizon) had done the same to me, and that was reason enough to quit my landline. I am perfectly satisfied with my HTC phone on T-Mobile. AT&T screwed with my bills when it was Bell South, so I don’t do business with them, either. Om is correct; everyone loses … IF this merger is approved.

      5. Dale, not sure if you were aware but Verizon does offer several models that also work on the GSM network… Mot. Droid 2, Droid Pro, BB Bold, Storm 1 and 2, and 2 basic flip phones… So really u get the best of both worlds with VZW.

      6. Most land lines are still regulated by public utility commissions so the regulated landline will not increase in price without scrutiny of such commissions.

      7. I believe you must of finished your introductory rate on emergency service only landline… AT&T has not raised the price of homephones in nearly 5 years, and the only price difference in landline is u-verse vs. non-u-verse… otherwise same price.

      8. Christopher E Ashley t mobil user Saturday, March 26, 2011

        you said to many users so to me that means lots of people like the service. I have att and at points is does have it problems but over all it is good. I think that with this merger would improve the current service for all ATT and T-mobie’s users.

      9. I agree! Every time AT&T has acquired a phone company that I had service with the service went down hill, the cost went up and they find some way to completely screw up the account i.e. leave an account open after I closed it and tried to charge me for it. AT&T isn’t good for ANYBODY!!!

      10. My husband had an iPhone with AT&T and He owed $200 on his bill and couldn’t pay it.. So he shut it off hoping he wouldn’t get charged anymore
        He now has a $500 dollar bill and It’s been 3 months since the shut off… I go through T-Mobile and I have the MyTouch 4g (which I love btw) and my sister has a line on my bill too which is also and android phone,I have to pay $215 a month and I really hope my bill won’t get any higher and my plan won’t suck either and I can’t switch companies for almost 2 years…. I’m screwed… lol

      11. Competition is always good for consumers ,it’s the same reason we get great prices on appliances and electronics , cars ect …so if you reduce the preseure on the phone co’s to compete prices will no doubt pay higher prices . and thousandes of people being out of work is never a good idea no matter how manny workers are there as far as verizion goes there prices are kinda high anyway so we then have less choices and thats never good.
        and you just know if t mobile had a better product att will just flush it away as in the casr of the aiwa sony merger for thoes of us who remember.

    2. As an AT&T Mobility Employee I can tell you it will not be OK. The consumers are really going to get Fucked if this deal goes through

      1. I second that. Switched to AT&T few years back from T-Mobile. After 1 month switched back. Outrageously expensive and crappy service.

        I need a phone that works outside of US. I will probably go without a phone in the US if this merger goes through. There will be no other phone in the US from which I can buy phone service.

        The problem is that many places ask for a phone number.

      2. You have nerver lied it will be all bad as a collector for at&t you are fucked if this go though think what you want LOL but at&t will never any kind of business. Of mine I wouldn’t let my dog do business with if I had one LOL that is how fucked you are going to be…. I will be calling you to collect those debts l to funny

    3. It’s not gonna be ok. IT’s going to give ATT a monopoly on GSM service in the US. It’s going to eliminate the only option for consumers to buy an unlocked, unsubsidized contract-free phone. It’s going to lower the overall level of customer service in the industry. As a T-mo user, I already have a great phone.

      I’m also not so sure about the upgrade to ATT’s network. T-Mo’s 3G service operates on different frequencies than ATT’s, and it will be difficult for ATT to market phones if they only run on one band or the other. Nobody really makes phones that run on both networks, so ATT will either abandon T-Mo’s 3G network, or completely confuse and frustrate customers (as if they don’t do that now) with a service plan that will not work with all devices.

      1. They are not going to drop T-Mobile’s band. That’s half the reason they’re buying it, and it’s only data that won’t be able to use T-Mobile’s towers, Voice will get extended coverage.

      2. Eh, isn’t the whole point of buying an unlocked, unsubsidized phone is that you can do it without giving a penny to the carrier? I bought my phone from Newegg and put my 5+ year old SIM card in it. AT&T couldn’t eliminate this option even if they wanted to, because that’s how GSM works.

        There are phone(s) that run on both AT&T and T-Mobile 3G (ahem, 4G) bands. There aren’t more because T-Mobile is too small. With new combined company size there will be 130 million more incentives for manufacturers to make 850/1700/1900/2100 phones.

      3. If you don’t like AT&T, don’t use them. There are other wireless carriers. If the other carriers don’t offer the phone(S) you like, purchase another phone. Some of you act like you are entitled to wireless service. It’s like anything else you purchase.

      4. att’s plan is to take t-mobile and use their system to update their own and disban t-mobile and eliminate competition. they run on the same 700mhz wavelength but t-mobile was a threat to att and as such are eliminating the threat.

        when 700 mhz went on the market, att bought 90% and t-mobile bought 10%. att was still trying to update their system, t-mobile already had an updated system that could handle better service.

    4. Tmobile users already have better phones than at&t. If anything changes its a get of contact free card four tmobile user.

      1. am at-mobile customer and am already looking for new company because i had nothing but problems when I was with at&t

    5. I already have a great phone. Its best feature: Wi-Fi hotspot on an unlimited bandwidth $50/mo T-Mobile plan. Good luck keeping that with AT&T in charge.

      1. I have $30 unlimited data for at&t :) includes hotspot making too
        Beat that

      2. @YOSH
        My unlimited data plan cost $20 a month and I have the MyTouch 4g and mobile hotspot and video chat and wifi calling….
        Do we really have to do the whole “Who has a bigger dick” competition?

    6. I’m on tmobile BECAUSE of their phone selection. They’ve long had the best phones

    7. Tmobile has a great phone in the Galaxy S Vibrant. And Tmobile has been the only domestic carrier to update the Galaxy S phone to Android to 2.2 aka the infamous Froyo. I hope they don’t lose their current edge.

      1. Let’s not got overboard. The upgrade process to Froyo on the Vibrant is horrible – it needs to be done through the Samsung Kies program, which barely works. Oh and did I mention the upgrade can’t happen through a 64-bit PC?

        Better shovel out that Windows Vista desktop.

        T-Mobile isn’t perfect, guys. I’ve been with them for 8 years and they’ve slapped mysterious fees and dropped many-a-call during my time there. Sure, it’s cheap as hell, but it ain’t perfect. Half the time, I don’t complain about lousy network connection and 3G coverage because of how cheap it is.

        On top of that, outside the Galaxy series (which every carrier supports), T-Mobile barely has any big name phones. Maybe the Nexus S, but its Best Buy exclusivity really hinders that. As a phone though, it’s up there with the best.

        I think now that AT&T bought the little guy, we have our nostalgia glasses on. As far as bills go, this is probably very bad news, as my fees are most likely going to shoot up. No more unlimited data or tethering. But it’ll just be another speed bump in what’s been an already-rocky road.

      2. I upgraded my Captivate to Froyo last week (on Win7 64-bit no less).

      3. Sorry not true I just upgraded my Captivate from ATT to Froyo 2.2 on Sat Afternoon

      4. Also gotta say not true. I updated to 2.2, installed a custom kernel, used ODIN to flash back to 2.1, updated back to 2.2 again, and installed another kernel. All from on my 64bit PC. CHEERS

    8. If the T-Mobile/AT&T deal completes, I’m hoping it will give AT&T access to same (ahem) “technology” for low prices & great customer service! Wink wink.

    9. Bravo, nice flame sir.

    10. sorry bust your bubble but T-mobile has some decent phone oh you must be talk about that mess called the I phone lol

      1. Yea I’ve been a tmobile customer for 7 years. Greatest customer service ever, and discounts on every bill I’ve had. N also much better phone selection. New my touch 4g blows the iPhone away in my opinion.

    11. 1) T-Mobile has plenty of good/Great phones most of which are not tied to a computer for it to be useable

      2) AT&T is just buying back the antenae they lost in the merger with Cingular.

      3) Pick up lines should not be at the begiining of your post. :P

    12. Seriously? You think it will all be fine and dandy? The last time I had AT&T they tried to f**k me up the a$$ with no Vaseline! First they overcharged me for their most useless phone that they no longer supported. Then they tried to charge me $160 a month for 400 minutes and 500 texts? The plan I signed up for said that was $45 a month, which is still ridiculously high. I canceled my contract after only 3 months of intermittent service (at best). The cancellation fee was my cheapest bill from them! As well as the one I was happiest to pay. AT&T is nothing more than a blood-sucking tick. It should be doused in alcohol and burned off the ass of the wireless community.

    13. You better go study some antitrust history. VZ more than likely won’t lower prices. They have that ability now, yet they keep them up. Actual cost of a customer is about 30 percent of what they charge. THe only thing that could make this work is if the regulators break the handset/service requirement.

    14. At&t will get decent phones t-mobile already got that if anything t-moile should stay independent or by out metro or sumthing

    15. U are stupidity in action I have a more than god phone and its called the. Nexus S.

    16. What’s phones does art have over tmobile? The icrap? That’s the only one I can think of. All the others have versions on tmobile with only cosmetic differences. And incase you havnt noticed who gets the exclusive google phones? That would be tmoble with the nexus one and nexus s
      Alsowho got the first galaxy s phone? Oh that’s right tmobile.

    17. Concerned Tmobile Customer Unconcerned Andy Friday, May 20, 2011

      Evidently you have been eating the wrong kind of fruit hon! AT&T sucks! That is why I left them in the First place to go to Tmobile!!!

    18. no way,,,,,att sucks and always will,,,I am an expert on att after having been one of their customers since 1981. Now all I have is a dry loop internet dsl and they cant even get my bill right. I have been with 2 companies that att bought and the service got worse and 1 company that bought att (cingular),,,then service got really BAD. I think all of cingular’s crappy employees stayed and made policies to be the worst company on the planet,,,,(they win—-go Charlie Sheen)

  2. This person sounds like they are very biased against AT&T. Boo for bad journalism.

    1. If I combined the words, “fling” and “dung”,….

    2. So where’s the bias? If the truth is bad for ATT, is it bias to report it?

    3. Believe what you are reading. A monopoly would only serve to increase customer dissatisfaction with a company that already thinks it is the gift to everyone.

      And, btw, who do you think wrote this article?

    4. Hey, looks like we have some AT&T astroturfers here!
      Go away spam boy.

    5. Phung, you do realize that this is an opinion piece, right?

    6. Bad journalism? IT’S TRUE, and even still, it’s an opinion piece as previously stated. And as for being against ATT WHY NOT? They’re more expensive, offer less services and features, and for god sake they just SUCK. ConsumerReports.org ranked ATT horribly according to a satisfaction survey of 58,000 ATT users. ATT was the lowest-scoring carrier in the US. ATT was the only carrier to drop significantly in overall satisfaction! I’ve been in the technology industry for many years and the cell phone industry specifically for most of them; This merge SCARES ME!

      1. Most of us stopped believing Consumer Reports years ago because they only take input from their subscribers which is not a statistically valid sample of the US population.
        The bad reputation some people still associate with AT&T dates back three years to a decade or more. During the last two years, AT&T expanded its number of towers, went 3G and was the first to allow a smart phone manufacturer to largely control how its devices operate on a network. The consensus is that AT&T has the fastest network. And, of course, it has simultaneous data and voice for smart phones. T-Mobile customers who remain at AT&T long enough to test it will likely stay.
        By the way, AT&T’s customer turn over rate is the same as Verizon’s: about 1.3%

  3. Where did you get this info. Btw tmobile doesn’t make it’s own devices, those are made by HTC

    1. And Motorola.

      And Nokia.

      And Samsung.

      NOT just HTC.

      It’s obvious you are not a T-Mobile customer.

      1. Actually they know what they’re talking about. They’re referring to phones like the “T-Mobile myTouch” or the “T-Mobile Dash”, etc which are marketed under T-Mobile’s name but actually made by HTC.

      2. Did HTC make the T-Mobile sidekick? Not to mention all of the uma and hspa 1700 phones made specifically for T-Mobile.

  4. Rocky Agrawal Sunday, March 20, 2011

    T-Mobile was also the only U.S. carrier that happily gave you unlock codes for its phones.

    I unlocked many phones just by calling customer service and asking for the code. In some cases when they didn’t have it readily available, they got in touch with the manufacturer and got it for me.

    They were also the only carrier to offer discounted plans for people who wanted to pay full price for the handset.

    1. Agreed. And not to mention their customer service which bent over backwards to make you happy. AT&T is the exact opposite of that.

      1. I agree about the excellent customer service, which is why I switched to t-mobile in the first place.

      2. This is exactly the reason and scenario I am with T-Mobile. I started with them with the Sidekick, but then, was given an older Nokia phone by my dad that was on AT&T and AT&T wanted a one for less service and horrible customer interaction.

        T-Mobile was able to unlock the phone so I could use other European carrier SIM cards and gave me a great plan that fit my needs. I moved all my service to T-Mobile from Sprint which was absolutely painful to deal with and data cards and phones that didn’t work or fell apart.

      3. The opposite being that the customer is bent over forward?

      4. Although I switched to ATT from TMobile (better rates due to company ties, and iPhone), TMobile’s service is immaculate.

        I struggle to convince ATT reps to allow me to use an unlocked smartphone on my ATT line. My fallback phone is an unlocked TMobile phone (not a smartphone) that TMobile reps unlocked within minutes of my requesting.

        TMobile had fantastic service, features, and plans.

    2. at&t does unlock their phones if you call customer svc

      1. That’s weird, I’ve been flatly denied multiple times.

      2. You are wrong there are millions of frustrated iPhone owners out there who have to muck around with jailbreaks just to have their own property unlocked from the evil AT&T empire.

      3. @rouvex Actually he is correct. AT&T cannot offer the unlock code for iPhone because it is in the contract with Apple (the true evil empire) that they cannot give out the information.

        Because Apple and AT&T have been in bed so long, people are confusing the customer service with regard to the iPhone with customer service at AT&T. We at AT&T are not able to help with the iPhone even though you bought it from us because to the T&C of the contract with Apple. Go try to get your Verizon iPhone serviced at a VZW Corporate Store. You will get the same crappy service.

    3. This is the one area that can easily be remedied by government regulation as a price for approving the merger — all phones on the new AT&T – T-Mobile monster must be sold unlocked. If Italy can do it, so can we.

      Come on, Feds, earn your keep!

      1. But what difference does it make? In Italy you could actually use your unlocked phone with the competition.

      2. Three cheers for Ted T.

    4. Unfortunatly, you are incorrect in your assessment that T-Mobile is the only US Carrier to happily give unlock codes for phones. AT&T will freely give out unlock codes for anything EXCEPT the iPhone. I know this from my own experience. You call, you ask for the MPE code for your phone, give them your IMEI, and they give you the unlock code and the model specific instructions for how to do it!

      1. Wrong. I’ve been trying to get a non-iphone and they gave me the run around. Shit, It’s still locked and I’m not willing to pay someone else to unlock it for an extra 50.

  5. I agree with Om, but I think he’s making the assumption that T-mobile is viable long term. Is it?

    Also, phone and equipment manufacturers have many potential customers around the world, but Om considers only the US market.

    1. Not necessarily – he suggested that we’d be better off if T-Mobile were rescued by Sprint.

    2. T-Mo is viable long term, it’s just that their owner, DT, doesn’t want to own them any more, and doesn’t want the hassle of spinning them off as an independent company.

      1. I doubt that DT does now “want them”
        I DO believe they like the big chunk of money they are being handed.

  6. Frederic Guarino Sunday, March 20, 2011

    the next shoe to drop will be the VZW-Sprint deal which i wager is already under way – the US will then have 2 nationwide carriers: GSM Ma Bell (at&t+tmo) and CDMA Pa Bell (VZW+Sprint) – with a sprinkle of regional and niche carriers.

    1. Conan Kudo (ニール・ゴンパ) Frederic Guarino Sunday, March 20, 2011

      Most people seem to forget that Verizon Wireless is actually a Baby Bell. So this is more apt that most would realize.

    2. Actually, I think we’re just as likely to see one of the following deals:
      1. VZW/Sprint
      2. Vodafone sells their VZW stake and uses the cash to buy Sprint
      3. Sprint raises some new money and goes on a buying spree (Clearwire, Leap, MetroPCS, and perhaps a couple of others).

      Sprint is one of the primary supporters of MVNOs, which provide many options to consumers in the US. I believe that regulators would have a much harder time to approve a VZW/Sprint deal than they will with the ATT/TMo deal.

  7. In terms of handset and infrastructure equipment manufacturers – you seem to forget there is more to the planet than just the United States.

  8. Kudos Om for this article, I had a lengthy exchange with Robert Scoble raising this very point you made. We all loose by this never.

    1. Uh Oh I just bought a house Christian Sunday, March 20, 2011

      I Work at a T-Mobile call center, what does this mean for me?

      1. Not to be crude, it means you’d better start looking for another job. One, At&T will axe many jobs in the buyout anyway, and two they certainly wouldn’t want to waste money employing T-mobile CSRs that waste time and energy winning countless JD Power and Associates Customer Service awards.

      2. Start looking for a job asap. I bet the vast majority of folks at T-Mobile will start polishing up their resume this week.

      3. If you’re like most of the T-Mo customer service reps I have talked to, you’re probably too nice and too helpful to work for ATT. Learn how to be rude and uncaring about customers, and you will probably move up at ATT. But wait to make sure the deal goes through, just in case.

      4. It means you may think freely about joining a union … and not get fired for those very thoughts.

      5. @skylark – Think freely about joining a union? Don’t you mean “you will almost certainly be forced into becoming a union shop?”

        I was with AT&T at the Cingular merger, and there was no viable option to keep the union vote from passing. With the horrible benefits package changes and other considerations, a large majority of call center employees felt compelled to vote for the union :(

      6. Ive been with att. For like 5 years and never had a problem with there csr. Will not switch to any other carrier. Had sprint never again. Seen what my brother had to deal with at big red. Ill stay where im at. U might feel different but that’s how I feel

      7. If you work at T-Mobile then you know what it means for you. Some T-Mobile employees are saying that T-Mobile is raising all the performance levels so it’s almost impossible to meet, so they can fire “at will” a large percentage of the employees as the merger is solidified. Why? Because it was said that T-Mobile doesn’t want to pay anyone unemployment benefits. If you happen to survive the mass firing, I heard that the T-Mobile severance package includes some unusual stipulations that you have to sign. If you survive to that point, be sure and read it carefully before signing.
        As usual, the big companies get bigger and gain control of consumer prices/services by swallowing up the competition; the lobbyists get wealthier as they host the cheap version of “Let’s Make A Deal” with the political decision makers; and the common working man/woman gets the shaft. It’s business as usual in the good ole’ USA. Sad beyond definition!

  9. Choices make for competition in price, service and breadth. Monopolies create high prices little choice and poor service.ATT customer service falls further when this goes through. AAPL becomes a winner here with more distribution with tmobile customer base. Overall duopololies and monopolies have never been good for the consumer. Five years ago Microsoft own the operating system market. Today osx linux and others are talking share. That change was a result of competition not consolidation.

  10. Yep – we’re all screwed on this one. Hope the Feds derail it.

    I’d worry less about Google, though. Plenty of carriers out there in the world. We may not see the good stuff here in the US, but others will.

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