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Summary:

AT&T intends to acquire T-Mobile over the course of the next year, the companies revealed Sunday. It’s far from a done deal, but what can Apple and users of its devices expect to gain or lose from the merger if it goes through?

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AT&T intends to acquire T-Mobile over the course of the next year, the companies revealed Sunday. It’s far from a done deal, since it still has to pass muster with U.S. regulatory authorities, but if it does ultimately result in AT&T taking the top spot in the U.S. wireless industry away from Verizon, what can Apple and users of its devices expect to gain or lose from the deal?

First, T-Mobile may get the iPhone after all, according to a statement made during the AT&T/T-Mobile conference call Monday morning discussing details of the proposed deal. Ralph de la Vega, president and CEO,Mobility and Consumer Markets at AT&T, said T-Mobile’s customers will get access to an industry-leading portfolio of devices which will include those from Apple, Microsoft and RIM in response to an analyst question about what AT&T was willing to offer to make the deal palatable to U.S. regulators.

The statement isn’t an out-and-out guarantee, however, and could relate to the iPad. There are still potentially technical barriers, and a new contract would have to be reached with Apple in order to expand the device’s availability to another network (AT&T seems intent to keep the brands separate, at least based on early reports).

T-Mobile’s network, while GSM, doesn’t use common spectrum used by AT&T’s (or any other global GSM network). Subtle differences mean that even though unlocked iPhones will work on the network, as of right now, there’s no way to get 3G access with iPhones using it. Instead, users are limited to EDGE for data connections. To correct this, after the acquisition, AT&T plans to use T-Mobile’s AWS spectrum for its Long Term Evolution Network and transition T-Mobile subscribers over to AT&T’s current 3G networks. After the deal closes and the network is rejiggered, T-Mobile subscribers would be able to use AT&T’s network (which should be strengthened thanks to T-Mobile’s towers) for the iPhone.

If everything goes as smoothly as possible with the acquisition, Apple would join the small crowd of those who benefit from the deal. It’ll get access to an additional 34 million subscribers, and if AT&T’s plans work out, will have 46.5 million more potential LTE customers for when it eventually rolls out 4G devices. That planned LTE rollout will see AT&T repurposing T-Mobile’s 1700 MHz wireless radio spectrum, which is bad news for existing T-Mobile 3G device owners, since that’s the frequency the company uses for 3G communications. It’s good news for users of jailbroken, unlocked iPhones, though, since they should be in the clear using T-Mobile’s 1900 MHz EDGE network, and should actually get access to AT&T’s 3G network on the same spectrum, too, which will replace T-Mobile’s.

Those looking to buy Apple’s products might benefit in the short term by new network reach and better cellular network infrastructure supporting iPhones and iPads, but the more troubling concern is that the deal would make the U.S. cellular landscape far less competitive. Canada provides a good example of how that can have a seriously detrimental effect on individual device users, since it essentially only has two or three major carriers depending on where you are. iPhone customers in Canada can choose between a variety of carriers, but all three require 3-year contracts on new purchases in order to get the same subsidy as U.S. customers enjoy on 2-year deals, and pricing is essentially the same no matter where you look. Expanded availability, in this case, doesn’t mean increased competition.

The last thing to keep in mind is that this is all a long way off. AT&T and T-Mobile still have extensive regulatory hurdles to jump in getting the deal approved, and once it does, there will probably have to be some renegotiation of the existing deal between Apple and AT&T. In short, it won’t affect your 2011 product purchasing plans, and it might not influence your 2012 decision, either.

  1. Won’t it also mean that if Apple releases a 3g+ phone in the iPhone 5 (HSPA+, or as T-Mobile calls it “4g”), and hopefully T-Mobile starts to share towers right away, AT&T and Apple will be able to take advantage of a large installed base of HSPA+ and will be able to focus their energy on LTE? Is it not also possible that if Apple has latent support for the T-Mobile 1700 spectrum (as has been reported in the past,) they may turn it on with a baseband upgrade?

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  2. AWS is also being used for 3G HSPA by Wind Mobile in Canada. AT&T could start to offer unlocked iPhones just like it is done in other countries as it no longer has to worry about a major GSM carrier to take their customers away and use their phones.

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  3. I wouldn’t count on ATT willingly offering unlocked phones. ATT has been making all the wrong moves, data caps, overpriced data plans, going after those who teather to their overpriced data plan with out paying again for the same data. This buyout probably wont be a goodthing for US GSM users.

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  4. The plus of a merger is better major city coverage for AT&T clients. Someone at T-Mobile corporate confirmed to me that T-Mobile’s higher frequencies have meant that they have an abundance of cell sites that AT&T can take over. The minus is that T-Mobile has the best pre-pay plans in the industry. AT&T may grandfather them in but look for ways to kill them.

    There are rumors suggesting T-Mobile customers might come off best if this merger doesn’t come off. T-Mobile would get a slice of AT&T spectrum to role out their own data upgrades. It might even be data spectrum that iPhones could use.

    And yes, something needs to happen to force AT&T/Apple to unlock iPhones once their contract runs out. They are paid for, so there’s no viable rationale for keeping them locked.

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