What the AT&T/T-Mobile Deal Means for Apple

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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.

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