Still thinking about today's big news, but here are some of my initial thoughts:
down and average revenue per user way below that of AT&T and Verizon, DT had to decide whether it wanted to cut its losses or find billions and billions of dollars to invest in building a true 4G network to stay competitive. Seems like an easy call, all things considered.
2. It makes sense for AT&T, too. Once again AT&T gets to call itself the largest carrier in America, and presumably they'll try and leverage that combined customer base to get better deals (i.e. lower prices and more exclusives) out of handset makers. Plus, even though AT&T and T-Mobile's HSPA networks operate on different bands, it'll still be easier to combine the two networks than it would have been to pair up Sprint's CDMA/WiMAX network with T-Mobile (though Sprint has made it clear that it could transition to LTE if need be), and AT&T will be able to combine T-Mobile's spectrum with its own as it builds outs its LTE network. In the meantime, AT&T gets an immediate boost where they need it most right now -- coverage -- and adding all of T-Mobile's towers lets them expand their network much more quickly than they would have been able to otherwise.
3. It won't be good for consumers, at least for the most part. I've been a T-Mobile subscriber for a few years now, and have generally liked both the pricing (which is just about the best of the Big Four, I pay about $63 per month for voice + text + unlimited data), the coverage (which is good where I live), and how it easy it was to get a service plan without a contract (I haven't been under contract with anyone for almost eight years now). Once this deal closes I don't expect to continue to pay as little as I have been, or to keep my unlimited data plan, and I suspect AT&T (and Verizon!) will be happy to see a low-priced competitor out of the market and will find it easier to raise or maintain prices.
4. The merger will also result in fewer handsets hitting the US market. Since almost all phones in the US are sold subsidized through a carrier that effectively means less consumer choice in terms of phones (though of course if people were willing to suck it up and buy unsubsidized that wouldn't be the case). The carriers like exclusives, so for the most part they've done a good job of getting handset makers to do phones just for them, and that's meant that each carrier has a nearly-exclusive line-up of phones. It's possible that the combined company will offer a wider selection, at least initially, but I'd guess that they'll end up offering just about the same number of handsets as AT&T does now.
5. The one bright side is that after the merger AT&T and T-Mobile subscribers should see improved service. Combining T-Mobile's network with AT&T's network will enhance coverage and reliability, and presumably we'll see fewer dropped calls.
6. Most handset makers won't like this. Remember that in the US the handset makers' real customers are the carriers, not us, and seeing the market go from four big players to three won't help them. As I mentioned above, a combined AT&T/T-Mobile will have be able to command a huge amount of purchasing power, and I have no doubt that they'll wield that power to extract the absolute best deals from the likes of HTC, Samsung, Motorola, LG, HP, etc. The one manufacturer that might actually gain is Apple, which gets to sell the iPhone to 33 million or so T-Mobile subscribers without having to negotiate with another carrier or risk alienating one of its existing carrier partners.
6. This is definitely not good for Sprint. After a few rough years it looks like things have stabilized and Sprint has finally stemmed the bleeding, but they didn't have the scale of Verizon or AT&T before this deal and facing a combined AT&T and T-Mobile won't make things any easier. Getting exclusives on hot phones will be harder, since most handset makers can get larger volume guarantees from Verizon and AT&T, and devices are what tend to drive new sign-ups. On the other hand, having T-Mobile out of the picture would make it easier to for Sprint to position itself as a low-cost alternative to the big guys. My bet is that Sprint gets bought soon, probably by Comcast, though Time Warner is another possibility.
7. Nothing is going to change for awhile. The deal is expected to take about a year to close, and is subject to regulatory approval, so we'll be well into 2012 before we see any material developments, good or bad. Getting regulatory approval is not a slam-dunk, but my guess is that the FCC and FTC will sign off, though they might extract some concessions first.
8. T-Mobile will have to kill all those ads attacking AT&T's service.
This is when I really dont get the FCC and how they deal with ISPs and mobile carriers. I dont understand how a country this large and advanced has only three major mobile carriers and four major ISPs for wired internet (comcast, cablevision, verizon and time warner). Its kind of comparing apples to oranges but look at the choice of car manufactuers you have in the USA, over 10 major companies from all over the globe.
Im on a rant but this is really dishearting news to me.
I see Google has a couple of new Blog post about Nexus S 4G for Sprint and Google Voice integrating with Sprint.
I also wouldn't overestimate how many people might leave T-Mobile over this. They might lose a few, but I doubt it will be enough to make a material difference to AT&T.
In my opinion the best thing AT&T could do is if it gets approved leave Tmobile alone as a separate entity and take the profits.
Verizon released Android phones with Bing, and AT&T disabled side-loading apps (installing via APK files). Now AT&T are chasing after people who are tethering without paying for the service too... It's ugly.
As you said, AT&T never accepted Android in its "true form"... They added Android to their list of devices just so they can say that they have it too.
Any way you slice it, Sprint is screwed in this whole fiasco.
Since both AT&T and Verizon have iPhones now, maybe this will be an opportunity for Google to team-up with Sprint and focus on them rather than the two main players.
This will also mean that HTC needs to find an outlet for their Android devices... Sure they had a model or two with each carrier, but when it came to Android phones, T-Mobile was their main partner.
So, I doubt Sprint is going to become known as the "low cost" alternative. I think we will all be stuck with three "high cost" choices, none of which have any choice for us since unlocked phones will now be pointless. I despise the cell phone industry. I long for the day when someone offers some kind of cheap whitespace data plan that can handle Google Voice as VOIP. :(
At the minimum, what could they do to maintain the status quo? Grandfather in all the existing plans and contracts, including the month-to-month post-contract service. Since T-Mobile doesn't have a LTE strategy, old plans would be limited to 3G (up to HSDA+). T-Mobile customers would get better coverage from the addition of ATT's towers for the volume offloaded to the tmo infrastructure. These plans would exist indefinitely, and any customers wishing to take advantage of faster data (LTE) can either add it on or sign a new contract (at unfavorable rates).
I suspect when AT&T takes the keys they will make offers to "buy out" existing customers into mainstream AT&T phones/plans, so they can proceed with dismantling the existing T-Mobile data network in favor of their new vision as quickly as possible.
The only thing AT&T gains is access to the spectrum which T-Mobile won in the AWS auction, and the chance to do it right.
IMO, this has more to do with DT not being happy with having a #4 carrier on their balance sheet. But I somewhat agree that the way to increased customer base is to upgrade the network and therefore an infusion of money or an acquisition of resources will help to boost that.
I would like to see this assimilation scrutinized by the regulators, but in our current plutocratic political climate I can't imagine that happening.
I don't care that T-Mobile didn't have an LTE roadmap! Their existing infrastructure was GOOD ENOUGH. If keeping the status-quo kept down prices, then I was all for it.
If caps are necessary, then how about some carrier offer a speed-capped REAL-unlimited plan instead of bytes-capped high speed one? What good does a gigabit/second plan do if it means you blow through your entire monthly allotment in 40 seconds (hypothetically, of course)?
"Despite its acquisition of AWS spectrum in which it has deployed HSPA, T-Mobile USA urgently needs additional spectrum to keep up with its three larger competitors in the mobile broadband arena."
I'd like to think I'm not being naive with this statement but I really hope this makes more aggressive pricing schemes. What makes me realize my wish is completely wishful thinking is comparing them to residential ISP providers in my area (Comcast and FIOS) this is not the case.
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I think Peter has really covered the important effects of the merger quite well, although I admit I don't personally know about the business aspects.
One last thing is I liked the jabs at AT&T that T-Mobile put in their TV ads, and I will miss seeing them. But if the service improves (as per point 5) this will be a thing of the past
I start with the classic objection: high concentration of market power. The likely result is the loss of Sprint as an effective national player. But a merger would also create a GSM monopoly. AT&T would become the sole national GSM carrier. As a result, AT&T would become not only the participant in an oligopolistic market consolidation-- it would also make them a GSM monopoly in the US. The GSM technology presents a substantial exit barrier for customers.
Why would this matter? GSM is the system used by the vast majority of the world. One can buy the right handset and use it everywhere. Unless the carrier has locked the handset to prevent consumers from "straying." AT&T has already shown hostility to customers seeking to unlock handsets the company sold them. T-Mobile has a far more embracing policy in this matter.
Then there are AT&T's policies forcing data plans onto customers:
I am told that if an AT&T customer manages to buy an unlocked smart phone from other sources, AT&T threatens to force the customer into accepting a monthly data plan-- even if the customers only want to use the device with their home wifi. I am not sure whether AT&T actually enforces this threat, but I am assured they do by one customer who ran into this barrier. (Today such consumers could theoretically migrate to T-Mobile, where such medieval practices don't exist.)
The EU has forced carriers to remove such anti-consumer barriers.
Failing complete rejection of this acquisition: require rather extensive concessions from AT&T:
* Cease selling locked phones. All AT&T-sold handsets must be sold unlocked. Now that they have a virtual monopoly over GSM service in the US they have no basis for restricting customers.
* Stop forced bundling of internet data plans. Consumers should have the right to reject data plans when they don't want them.
* An even more radical idea: allow AT&T customers to purchase separate voice and data from separate carriers. If a MVNO (virtual carrier) wants to resell data plans that undercut AT&T then the customers benefit. Require AT&T to handle billing just the way they do for charity SMS campaigns and landline long distance.
* If AT&T offers capped data plans, they must provide easy ways for customers to determine when they are approaching their cap. Provide SMS-based queries and even allow customers to opt in to an automatic alert service-- this sends messages when the customer is approaching the top of their billing tier.
* Require AT&T to offer favorable financial terms for MVNO's to compete for customers-- and the rates must be low enough to allow the competitors to undercut AT&T rates-- as T-Mobile does today. (Create the basis for a new swell of competition.)
* Require AT&T to provide T-Mobile customers with a free trade in. If a customer owns a 3G or 4G GSM phone that is incompatible with the AT&T network (but is compatible with the T-Mobile network), AT&T must offer a like value phone at no cost to the consumer.
* Require AT&T to practice network neutrality on their wireless systems.
* Forbid AT&T from signing exclusive deals with handset manufacturers. A wise observer noted that the exclusive Iphone deal with Apple was the last straw for T-Mobile. It resulted in dramatic increases in churn.
o Perhaps force AT&T to accept direct manufacturer-to-consumer handset sales. AT&T would be required to allow manufacturers to use space at AT&T-owned retail locations (and the AT&T website) to promote and sell GSM handsets.
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