Carriers

AT&T answers questions about T-Mobile purchase

March 21, 2011 | by Andrew Kameka

AT&T, T-Mobile

att-t-mobile

AT&T is buying T-Mobile. After several flirtations with a possible Sprint merger, Deutsche Telekom finally opted to sell T-Mobile USA to AT&T Wireless for $39 billion. Pending government approval, the AT&T-T-Mobile deal would create the largest cellular network in the United States.

During an early-morning conference call, AT&T addressed concerns about how its acquisition would affect the wireless industry. While T-Mobile customers may have been concerned about how the T-Mobile acquisition would affect affordable cell plans and Android phone line-up, AT&T painted a picture of things staying the same for now and improving in the future if/and when this deal gets government approval. Here are some highlights from the conference call:

  • CEO Ralph De La Vega sort of skated on the details about how T-Mobile brand will be integrated into AT&T. De La Vega said the acquisition will give customers “the best” network quality at the best prices. We probably won’t get concrete details until the acquisition gets government approval because AT&T said it will do “Nothing” until the deal is finalized.AT&T and T-Mobile will remain competitors until this deal is approved. That means you won’t see AT&T phones on T-Mo or vice versa, so we can still expect new Android phones released until the deal is official. AT&T and T-Mobile will continue their current plans until further notice.
  • More capacity means more network strength and quality. AT&T and T-Mobile are facing impending spectrum shorting. Spectrum is the frequency that carriers use to transmit data, so its crucial that a network has enough to build a robust wireless service. An AT&T executive noted that T-Mobile doesn’t currently have enough spectrum to build a quality LTE network. The argument is that these two companies banding together will provide enough spectrum to invest in more towers and expand into areas that likely would not have received faster speeds and service offered by LTE.

  • AT&T downplayed concerns about prices by citing history. When carriers previously merged, prices actually fell as networks worked to be more competitive. [Ed note: True, but one could easily argue that with fewer options for consumers to embrace, the need to be competitive will decrease. There will be a difference in affordable options if there are 3 big carriers instead of 4 big carriers.]
  • John Stankey, AT&T Business Solutions President, says the company plans to keep several cell sites to maintain “great network density” in urban areas. This will improve major metro centers by 20-40 percent. AT&T says spectrum is being exhausted 3x faster than it can be built. AT&T plans to migrate 3G AWS customers, but it will dual-band sites to allow ATTMobile phones to work once deal is finalized.
  • LTE migration takes several years, as does identifying new spectrum. In the meantime, roaming on both networks will be made available to current T-Mobile and AT&T customers once the deal is closed. T-Mobile’s AWS spectrum will be used to build up LTE. AT&T still plans to have LTE available beginning mid 2011, but it will grow faster and perform better if this deal is approved. Benefits will be available within 1-2 years of closing.

The next 12-18 months could define the future of the U.S. wireless industry. AT&T could control more than 130 million customers if it can retain the bulk of T-Mobile’s dwindling subscriber ranks and transition them to AT&T plans. It will also create an even more powerful network that would be three times the size of Sprint, according to a statement released by the Now Network. Sprint is opposed to this deal because a AT&T-T-Mobile marriage would make its efforts to compete even tougher. AT&T would have more customers, spectrum, towers, and outlets to attract customers.

“The [Department of Justice] and the FCC must decide if this transaction is in the best interest of consumers and the US economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.” – Sprint statement given to Mobilized.