AT&T + T-Mobile = Biggest Cell Carrier

News broke Sunday that AT&T is buying T-Mobile. I read “AT&T to Buy T-Mobile USA for $39 Billion” (New York Times) by Andrew Ross Sorkin, Jenna Wortham, and Michael J. De La Merced and I also read “AT&T to Buy T-Mobile: Here’s Why” (Wall Street Journal) by Shira Ovide. Both articles have significant information about the deal but I will write about a few points.

This will make AT&T/ T-Mobile the biggest Cell Carrier

Both T-Mobile and AT&T have 42% of the market. This would obviously reduce competition that could ignite regulators to try to prevent the merger. According to New York Times (NYT) “the deal requires approval from both the Justice Department and the Federal Communications Commission. It is unclear how regulators will react, but the companies clearly know the deal faces serious regulatory hurdles”. AT&T and T-Mobile will have to fight off theories that they are “monopolizing” the market.

“Wireless service will be awesome”

As Wall Street Journal (WSJ) reports, the assumption is the wide range of coverage both companies have will combine to give better service than current AT&T and T-Mobile service. But it has been previously reported that AT&T is the worst carrier in the U.S. The plan should be for AT&T to become better but the fear amongst people so far in news outlets and blogosphere is that it will make service worse for T-mobile consumers. NYT reports some expect higher prices from the merger considering T-mobile has “some of the lowest rates in the country” and mergers usually don’t result in lower prices, especially if it is a consolidation of services with little competition. NYT also reports AT&T will “honor current contracts” but “T-Mobile Customers may have to pay higher rates once those contracts expire.”

Merger usually means…

…Loss of jobs. AT&T and T-Mobile merger means changing logos and closing stores where there would be duplicates. NYT reports, “The combined company is expected to close hundreds of retail outlets in areas where they overlap, as well as eliminate overlapping back office, technical, and call center staff.” NYT states the estimated savings is about $3 billion a year.

As a T-mobile customer, writing about AT&T’s reported bad service, and a general consumer, I don’t see great things for consumers in this merger.  Cell service, from talk quality to web browsing might get better. But T-Mobile does have decent prices and those prices will most likely be gone. While T-Mobile customers will have access to the iPhone, it would only be worth it during contract renewal time when the price would be best. But then, customers would have the option to leave and go to Verizon. So, the question: will AT&T/ T-Mobile be better than the competition? I am fearful of  “catching” AT&T’s bad service. As a general consumer, lack of competition is scary. I do write about business but people forget customer service is a giant part of business. Lack of it is the reason people predicted Verizon would become a threatening competition to AT&T once they got the iPhone because AT&T had it for 3 years and disappointed customers. So, in the end, the new company, AT&T/ T-Mobile needs to become a better company for itself and customers. The merger will reduce competition but it won’t eliminate it.

I will keep up with the news of the deal and try my best to do a follow-up post. Mind that I’m writing this late Sunday night so I apologize for any change in news not reported that may happen Monday morning or afternoon. Please read the articles for more info. Also twitter is a great service for information on this deal. I follow major business twitter pages and just started following @PreetaTweets, page of Anupreeta Das, writer of deals for WSJ.