AT&T + T-Mobile: Here We Go Again

March 24, 2011

Karen Thatcher, CEO

There are big things going on this week at the CTIA Wireless trade show this week in Orlando.   The most shocking – and one that is creating the most speculation -   is the announcement of a pending merger between wireless giant AT&T and T-Mobile.    The deal, reportedly in the $39 billion range,  would create the nation’s wireless carrier with approximately 130 million customers.

Huge mergers are nothing new in telecom industry.  What is ironic, however,  is the fact that the AT&T monopoly was dismantled in the early 1980s because of its mammoth size and scope over the long-distance market.   Since then, we continue to witness huge multi-billion dollar mergers that are pushing toward the very same telecommunications landscape that legislation was enacted to avoid.  The difference is that now the “holy grail” is the wireless industry.

Effects on the Customer

It would be nice to think that mergers of this type result in benefits to the end user. Unfortunately, history has proven that these types of mega-mergers rarely, if ever, result in better customer service and lower prices for the consumer.

In fact, a recent issue of Consumer Reports rank T-Mobile second to last in customer service, edging out AT&T who ranked last place in the same category.   Not a good start to a wireless marriage, that’s for sure.

Many in the industry are speculating on the difficulty of getting the merger regulatory approval.  My guess is that the deal will eventually go through, but  AT&T may be forced to make some concessions like giving up control over certain wireless spectrums and/or assets.

AT&T Forced to Make a Move

When you really think about it, AT&T’s proposed merger with T-Mobile does make alot sense from a business standpoint.   In recent years, its exclusive deal with the iPhone has pushed its capacity to the limit.  After all, who would have thought that Apple would sell so many of those darn things?

Just as the company was settling in with handling iPhone traffic, along comes the iPad, taxing its network capacity even more.

AT&T has essentially done two things with this merger: 1) eliminated one of its major rivals, and 2) quickly acquired additional network assets without having to take the time and effort to build its own.

If the merger does get approved, we will be left with only three major wireless carriers in the United States.   Perhaps at some point in the future our choices will dwindle down to just one – AT&T.  Time will tell, but history does have a way of repeating itself.