AT&T-Mobile Is a Win for T-Mobile’s Customers

By  |  Sunday, March 20, 2011 at 11:45 pm

It seems as if the popular take among tech pundits in light of Sunday’s announcement of the AT&T and T-Mobile merger is that it is a bad situation for everyone involved. Among the reasons I’ve seen so far are a further consolidation of an already top-heavy industry, the threat of rising prices as a result of less alternatives, and a loss of one of Android’s most stalwart partners.

But let’s step back a minute from the insta-reactions of most of the tech world and look at the bottom line: merger or not, T-Mobile’s customers stand to benefit the most by far. The deal is written in such a way that even if regulators scoff at it, T-Mobile will exit in a much stronger position than it is currently in.

I do realize that hyper-consolidation in any industry is never good. The SprinT-Mobile merger that looked like a possibility a few weeks ago would have been the merger from hell, though. Yes, it would have likely won easy approval because the combined company would still have less customers than its two larger competitors. But merging those two networks would have taken years.

When Cingular and AT&T Wireless merged in 2004, it took the two companies nearly two years to merge the GSM and TDMA networks together (the old AT&T Wireless had already begun the process, however). The two technologies were fairly similar: an upgrade path was available from TDMA to GSM.

With CDMA, Sprint’s wireless technology, there is not. It would require a massive and costly transition that would likely take much longer.

T-Mobile did not have that kind of time. It could be argued the company was following a similar path to Sprint previous to the Nextel merger, where the company was drifting, listless, and beginning to hemorrhage customers. T-Mobile needed to figure out its future. AT&T was it.

While AT&T talked up the benefits to its own subscribers in the merger announcement, the real winners are the T-Mobile customers. With identical technologies (save for their 3G frequencies), almost immediately after the merger is approved those subscriber’s coverage area will increase several times over. (For T-Mobile subscribers, the biggest gripe is always coverage.)

Secondly, T-Mobile customers will stand to benefit from gaining access to AT&T’s expansive non-Android line (iPhone/iPad, Windows Phone 7). I honestly do not believe that AT&T would not beef its Android lineup as a result of this marriage: remember, a Deutsche Telekom executive will now sit on the AT&T board.

Third, T-Mobile customers now have a clear path to LTE. The carrier has been pretty silent, talking up its HSPA+ network, but has so far not made a strong commitment to the 4G technology. Remember how far the carrier was behind on 3G — in this increasingly data intensive society, it can’t afford to continue to play catch up.

Fourth, and probably the most important, is what happens if the merger fails. T-Mobile would get $3 billion in cash from AT&T as a result, as well as unused AWS spectrum. Add to this the fact that AT&T is required to provide the carrier a roaming agreement “on terms favorable to T-Mobile,” and how could customers lose?

I think it’s foolish to believe that T-Mobile would be able to continue life as a budget-priced carrier while still attempting to compete on the stage with the big boys. It was simply not going to happen. The AT&T deal was the smartest move for the carrier, even if it seemed the least likely. We shouldn’t automatically assume the worst–if our antitrust regulators do their jobs, we won’t need to worry about the return of Ma Bell anytime soon.

 
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10 Comments For This Post

  1. Mike Cerm Says:

    Um, what? I'm sure that the average T-Mobile custom is a little more price-sensitive than the average AT&T customer, and will be hurt most by this deal. If you're a 4-smartphone household, you'll pay about $200 on T-Mobile right now, and on AT&T, you'll pay around $350.

    I'm sure that T-Mobile subscribers will have their EXISTING contracts honored, and may benefit from the enhanced coverage (voice-only, since T-Mobile phones use different frequencies for data). However, when it comes time to sign a new contract, switching the family over to iPhones will result in a 50% increase in the monthly bill. Now, tell me how THAT is good for T-Mobile customers!

    What will happen is that the cost-sensitive customers will either take the hit, or switch to one of the other "budget" carriers. However, Cricket, MetroPCS, etc. don't serve as many areas as T-Mobile currently does, and don't have nearly the same quality of phones. So, the option will be to pay SIGNIFICANTLY more, for slightly better service, or pay less for significantly worse service.

    Losing a competitor in a market with so few competitors already is bad for everyone.

  2. Josh Bee Says:

    Finally! A well thought out article backed by solid facts. Keep up the great work man… you’re moving up on my Google Reader list in a major way. T-Mobile USA was in trouble and this is the best/fastest way for its customers to really get see a benefit. If the transition is not smooth and swift, the subscribers will jump ship. The sharing of towers alone makes this a good deal for consumers, let’s just see how pricing changes.

  3. jltnol Says:

    You are sadly wrong. AT&T's coverage, while vast, just doesn't work most of the time. Gaining access to an overburdened, over sold, and slow network does no one any favors regardless of how vast it may be.

    AT&T's customer service is dismal at best. T-Mobile's, when I was a subscriber, seemed better. AT&T is nothing more than a money making machine that will hinder future innovation at all costs to increase their already obscene profit margins.

    Poor customer service, and poor cell service… how exactly is this better for anyone ?

  4. Wally SirFatty Says:

    As a former customer (10 years), I can speak with authority to the amount of suck and headache that is AT&T. I switched to T-Mobile (first Voicestream, later T-Mobile) to address connectivity and cost issues. Both solved with the switch to the first US GSM carrier.

    Sorry, but this is going to be bad news for me and my family, as Mike Cerm indicated above.

  5. Ed Oswald Says:

    Let me tell you… I was a customer of T-Mobile for 8 years (PCS One -> VoiceStream -> T-Mobile). I am only 60 miles away from Philadelphia, and the coverage out here even to this day has serious holes (family is still with the carrier). That also said, it took then 3 years after other carriers had 3G out here to get it here.

    I'm sorry to the T-Mobile fans (I was once one), but either way you folks are going to benefit from this. That also said, the carrier couldn't function in its current form much longer. It cannot compete with the big three yet cut corners.. and it realized this.

  6. Rev Says:

    Mr. Oswald is very much mistaken. The merger is disastrous for most customers of T-Mobile.

    What comes to mind after reading this piece:
    – The coverage is already available, since as a T-Mobile customer I roam on ATT
    – ATT cripples its phones almost as bad as Verizon does
    – I get a discount of abt $20/month right now for bringing my own phone and do not have a contract, ATT (or any other carrier besides T-Mobile) doesn’t have a plan for that
    – plans in general are much more expensive on ATT
    – I used to be an ATT landline customer and had a celebration on the day I finally canceled that service. Atrocious quality and customer support.

    This really was very depressing news. Right now, my only hope is that Google’s plans include a ‘universal phone': one that will work on any network and can be bought without a contract, allowing me to change carriers at will, anytime. It would be a beautiful thing.

  7. Josh Bee Says:

    I believe the focus here is in the wrong place. As long as we still have a strong three, with Sprint standing strong then this deal benefits T-Mobile customers with extra coverage. As far as price goes…. Sprint has been very competitively priced. Now, they will probably push that more then ever. As long as Sprint is there, a cheap option will be available.

    Sidebar:I’m happy with AT&T as a user from Philadelphia, living in Baltimore. My wife and I pay $108/month for 2 iPhones with rollover minutes and draped in coverage. (family plan, 200 SMS each, she has 200MB data, I have 2GB data, 15% student discount.)

  8. Jade Says:

    I have to disagree with this as well, as a VERY long time, VERY happy T-Mobile customer with awesome coverage in the St. Louis area. While this *might* be a benefit for phone wielding mankind as a whole (extremely doubtful), it will hurt me personally, and I am unhappy. I pay $109 (plus taxes and fees) for a family plan 4! lines, with unlimited texting and data and 750 minutes.

    So, right now I get:
    Awesome Coverage
    Fast HSPA Dowloads (getting around 5Mbps)
    Amazing Customer Service

    All At a Price That Can't Be Beat.

    As soon as my bill says AT&T on it, I am going going gone. They have burned me twice, and it aint gonna happen again. Not only no, but hell no. I'm especially mad at them for buying Tmobile, though I know this is half tmobile's fault. ;) I'll pay more to Verizon rather than give a dime to AT&T.

    I will sorely miss the great customer service. Once I had misread fine print about fees I would pay to switch from my contract plan, to T-Mobiles non-contract plan (even though I was out of contract). I called to complain about the fees (even though I knew in my heart of hearts it was my fault, and I was prepared to eat the fees), and I was told since I was such a long time customer, sure, we'll refund!! Every other company would say "I'm sorry, there is nothing I can do", or some other rendition of: "I'm sorry for your frustration, but suck it up because you have no choice and we have you right where we want you, have a nice day."

  9. Ginna Says:

    I do think it would help both ATT & T-Mobile customers in the sense of larger coverage areas because there would be more towers. As far as ATT I can't stand them anymore the Verizon they both have horrible customer service and outrageous priced plans that is obscene for anyone to have to pay those prices to have a cell phone service. T-Mobile's is high enough now and all the customers from T-Mobile should be protected by the government to be able to keep there rate plans forever even if ATT buys them out that should be part of there purchase agreement. Or that is like the government not paying attention to the housing market and letting homes be sold for 3 times there actually worth and then the bottom falling out of it and the consumer get's shafted and pays the price for it in the end along with the governement. I'm a T-Mobile customer and have been for years and years now they have been improving there coverage over the years just slower

  10. Ginna Says:

    then the bigger counter parts but I get pretty great coverage everywhere I go now just a few places that I'm at regularly don't get coverage at all and that sucks but I'm sure they will eventually. Verizon and ATT just want your money and stink at customer service or offering any decent priced unlimited plans, there nothing but greedy money hungry companies. So I sure hope the government is going to look after all of us T-Mobile customers a lot better then they did us in the Housing Market before and after the collapse.