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Monday, March 21, 2011

AT&T wants to buy T-Mobile

AT&T Inc. announced on Sunday its intent to buy cell service provider T-Mobile from its owner, Deutsche Telekom, for $39 billion. Keep in mind the deal has not yet gone through — it would take about a year and could potentially run into difficulty with the Federal Communications Commission and the Federal Trade Commission — though both companies' boards have already approved. AT&T is trying to look appealing to federal regulators by also spending $8 billion to strengthen broadband service, especially in rural areas, fitting into a stated goal of the FCC and the Obama administration.

If the deal closes, this would reduce the number of big cell phone carriers in America to three.

If everything does go through, AT&T's 86 million customers will combine with T-Mobile's 34 million customers to create the largest user group of any mobile carrier at 120 million customers (eclipsing Verizon's 94 million).

Part of this could be for compatibility. T-Mobile phones use different network technologies than the other big carriers, Verizon and Sprint, but the same type as AT&T (except when it comes to 3G wireless data). Another part of it is that AT&T wants T-Mobile's cell towers. This deal would give them new infrastructure equivalent to what would take about five years or more to build on their own.

Casey Chan at Gizmodo has a pretty good write-up of the situation. Chan focuses mainly on what might happen in the future (while also mentioning that T-Mobile's last-in-the-pack position gave it chances to try out new things—for example, they were the first U.S. carrier to offer Android phones):

AT&T could slowly integrate T-Mobile customers into the fold like what Verizon did when they swallowed Alltel. Which means that T-Mobile might stick around for a few more months after the acquisition closes, and then be absorbed into AT&T, disappearing forever. Another, more hopeful, scenario would be for AT&T to turn T-Mobile into a low-cost carrier with dirt cheap plans (which they kinda were already) but that seems less likely given the bill-ee-ons AT&T just paid for it.

(Anyone remember Alltel? Wow. All I recall about them is this funny ad.)

This article also provides some "what will this mean?" answers, theorizing that unlimited data plans may disappear (AT&T stopped offering them while T-Mobile does, but slows downloads after a user reaches 5 gigabytes a month) and there may be fewer pricing plans, but there would be more phone choices and better network coverage.

To repeat: this deal is not at all complete yet. T-Mobile has a Q&Arepeated that nothing has changed for customers as of today. However, watching this story develop is going to be interesting. Plus, no, no one is entirely sure yet that T-Mobile will get the iPhone if the deal is successful. Chan theorizes that they will, while the official Q&A says it will not be offered in the year's time this deal may take.

The best joke I've seen about this topic has been floating around Twitter: "AT&T and T-Mobile are getting married. There will be no reception." Bazinga!

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