What AT&T’s Acquisition of T-Mobile USA Means for the Market

The VAR Guy isn’t here to talk about his cellular service or get into a flame war about mobile providers, despite what he might mutter under his breath when he can’t get a signal. The impending acquisition of T-Mobile USA by AT&T has some serious implications for the future of wireless technology in this country, and subsequently, your phone service. Read on for what The VAR Guy believes are the things to keep your eyes on as the acquisition process (which could take up to two years) rolls out across our fair nation …

Bottom-line changes here will be coverage and type of coverage. AT&T has been looking to roll out a solid 4G LTE network, especially since all its competitors pretty much beat AT&T to it. T-Mobile, Verizon and Sprint all offered 4G devices first (and coincidentally, all also offered Android devices before AT&T, which was the last of the big names to offer such phones).

The key quote from the monster of a press release was the following:

“At closing, AT&T will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets. The combination will increase AT&T’s network density by approximately 30 percent in some of its most populated areas, while avoiding the need to construct additional cell towers. This transaction will increase spectrum efficiency to increase capacity and output, which not only improves service, but is also the best way to ensure competitive prices and services in a market where demand is extremely high and spectrum is in short supply.”

Read between the lines and you can see that instead of looking for land and building out new towers for 4G, AT&T can now repurpose T-Mobile’s existing 3G’s towers for AT&T 4G, use T-Mobile’s existing 4G network and grab a considerable amount of subscribers at the same time.

But here’s something not everyone might consider at the outset: Once T-Mobile’s towers get repurposed, 3G phones on T-Mobile’s network will no longer function. AT&T and T-Mobile both offer 3G on a GSM network, but work at different frequencies. Even though AT&T and T-Mobile share EDGE frequencies (which is how hacked iPhones can operate on T-Mobile) the buck stops there.

According to the AP, T-Mobile subscribers with 3G phones will be offered replacement phones, and this is something that AT&T planned for. The details have yet to be worked out whether those subscribers will be offered a credit, a 3G phone that works on AT&T, or an upgraded 4G phone.

So what can we expect then, at the end of this acquisition? A lot more bars, apparently — something The VAR Guy is definitely looking forward to. The consolidation of these networks could potentially rival that of all AT&T’s rivals.

But then what of competition? The VAR Guy worries, because should this deal be completed, AT&T will own about 43 percent of all cellular subscribers in the United States, and there will only be three major players in the mobile marketplace — AT&T, Sprint and Verizon. The VAR Guy has heard that Sprint allegedly fails over to Verizon’s network on occasion since they both operate on CDMA. What if Verizon wants to scoop up Sprint? Would federal regulators allow such an acquisition? Will federal regulators even allow the AT&T/T-Mobile acquisition?

Monopoly panic aside, this deal likely won’t do much in the way of lowering prices for the end user, but if there is a increase in offerings (Hey AT&T, can we have unlimited data back and free tethering now that you’ve got all that spectrum and towers?) customers could just see the status quo in pricing with a bump in quality of service. AT&T, however, could keep its current pricing and data plan structure, much to the chagrin of T-Mobile customers who currently enjoy all-you-can-eat data plans.

The VAR Guy obviously is hoping AT&T will be generous. However, customers in the United States tend to pay a high price for mobility compared to their European counterparts. T-Mobile (and Sprint) both have made efforts to offer cheaper prices than AT&T and Verizon, and that low-price choice is important for consumers. If AT&T doesn’t lower its prices after this acquisition, Sprint (and a plethora of prepaid mobile devices) will be the only solution for cheaper cell service, since AT&T and Verizon are likely to spend as much money as they can battling each other in 4G, 5G and beyond.

The VAR Guy is hoping for mostly positive changes during this transition, but this blogger thinks this is the opening salvo in a bigger war in the mobile marketplace. Meanwhile, our resident blogger will keep watching his signal bar and his monthly bill for any changes.

Sign up for The VAR Guy’s Weekly Newsletter, Webcasts and Resource Center. Follow The VAR Guy via RSS, Facebook and Twitter. Follow experts at VARtweet. Read The VAR Guy’s editorial disclosures here.