ATandT Buyout Is Best Option for T-Mobile Customers in a Stagnant Market
News Analysis: T-Mobile's last two years of virtual stagnation left its customers with an uncertain future. AT&T's purchase may be the best of a series of less-than-ideal outcomes.The first reaction I had on hearing about the agreement by AT&T to buy T-Mobile USA from Deutsche Telekom was one of dismay. As a T-Mobile customer, I'd grown used to its relatively low rates, its stellar customer service and the lack of dropped calls.
I also liked the comparatively low rates when I traveled out of the United States-T-Mobile charges about half of what AT&T charges per minute for calls made in Europe. Finally, I liked T-Mobile's willingness to let me unlock my phone so I could use foreign SIM cards.
But taking the long view, this was all going to change anyway. T-Mobile was adrift in a sea of sharks. While it made great strides in bringing Android phones to the market, it was ultimately Verizon Wireless that made the Android market explode with its Droid line of phones. T-Mobile dropped its Sidekick devices following a number of high-profile data losses. They're only now coming back in an improved form.
The company is best known for its customer service, which features real people with actual training (imagine that!) who can answer most questions without escalation. But as good as the customer service might be, it doesn't make up for vast areas of no coverage. On a recent drive through central Virginia, I found myself driving for more than an hour with no cell phone coverage. I was glad that I'm a ham radio operator and could still call for help in an emergency.
Ultimately, it was T-Mobile's inability to compete in a growing market that doomed the company to a merger with another carrier. For quite a while the effort was to merge with Sprint, a company that's suffering from being relatively small in a battle with giants. Had T-Mobile and Sprint reached an agreement on corporate valuation, there would have been the problem of how to merge the two networks. Sprint, which once owned what eventually became T-Mobile, has a CDMA network. T-Mobile is GSM. One or the other would have had to change. As was demonstrated during the last time Sprint revamped its network, this could have been a nightmare.
At least with an AT&T merger, customers from both companies can use the other's voice and EDGE network with nothing more than a setting change at their cell sites. In some markets, AT&T and T-Mobile already have roaming agreements. Their respective 3G frequencies are different, but the merger gives T-Mobile customers access to 3G and 4G LTE (long-term evolution) that would not have been available previously.