Should AT&T be allowed to acquire T-Mobile, customers of both companies will see positives and negatives, analysts say.
It could take
as long as a year for federal regulators to sort through
the proposed $39 billion acquisition of T-Mobile by AT&T, during which time both commercial and consumer
customers probably will see little if any change.
However,
should the deal-which would unite AT&T, the country's second-largest
carrier, with T-Mobile, its fourth-largest-get the blessing of the Federal
Communications Commission, the Department of Justice and other regulators,
customers of both carriers could see their share of positive and negative
impacts, according to analysts.
Those changes
could range anywhere from improved service and a greater number of mobile-device
choices to higher prices and less innovation, the analysts said.
The effects of
the deal, announced March 20, are likely to be "slightly negative from the
perspectives of price, service and innovation, since the decrease in competition
will reduce motivation to improve any of these things on behalf of
customers," Roger Kay, principal analyst with Endpoint Technologies, told
eWEEK.
In the short
term, however, customers shouldn't expect much of anything, said analyst Ken
Hyers, with Technology Business Research.
"We've
seen AT&T for so long being characterized as having poor coverage, and in
the short term, that won't change. These sorts of deals take about a year,
since the regulators need to pore over it," he told eWEEK. "In the
long term, though, it'll improve the quality of the [network] service AT&T
customers receive, and T-Mobile customers will see prices increase."
Consumer Reports, in a March 21 blog post,
also suggested that a price hike for T-Mobile customers is imminent.
"T-Mobile
charges less than many major competitors on a number of plan types, as our
recent
rundown of best plans for certain needs
makes clear. It's possible, even likely, that after a merger, these lower rates
will continue only until T-Mobile's contractual obligations are up, and then
they'll rise to the levels of AT&T and other major carriers," Consumer
Reports' Paul Reynolds blogged. "The fact that one fewer major wireless
carrier will be in the national market helps increase the likelihood of rate hikes."
Reynolds added
that just as T-Mobile's pricing has nowhere to go but up, so does AT&T's
network service quality. Not only should customers expect more robust cellular
coverage, but sooner rather than later, they'll have a solid, LTE-based
(Long-Term Evolution-based) 4G network to look forward to.
"From
AT&T's perspective, this is an awesome deal," said TBR's Hyers. While
not a sexy topic, he conceded, "T-Mobile has done a great job with
backhaul," laying down not T1 but actual fiber, speeding and complementing
AT&T's move to an LTE 4G network.
"T-Mobile
has been ahead of the curve, and that's the reason that AT&T is paying such
a premium," Hyers said. "They get a ready-made network with 35
million or so customers, they get spectrum, lots of assets, and they're compatible
technologies." While Verizon and Sprint depend on CDMA (Code Division
Multiple Access) technology, AT&T and T-Mobile are both based on GSM
technology.
In the plus
column, T-Mobile customers can expect a larger portfolio of devices from which
to choose.
Gleacher &
Company analyst Stephen Patel wrote in a March 21 research note that AT&T's
broad lineup of BlackBerry smartphones from Research In Motion could become
available to T-Mobile customers. The carriers' combined subscriber bases, which
would total nearly 130 million people, could also be good for Microsoft's
Windows Phone, in addition to RIM's BlackBerry OS, he added, explaining that
such a vast customer base "could enable a more balanced market share for
multiple ecosystems" and make it less likely that two ecosystems-Google's
Android and Apple's iOS-take over the U.S. market.
That said,
AT&T customers might also wind up with a better selection of
Android-running phones.
"AT&T
has been slower than other carriers to push Android," wrote Patel. "T-Mobile,
on the other hand, was a very early Android supporter and has always carried a
variety of Android models. It's possible the T-Mobile subscriber base drives
AT&T to carry a broader Android lineup."
Less expected
but nonetheless likely to be affected by the deal are Sprint customers.
According to analysts, Sprint may have a tough time weathering a merger of two
rivals.
"The
proposed merger would leave Sprint a distant third in what would then be a Big
Three wireless market," wrote Consumer Reports' Reynolds, "and some
analysts predict that it, too, would need to seek a partner." A likely fit
is a cable operator.
Finally, TBR's
Hyers said the acquisition should also be a positive one for AT&T's
business customers.
"AT&T's
enterprise customers will have a larger, more robust network to roam on,"
he told eWEEK. "And being a GSM network"-the technology favored
abroad over CDMA-"this is going to provide them with larger global roaming
capabilities."
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