ATandT, T-Mobile Customers Should Expect Perks, Drawbacks: Analysts
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."