Federal regulators last week cleared the way for Cingular Wireless LLCs $41 billion acquisition of AT&T Wireless Services Inc., despite worries that the pairing will decrease competition and increase prices.
The combined company will have about 46 million customers, making it the nations largest wireless carrier. The next largest, Verizon Wireless, has about 40 million. The merger also cuts the number of national wireless carriers to five.
Cingular officials said the merger will bring expanded coverage and services to customers. The company has already begun opening both carriers GSM (Global System for Mobile Communications) networks to customers. In the next six weeks, the handoff between networks will be handled automatically so that customers will be connected to whichever network has a stronger signal.
When the companies unite, customers will be able to make unlimited mobile-to-mobile calls to any Cingular or former AT&T Wireless customer in some plans, officials said. But the physical integration of the systems and networks will take 18 months to two years.
Critics of the plan say the merger will lead to less competition and, in turn, higher prices for consumers.
“Any immediate advantages consumers see will be overshadowed by the disadvantages,” said Susanna Montezemolo, policy analyst with the Washington-based Consumers Union, publisher of Consumer Reports. “The way the order was written—both with the U.S. Department of Justice and the FCC [Federal Communications Commission]—set a precedent that all you need is three competitors. From our point of view, whats needed is more robust competition.”
Although there will be layoffs, Cingular will not cut workers before the end of the year, said Cingular CEO Stan Sigman, who will remain in his current post. Cingular officials would not comment on how many of the combined companies 68,000 employees would be laid off. Cingulars headquarters will remain in Atlanta, although Sigman said on a conference call with reporters last week, “That doesnt mean all workers will have to be in Atlanta.”