AT&T-Mobile: Cue Angry Consumers

by: Brian K. White

Image makeover to follow?

It was recently announced that AT&T will buy rival T-Mobile from Deutsche Telekom for a cool $39 billion, roughly a third more than its current market value. While this may be a great move for T-Mobile investors and management, consumers seem to hold their own opinions, and ones held pretty strongly at that. Not to mention the anti-trust flags that are already waving. If approved, this means that 80% of the mobile market will be held by AT&T-Mobile and Verizon. Expect the FCC and the government to watch this acquisition closely.

The voices in opposition are saying that this would:

  • Reduce competition…which it would, by its very nature.
  • Diminish innovation…which is a typical side-effect of reduced competition.
  • Increase prices…since AT&T charges more than underdog T-Mobile for otherwise comparable products.
  • Lower data caps…since AT&T has a 2GB cap, whereas T-Mobile has a soft 5GB cap, which it calls “unlimited.”

There is already a Facebook page or two opposing the merger, as well as a grassroots effort to slow it down, if not stop it entirely. One site, StopThisMerger.com, has gone as far as to try to mobilize the base to, well, stop this merger. On that site, you can post your comments of opposition (or support) or make a donation to advance a physical letter-writing campaign.

In theory, costs could go down. AT&T already charges significantly higher rates than T-Mobile so they aren’t likely to risk losing T-Mobile customers by charging much more than the rates they are already enjoying.

Coverage will expand, but reciprocal agreements already allowed users in blackout areas to use the rival’s towers, so this is expected to be a small consolation, especially considering the 20-30% increase in rates for existing T-Mobile consumers.

Even thought there is a significant, unexpected backlash from consumers, there is little doubt that this merger will go through. AT&T has been in the quasi-antitrust business for a few decades now (see the breakup of Ma Bell), and they know better than anyone how to do it. Their lobbyists are well-placed, and they wouldn’t have endeavored to place such a massive financial stake without an internal certainty that it would go through.

Got a lobbyist? They can’t hear you now!

Brian K. White, known to 538 Refugees as 10kZebra, is a Seattle native who has worked for nine years as the editor of Glossy News, a humourous and satirical take on the news. He is a voracious consumer of news himself and splits his time between raising his clever kids and trying to find the elusive unicorn that is the honest politician.


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5 Responses to AT&T-Mobile: Cue Angry Consumers

  1. mclever says:

    As a former Cingular customer currently grandfathered into AT&T, this is exactly the sort of thing that makes me cringe. AT&T has already gobbled up other nationwide competitors.

    When is enough enough? When they’ve gobbled Sprint, Verizon, and Nextel, too?

  2. Max aka Birdpilot says:

    Sorry, mc, but Sprint ALREADY gobbled up Nextel!

  3. mclever,
    The answer is complex (as I noted earlier today). But I don’t believe they should be allowed to buy the wireless bandwidth as part of the acquisition. On the other hand, lacking that bandwidth, the deal hardly makes sense.

    Part of the AT&T and T-Mo problem is that they use GSM TDMA for their communications. TDMA uses wireless frequencies far less efficiently than does CDMA (used by Verizon and Sprint). TDMA also causes all sorts of nasty buzzing in many audio devices (e.g., car radios, computer speakers, hearing aids). But I doubt it’d be very cheap for AT&T to switch to CDMA.

  4. mclever says:

    @Michael

    Well, I now have a technical explanation for why my car radio buzzes when I turn my cellphone on in the car. Thanks!

    I mostly don’t like seeing the erosion of choice.

    When Cingular got bought by AT&T, it ended up being a relatively good deal for me. I got to keep my Cingular plan and rates (with a couple of minor tweaks) but with better/broader coverage and all of the AT&T bells-n-whistles. I still have that same plan with those same Cingular rates (which makes the geek boys at the AT&T store stammer in awe when they see it).

    But if I wanted to get a similar deal now, I can’t. And neither can anyone else, because that choice is gone. T-Mobile offers a choice that I wouldn’t like to see disappear from the marketplace.

    I guess I just don’t like the business model that says, “If you can’t beat ’em, buy ’em.” It does a disservice to the overall community of customers. Besides, what’s that old adage about bank mergers? If two banks that service the same area merge, you don’t end up with one bank that’s the sum of the two banks, but rather the competitors get a boost in size due to the redistribution of customers.

  5. Winston Stary says:

    In-car entertainment has come a long way since 1930, when Motorola introduced the first commercially successful car radio, the Model 5T71. Over the past 80-plus years, car audio has evolved from the basic AM radio receiver with a single speaker to complex electronic systems reproducing music and other entertainment from both over-the-air signals and recorded formats. Many systems today can play music from a staggering array of audio sources: radio, CD, portable music players like the iPod, USB flash drives, SD cards, Bluetooth audio and hard-disk drives. –

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