What’s the Impact of the AT&T/T-Mobile Deal?

Pros and cons weighed out

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Ever since AT&T announced its $39 billion acquisition of T-Mobile USA, consumers have been speculating about its potential impact. Some people have spoken out in favor of it, and others have strongly opposed it.

Do you think the merger would help or hurt consumers? Let us know.

If approved, the combined AT&T/T-Mobile would create the largest wireless provider in the US. Verizon would be the second largest provider, followed by Sprint. Does this limit competition, or is it simply a strategic business move on AT&T’s part?

Those who oppose the deal believe that consumers would suffer since they would be given one less choice in a wireless provider. Those who support the merger, on the other hand, believe that consumers would benefit from better service from the combined companies.

Jim Lakely, the Co-Director of the Center for Digital Economy at The Heartland Institute, supports the deal and said, “There’s actually a lot more competition in the market than most people realize.”

He went on to say that, although most people are drawn to the big 3 or 4 providers, smaller providers, such as Leap Wireless and US Cellular, should also be considered as competitors in the marketplace.

Price has been another point of dispute between supporters and opponents of the merger. Understandably, many consumers are concerned that their wireless rates would increase as a result of the deal. However, supporters argue that services would better through the joint companies.

For example, T-Mobile customers would have access to the iPhone. Also, advocates say that 4G has more of an opportunity to advance and become available to more people through the combined effort.

Lakely further pointed out that price wouldn’t be an issue, since the wireless market is so customer-sensitive. If AT&T/T-Mobile were to increase their prices, their customers would simply move to another provider.

He actually believes that the FCC could be more harmful to consumers than the AT&T/T-Mobile deal. In a statement, he said, “The FCC itself poses a bigger danger to consumers than any merger.”

According to him, the anti-trust division of the Department of Justice is the proper place that should review mergers and acquisitions. He further stated that the FCC did not have enough experience in the wireless space to be involved.

“What it really needs to do is get out of the way and let things develop naturally,” he added.

Lakely, along with other supporters of the deal, believe that this merger is a “natural” business acquisition. Just as in any other industry, companies unite in order to create efficiencies in the marketplace and better meet customer needs. If you remember, Verizon acquired Alltel for these very reasons.

Even though Lakely is convinced that the FCC will put many conditions on the deal, he believes it will pass regulatory approval. Because the Department of Justice stated last year that the wireless sector was competitive and healthy, he doesn’t think it could overturn that stance. Do you agree that it will be approved?

Note: WPN reached out to Om Malik for his perspective but did receive a response.

What’s the Impact of the AT&T/T-Mobile Deal?
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  • Chuck

    The provider with better rates & customer service is getting taken over. Of course the consumer is going to be worse off . Rates will go up & service will go down . AT&T can’t invest in itself but can give away billions if a merger is not approved . Its all about the profit . AT&T & the politicians they paid for will benefit . The consumer will end up paying . Anyone who says there is “fierce competition” is not being honest . There are only two national GSM providers ,the main standard used worldwide , T-Mobile & AT&T . Now there will be just AT&T . America deserves better .

    • Maria

      What do you mean “the best customer service”? T-mobile customer service sucks. I have a sister in law who spends upwards of an hour on hold every time she calls to speak with one of their agents. And the prices for some of t-mobile’s devices are outrageous considering the fact that half of the time they don’t work properly. Of course, while ATT has better customer service and devices, you are right about their failure to invest in themselves. If one of their cell towers in an area is damaged, they take forever to fix it. Still, I think this merger might be great for both companies.

  • http://m1t0s1s.blogspot.com m1t0s1s

    People who use att are usually conservative, and frankly, ignorant. Therefore, they wont change. They should be protected from thie monopoly thats about to form.

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