AT&T-Mobile: the good, the bad, and a better alternative

When AT&T and T-Mobile announced their plans for AT&T to buy the beleaguered American wireless wing of Deutsche Telekom, the only cheers I heard were from the two companies themselves. I imagine the AT&T execs were all sitting around the conference room high fiving each other upon realizing that buying your competitors is much simpler than being competitive, and the Deutsche Telekom execs were shrieking with joy on news that some sucker actually wanted to buy that third rate wireless carrier.

Realistically, AT&T needs T-Mobile’s resources if it wants to survive. While AT&T were busy cleaning the jizz out of their underwear after realizing that customers were willingly paying $30/month extra for data plans for their iPhones (for which AT&T was the exclusive carrier), Verizon was buying up that coveted 700 MHz spectrum that it would inevitably need. To make matters worse, there are pretty giant regions of the US where AT&T doesn’t even have a foothold (like, ahem, THE MIDWEST) and is completely reliant on its roaming partners to provide coverage outside of the metro areas in the Midwest (and by roaming partners, I of course mean T-Mobile and its partner carriers). Because T-Mobile’s 3G network isn’t using the same frequencies that AT&T’s 3G network used, this means that roaming off of AT&T’s network leaves you on the EDGE of civilized life with poor data speeds (also a ton of dead zones, because T-Mobile doesn’t have a lot of cash to spend on towers, and AT&T just doesn’t give a shit about small areas).  Albeit the more rural areas aren’t really in AT&T’s focus (they really only care about providing cell service to an area they can make a shit ton of money on as opposed to being able to offer a thorough network to all its customers), AT&T’s also got this growing problem of network congestion in major cities that are densely populated. For AT&T, buying T-Mobile is a logical next step, because T-Mobile’s already got a large presence in these major cities (and logically is licensed for spectrum in said cities) and since they don’t have a lot of customers, that means there’s a fair amount of breathing room (and based on the network performance my T-Mobile using friends have experienced, that is the case).  And T-Mobile’s developed other interesting technologies that may be of use to AT&T, such as their use of UMA which enables customers to make calls using a WiFi hotspot (which is great for T-Mobile whose network isn’t that expansive and for AT&T, whose network could really use a break).

Conversely, T-Mobile isn’t doing so hot.  Despite offering the most competitive prices of any national carrier (Sprint’s a close rival), they’ve recently been bleeding subscribers. Being a smaller carrier, they have failed to get access to some of the hottest phones (okay, the iPhone. They have so far failed to get access to the iPhone), and their coverage on a large scale is relatively weak, which surely has pushed subscribers away. When a big company like AT&T comes along and offers them $39 billion in cash and stock, well, it’s kind of hard to walk away from that.

But the overwhelming feelings of opposition from consumers (correct me if I’m wrong on that, but I’ve been getting that vibe) indicates that although the companies stand to benefit from this, the consumers are going to lose. Realistically, it’s a mixed bag. T-Mobile customers will start to get access to AT&T’s larger network (which may or may not make a difference, as the two have always been roaming partners) but they’ll probably also get access to AT&T’s higher prices, too.  AT&T customers may very well breathe a sigh of relief on hearing that their network might get a bit less congested, though AT&T’s network performance hasn’t been making headlines since the Verizon iPhone came out (not that I think there’s a causal relationship between the two; I genuinely think AT&T’s gotten a better handle on their network in the past year). T-Mobile customers may start to get more mainstream phones, and AT&T customers may soon see WiFi hotspot calling (a feature I would love, personally).

There is the reality, though, that less competition is going to harm consumers.  One fewer competitor creates an effective duopoly in the US wireless market. Jobs are going to be lost for sure as the merger creates redundancies that will be eliminated. Price increases and data usage limitations will probably come to exist a lot faster than when there was one more large carrier making the others look bad.

Perhaps a better solution here would be to do something along the lines of what happened when we broke up Ma Bell.  When this happened, long distance prices magically went down. Though from a technical standpoint having all these disparate networks competing against each other would probably be slightly inefficient, I think that limiting the size of a wireless carrier to a certain regional area and/or number of customers and having the carrier split after growing too large could be beneficial assuming a couple of stipulations:

  • Carriers are required to let other carriers’ customers roam to their network, and vice versa, at the same rates
  • Devices running on these networks may not be locked to run on a single network; they should be able to run on any network they are compatible with
  • If a carrier is to change to using a different network technology, other carriers should also adopt this technology so that there is roaming coverage nationwide.

Sure, having dozens of small carriers could have its disadvantages, but I think most would agree that having 4 large ones in the US has created more problems, and I think having many small carriers could lead to some clever advantages, such as the companies catering better to the needs of locals because they’re from around there, more local jobs, and of course, more competition and lower prices.

 

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