Government // Mobile & Wireless
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3/21/2011
05:21 PM
Eric Zeman
Eric Zeman
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AT&T T-Mobile Deal Sets Industry Abuzz

The industry is an uproar about AT&Ts plans to acquire the Deutsche Telekom unit and form the nation's largest wireless network operator.

Now that everyone has had some time to digest the possibility of AT&T devouring T-Mobile to become the nation's largest wireless network operator, the reactions span the gamut. Here's what we've learned Monday:

1. AT&T Targeting AWS Spectrum For 4G:

AT&T today said during a press call that its intent is to push T-Mobile's HSPA+ 4G network off the 1700MHz AWS spectrum it currently uses and transition T-Mobile's 3G services to the shared 850/1900 bands that T-Mobile and AT&T both already own. AT&T will then use the 1700MHz spectrum (and the 700MHz spectrum it already owns) expressly for Long Term Evolution 4G. It says it will cover 294 million Americans with LTE eventually.

2. Business As Normal For Now:

Both companies will continue to operate as separate entities for the foreseeable future. The agreement has been announced, and the acquisition won't close for about 12 months. This means T-Mobile will continue to sell its phones with its plans, and AT&T will do the same. T-Mobile will not begin selling the iPhone.

3. Approval Will Be Hell:

Based in the sheer volume of naysayers, AT&T faces a huge regulatory hurdle. The acquisition will likely undergo intense anti-trust scrutiny by governmental regulators. Some have already stepped up and spoken their minds. Sprint, which would continue to be the nation's third-largest operator, said in a statement, "The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry.

AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated by two vertically integrated companies that control almost 80% of the U.S. wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete. The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the U.S. economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry." You can be sure other players in the market will be making similar arguments.

4. Many Questions Remain Unanswered:

Though AT&T projected confidence that the deal will be approved and the merger allowed to move forward, the number of unknown consequences are too many to count right now. How will contracts be handled? What sort of plans will be offered? Which carriers' plans will take preference? What about device lineups? What about T-Mobile's awesome customer service (and AT&T's lousy customer service)?

5. Equipment Vendors Bear The Brunt:

Those likely to take it on the chin first are the handset makers, the tower builders, the networking infrastructure vendors, and the high-speed backhaul providers who hook base stations and cell towers into the Internet. Handsets will need to be redesigned to match the changed spectrum support. Cell towers and base stations will need to be upgraded and/or altered to handle the changes in networking technologies. And all of this will need to be done as fast as possible so that competitive products can actually reach the market and fight off the product offerings of Verizon, Sprint and others.

6. No Shortage Of Opinions:

Many Internet personalities and tech sites have weighed in on this merger announcement, and the opinions run far and wide. Here are some of the headlines I've seen today: Why AT&T's Proposed Merger is a Good Thing; Stop the AT&T Merger; The Ups and Downs of the Monster Mobile Merger; Higher Prices, Fewer Choices if AT&T Swallows AT&T; What's Going to Happen to Sprint?; Sprint Shares Tank Thanks to AT&T Plan to Buy T-Mobile; What the AT&T / T-Mobile Merger Means for Innovations; and on and on and on. Oh, let's not forget my favorite: Here's What You Can Do to Block the AT&T / T-Mobile Merger.

This merger is going to generate a lot of discussion for some time to come. Not just here in Orlando at the CTIA Wireless trade show, but across the entire telecommunications industry.


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