AT&T just announced that they're buying T-Mobile from Deutsche Telekom for $39 billion. The deal makes AT&T the largest network in the country, and leaves us with only three major US carriers. What's that mean for us?
Once the deal is approved, AT&T will buff up their 86 millionish customers with T-Mobile's 34 million subscribers—giving them around 120 million customers, making them way ahead of Verizon's 94 million. AT&T won't only be the biggest game in town, it'll be the only major GSM carrier in town. That's good for AT&T! But for us? Well, um, it depends. Things might not change for a while—the deal's going to take 12 months to be finalized, if it's approved by the FCC and FTC—but since there is only one "little" major carrier left with Sprint, the big boys in Verizon and AT&T can now do and charge what they want knowing there's fewer places for people to flee. Sprint's going to be the only cheap major carrier around. And our phone selection will probably get a little bit crappier, now that there aren't two competing major GSM carriers.
T-Mobile, though only a 4th place carrier, has done a lot of good things because of their back of the pack standing. They take chances on phones! Remember, they were the first carrier to introduce Android to the masses in the T-Mobile G1. (AT&T was the last). They have cheap plans! Their Fav 5 plan was a huge selling point that spurred other carriers to buck up and offer better deals. Their UMA Wi-Fi calling was awesome. They had really good customer service! No seriously, talking to T-Mobile service reps was not a disgusting experience in humanity like the other big carriers. All that's going to be gone.
So what happens to T-Mobile now? Well, we see two likely options and none really comforting for T-Mobile customers. AT&T could slowly integrate T-Mobile customers into the fold like what Verizon did when they swallowed Alltel. Which means that T-Mobile might stick around for a few more months after the acquisition closes, and then be absorbed into AT&T, disappearing forever. Another, more hopeful, scenario would be for AT&T to turn T-Mobile into a low-cost carrier with dirt cheap plans (which they kinda were already) but that seems less likely given the bill-ee-ons AT&T just paid for it. T-Mobile's saying for now everything's going to look and feel the same, but that's largely 'cause this deal's expected to take a year to clear. On the plus side, when that happens, T-Mobile customers will finally get the iPhone.
Why did AT&T make the deal? Pretty simple, they wanted T-Mobile's 34 million customers. But AT&T also wanted T-Mobile's cell sites and spectrum:
At closing, AT&T will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets. The combination will increase AT&T's network density by approximately 30 percent in some of its most populated areas, while avoiding the need to construct additional cell towers.
Which is to say, pinch yourself if you've heard this before, AT&T might really improve their shitcrap service in New York and San Francisco and other areas. That's about the only upside we to see this deal.
Will the deal go through? Probably. AT&T's already offering some concessions to make the FCC more likely to swallow it, like promising now to cover 95.5 percent of Americans with LTE (that's 294 million people, or an extra 46.5 million people AT&T wasn't going to cover originally) with a new focus on blanketing rural areas—something the FCC's been hot on.
There's a lot we still don't know, especially when it comes to the technical details—how is AT&T going to run T-Mobile's network? Are phones in the future going to need to run on a smörgåsbord of different bands? What's the transition going to look like for current T-Mobile customers?—but there's a conference call scheduled for 8am tomorrow that'll hopefully fill in some of the blanks. [AT&T, T-Mobile]