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AT&T Acquiring T-Mobile USA: Today’s Mobile Phone Options

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This weekend, AT&T announced its plans to buy T-Mobile USA for $39 billion, pending regulatory approval. The new company would be the leading mobile telephone (and data) service provider in terms of customers. With the new AT&T soaking up 39% of the mobile market, and with Verizon Wireless at a close second at 31%, this would create an effective duopoly.

This could be good news for AT&T customers who are frustrated with dropped calls, slow data downloads, and spotty 4G service. T-Mobile’s network is easily combined with AT&T’s, as they both function with the same GSM technology.

The U.S. Government Accountability Office, in a study that is proactively cited by AT&T executives strongly in favor of the merger, says that services prices for the consumer have fallen from 1999 through 2009, a period which has seen consolidation of wireless carriers. However, the GAO has recommended to the Federal Communication Commission that regulators should do more to increase competition among carriers and to increase transparency regarding fees and prices.

If the deal goes through, and considering the FCC’s encouragement of mergers and acquisitions recently I expect it will, Verizon Wireless will likely follow suit with a renewed bid for Sprint-Nextel.

Those with basic mobile needs might want to consider alternative options. The big wireless carriers get a lot of attention, but some of the smaller, independent companies can offer basic services at a lower price point. Some of these smaller companies are owned by the major networks or use the major networks’ infrastructure, so they might not be as independent as they first appear. For example, Boost Wireless and Virgin Mobile simply resell use of Sprint’s network.

Pre-paid plans are popular, and for many, cost less than a contract. Most of the mobile providers use slightly different branding for their pre-paid plans, perhaps because they believe the target market is different than for contract-based customers. In fact, since mobile phone companies often require credit checks before customers can be approved for a plan, those without a credit history or with a damaged credit history may be required to enroll in a pre-paid program with an initial deposit.

Financial analysts and consumer groups all have something to say about this deal. Consumer Reports looks at the effects a deal might have on customers: T-Mobile users will likely see rate hikes and Sprint customers who are generally more satisfied than customers of AT&T or T-Mobile will likely be pushed out of the market, but coverage for AT&T and T-Mobile might improve. The fact that the two carriers to be merged operate on different wavelengths, even if they use the same technology otherwise, might hinder coverage consolidation in the short term. Read more from Consumer Reports.

Analysts seem divided. Some think the mobile industry is overdue for consolidation. Others believe fewer choices is not good for the consumer or wireless device vendors and infrastructure suppliers. Read more from the analysts.

What type of mobile carrier do you use? Do you think this acquisition will be beneficial or harmful to the mobile communications industry?

Updated March 24, 2011 and originally published March 21, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 21 comments… read them below or add one }

avatar rewards ♦31 (Newbie)

I have been searching for prepaid service to eliminate another monthly expense (12×50 = 600/year = iPad :)). One interesting thing is that most prepaids, even Verizon’s prepaid service, don’t use all of the same cell towers as the comparable postpaid service. Also, roaming isn’t possible with many prepaid services. So if coverage is critical, you won’t like prepaid. I’m a city dweller, so it’s Tracfone or Virgin Mobile for me (4×20 = 80/year).

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avatar rewards ♦31 (Newbie)

Also, anyone want to take bets on whether AT&T will be broken up in the future (a’la Ma Bell in 1984?)

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avatar Ceecee ♦796 (Dime)

As an infrequent user, I love my prepaid Virgin Mobile. I pay about $90 a year and the minutes carry over. This is great for a basic user and I’ve built up enough minutes that if I need to use it more for a month or so, no problem. I do have access to a landline, however. If the mobile were my only phone, I’d need more minutes. When I have used it, I haven’t had any reception problems or dropped calls.

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avatar rewards ♦31 (Newbie)

When did you start your VM plan? I’ve been reading that minutes in the new payLo plans no longer carry over. Do you know if that is true?

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avatar The Latter-day Saver ♦706 (Dime)

I guess I better jump on board with the T-mobile $30 / month for 1500 minutes / texts soon then! I calculated how many minutes and texts my wife and I each use every month and we figured we will save more than $30 per month!

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avatar wylerassociate ♦906 (Dime)

I’m a current t-mobile user now so I want to wait and see how this merger with AT&T will be beneficial to me or look at getting another plan.

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avatar skylog ♦368 (Nickel)

yes. it is going to take forever for this to be completed, if it even gets passed the regulators. that said, i do not see a way that t-mobile customers will be better off. at&t does not even want the t-mobile customers, this is a pure spectrum and network play by at&t

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avatar krantcents

Mergers always seem to translate into higher prices for consumers. I am a Verizon user, I think I will start examining some of the alternatives.

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avatar Will @ HackingTheBank.com ♦258 (Nickel)

If this merger goes through it will put more than 80% of mobile subscribers in the hands of Verizon and AT&T. While Verizon and AT&T do compete against each other, they pretty much just trade customers over the long-term. People typically switch back and forth between those two. I think consumers will win here when there are more options. I think the current structure as is is good because there are enough players willing to make the big dollar investments needed in mobile. With fewer big players, will there be as much need to innovate?

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avatar Mike

I am not so sure Verizon will make a play for Sprint or that the FCC would allow it to go through, presuming they OK this deal.

Sprint has Nextel baggage, plus it uses WiMax, not LTE for its 4G network. Finally, a Verizon-Sprint deal that would essentially leave America with 2 major cell phone providers, GSM-based AT&T and CDMA-using Verizon. Not a very competitive landscape.

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avatar skylog ♦368 (Nickel)

i agree, everything i have read has indicated verizon will not make a play for sprint. that said mike, when LTE hits the masses, GSM and CDMA will be moot. the new technology eliminates this. that is the only positive thing i see in the future. it will be like in europe with one technolgy, although there not nearly be as many carriers. maybe, maybe…consumers will be able to take their phone from one carrier to the other.

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avatar 4hendricks ♦248 (Cent)

We currently use Verizon Wireless and have a plan with 3 of us on it. Besides our mortgage and our oil bill it is our biggest monthly bill that we have. I would like to dump our landline, but can’t get my husband on board. My mother in law did after we got her a cell phone.

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avatar Sandy @ yesiamcheap

I cried a little when I saw this merger. More of crap service from AT&T and less price comparison.

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avatar DonnaFreedman ♦2,454 (Dollar)

I’m an AT&T customer right now and haven’t had any complaints thus far. It’s a family program so that two relatives who are in financial straits can piggyback on the plan for a small monthly payment (in theory; I’ve been paying it until these folks’ situations improve).
I think it’s time to shop for a better plan, though. Your article is a good reminder of that.

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avatar Stella

I switched to T-Mobile from AT&T aka Cingular aka AT&T again several years ago. I freaking hated dealing with AT&T–sheer misery! I’m not looking forward to them jacking with my cell phone plan. The only consumers who can possibly benefit from this are T-Mobile users under contract who are jonesing for an iPhone…

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avatar rewards ♦31 (Newbie)

“Is T-Mobile USA getting the iPhone?

T-Mobile USA remains an independent company. The acquisition is expected to be completed in approximately 12 months. We do not offer the iPhone. We offer cutting edge devices like the Samsung Galaxy S 4G and coming soon our new Sidekick 4G.”

Source: http://newsroom.t-mobile.com/articles/more-information-att-acquires-tmobile

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avatar shellye ♦107 (Cent)

I used to have T-Mobile until about four years ago. Their service was beyond horrible. Dropped calls everywhere. Switched to Cingular before it became AT&T and their service was better, but the prices were outrageous. I have four phones on my contract, and luckily, I’ve been grandfathered in for many features like unlimited texting and rollover minute deals that aren’t available on other plans. I’m not worried about the acquisition too much; my Apple stock will probably go up as a result of the T-Mobile customers who are itching to get an iPhone finally have their chance.

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avatar tigernicole86 ♦55 (Newbie)

I have several friends who have either t-mobile or AT&T. However, none of these friends are from a city smaller than 500,000 people and neither of these 2 carriers work in smaller towns. However, they still complain of spotty service, dropped calls, and lackluster customer service. I have verizon and I’ve had very few dropped calls(most of those dropped calls were while I was with a friend of mine in the ER where there was quite a bit of interference). I get an awesome discount through work so I hope things don’t go crazy in the next 2 years.

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avatar gotr31 ♦224 (Cent)

I don’t think that having less companies out there is good for customers! Luckily I am not a customer or either one. I like my prepaid service just fine. It’s much cheaper and has everything I need. I have no desire whatsoever to own an iphone and pay through the nose for it.

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avatar Dan

I have a straight talk which uses verizon network runs $45.00 amonth unlimited tal,text and web sold only at walmart works better than my t-mobile when t-mobil runs out it is gone,

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avatar Ginny

I think I’ll go prepaid for now on Straight Talk’s plans till the AT&T & T-Mo merger has gone through and then once the prices have gone up all over the market and the plans have changed, then I’ll decide whether to stay on prepaid or switch to a contract.
At least if I use Straight Talk’s unlimited everything plan now for only $45/month, I can control my costs and I’m not locked into a contract where prices and extra hidden charges can increase in the next 2 years as no one knows what’s going to happen in the market and it makes for some interesting observations.

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