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?

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The year 2000 was not an easy one for me. I had hardly any money thanks to a low-paying non-profit job and student loan debt. Even when not spending much beyond the necessities, I wasn’t improving my financial condition. I was moving around from apartment to apartment; by 2004 I would had lived in seven different locations in four years, in different locations across the sate of New Jersey. It became apparent that I was going to need a cell phone, and I was probably one of the last of my friends to get one. This was at a time I had no money for tech.

In 2000, it was clear that Verizon Wireless offered the best service and coverage in my area, so I chose them over Cellular One, AT&T Wireless, Sprint PCS, and Nextel. I’ve been a customer of the company since then. Every two years, I renewed my contract and benefited from the “New Every Two” credit of (previously) $100 to use towards a phone, usually making the new phone free. Of course, I was not required to buy a new phone every two years or sign a new contract. I often did wait longer than two years to use the credit and re-sign my contract. For my first renewal, I waited until I had a new job and was earning some money. I was happy to see the Kyocera go; by that time, the phone’s technology was considered ancient.

I’ve taken advantage of the “New Every Two” discount several times since then, despite Verizon Wireless reducing the credit to $50. Some customers today qualify for only a $30 credit because the value depends on the type of calling plan that accompanies the phone.

Verizon Wireless has been offering bad news lately. First, the company announced that the carrier will begin offering the iPhone, but with only 3G capability. Now, customers who sign a new contract or renew a contract after January 16 will have no “New Every Two” discount to look forward to. The discount was a good way for Verizon to maintain loyal customers. To be clear, existing customers who have New Every Two on their contract will have the chance to use their New Every Two discount, even after January 16, but after that, New Every Two will not be part of their new contract, and the credit will not be available when they renew again two years later.

Will the company be able to keep customers without offering significant incentives to prevent attrition to other carriers?

Photo: Sonny Side Up!

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