The pending acquisition of T-Mobile by AT&T would create the largest wireless carrier in the U.S. AT&T said it is pursuing T-Mobile to increase its available wireless spectrum to meet exploding mobile broadband demand. Critics of the deal claim that the AT&T/T-Mobile deal will further reduce wireless market competition, limit consumer choice and stifle innovation.
Will a new wireless king be crowned?
AT&T wants to buy T-Mobile USA from Germany’s Deutsche Telekom for about $39 billion, the two companies announced Sunday. If the deal is approved by the Federal Communications Commission, it will create a wireless network with about 130 million subscribers, the largest in the U.S. Currently Verizon is No. 1 with 93 million subscribers. A wireless spectrum crunch has been a challenge for AT&T as data traffic has boomed along with smartphone use. At the CTIA Wireless trade show in Orlando Tuesday, AT&T said its data usage has grown 8,000 percent in four years and is expected to grow another tenfold in five years. By buying T-Mobile, AT&T can beat the spectrum crunch sooner than having to wait for new government spectrum auctions, a process that can take up to 10 years.
Will the AT&T-T-Mobile deal stifle competition?
Federal antitrust regulators and the FCC will be going over the AT&T/Verizon deal with a fine-toothed comb. But AT&T is so confident the deal will be approved that it promised to pay T-Mobile $3 billion if regulators nix the transaction. AT&T and T-Mobile said the deal will improve service and voice quality for their subscribers. The two companies also said they won’t need to raise rates to increase revenues after the merger. AT&T has also pledged to spend $8 billion to build a 4G network to deliver high-speed access to 95 percent of Americans if the deal is approved. But an AT&T/T-Mobile merger would give the two biggest wireless carriers 79 percent of U.S. market share. Critics of the deal say it will stifle competition. Having fewer carriers in the U.S. will inflate wireless rates and slow the introduction of new wireless phones and features.
Dealing with the spectrum crunch
AT&T is pursuing T-Mobile as explosive demand for mobile broadband is placing an unsustainable demand on the available wireless spectrum. Smartphones use 24 times the amount of spectrum than feature phones and tablets use 125 times as much. After increasing 300 percent in the last three years, industry analysts predict that mobile broadband traffic will increase another 35 times in the next five years. To protect the U.S. lead in the wireless industry, the FCC is proposing to FCC’s goal is create 500 MHz of additional spectrum for broadband by encouraging TV broadcasters and satellite providers to auction off unused spectrum. Broadcasters could keep part of the money and the remainder, estimated at about $9.6 billion, would be applied to deficit reduction.
Fox News: http://www.foxnews.com/scitech/2011/03/22/att-t-mobile-return-ma-bell/
PC Magazine: http://www.pcmag.com/article2/0,2817,2382377,00.asp
The Street: http://www.thestreet.com/story/11055239/1/att-ceo-t-mobile-solves-spectrum-crunch.html
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