Today AT&T officially signed to acquire T-Mobile USA Inc for a shocking $39-billion. Many worry that this will leave the market with only two main service providers, which could easily mean higher rates and fewer choices for consumers. Industry specialists warn that this could lead to a Verizon merger as well . A trend like this would most likely drive up service rates while simultaneously reducing the number of phones and other mobile devices available to consumers. However, AT&T asserted that this deal would increase competition and lower prices, citing a government study that said the average cellphone bill had dropped over the last decade, a period in which there were several large telecommunication mergers.
Approximately one third of cellphone users in America have Internet-connected smart phones. Consumers on those phones inherently tend to have a larger demand for data-intensive activities such as video, music and Web surfing that can strain cellular networks. AT&T reports that data traffic on it’s wireless network has increased 8,000% over the last four years. The heavy demand on AT&T’s networks has contributed to a reputation as less reliable and slower network than many of its competitors. AT&T is hoping that by utilizing T-Mobile’s national cellular network they will increase their ability to supply data traffic and cell service across the nation.
Though AT&T would not comment as to whether or not it would allow T-Mobile customers the option of using Apple’s iPhone the prospect is appealing to many T-Mobile users.
AT&T also said that the merger would allow it to accelerate the spread of the faster, 4G wireless service to more of the country. Due to the fact that AT&T and T-Mobile already utilize similar cellular networks, the implementation of the new technology would be a lot easier according to company spokesmen. Of course a merger of this size is subject to government approval and regulation. If approved by regulators, the newly expanded AT&T would absorb T-Mobile’s market share and have 130 million users, beating out top competitor Verizon Wireless and its 94 million customers, making it the nation’s largest wireless carrier by no slim margin. “It is absolutely essential that both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people,” Sen. John D. Rockefeller IV (D-W.Va.) said.”When you have two companies control almost the entire market, you’re almost back to reassembling the Ma Bell monopoly” when the previous AT&T monopolized local and long-distance service prior to it being broken up by federal regulators, said S. Derek Turner, research director for Free Press, a Northampton, Mass. Washington lawmakers quickly jumped on news of the deal, with Democratic senators urging close scrutiny of the acquisition by federal regulators. In evaluating the proposed acquisition, both federal antitrust and telecommunications regulators like the FCC (Federal Communications Commission) and the DOJ (Department of Justice) are forced to weigh the benefits of technical efficiencies that will be achieved through the merger against the loss of competition in the wireless service provider market. Regulators are also likely to take into account the combined market share for both wireless telephone services and Internet broadband services as well when examining the p0ssible monopolistic effects. However, AT&T stated that it was confident that the deal would be approved within 12 months.
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