Should AT&T Buy T-Mobile

There has been quite a controversy lately about whether AT&T will or should buy T-Mobile. Deutsche Telekom has been recently wanting to get out of the USA. If you did not know, this is the European company that has a major share in T-Mobile USA. T-Mobile is currently the USA's forth largest carrier, serving about 34 million customers. AT&T has so far agreed to buy T-Mobile for $39 billion. The deal is pretty much set in stone except it now has to pass FCC approval. This process could take up to a year to clear. There could be some great benefits from this merger, however this could also present some problems. Let's take a look at what some of those are.

Pros:

• This merger could improve AT&T's network, as AT&T would naturally acquire more coverage. This would add a fair amount of towers to AT&T's network, and because both of these networks are GSM, the transition would be fairly simple for AT&T to convert the towers. Both AT&T and T-Mobile customers would benefit from better reception, improved call quality, and better overall coverage.
• If AT&T acquires T-Mobile, they will use T-Mobile's existing AWS spectrum to build their LTE 4G network, which will eventually cover 95% of the US population. This will make ultra-high speed wireless available to more people in remote areas. This will also make broadband in general more accessible to remote areas.
• With the additional subscribers, AT&T will receive more cash to improve their network, thus improving call quality even further (hopefully).

Cons:

• In a post merger world, AT&T and Verizon will control about 80% of all wireless subscribers in the US. This will essentially create a duopoly, possibly causing a steady increase in prices as competition declines. Though an economics class will tell you that monopolies and duopolies cannot price products past the limit of demand, however they do have strong price setting power, and will probably push the limit of what they could possibly charge. By the way, this will make AT&T the only GSM provider in the US, at least until LTE becomes widespread.
• This merger will push out smaller local carriers as they may not be able to keep up and compete with the behemoths of AT&T and Verizon, further killing competition and raising prices.
• After Verizon and AT&T become our US wireless carrier overlords, where you will have the opportunity to get an affordable $150 plan which includes 15 anytime minutes ($3.00 a minute after that) and 25 MB of data (and $5 for each additional MB), innovation will slow down drastically, as motivation to make improvements to their phones and networks will decrease. Innovation will not entirely stop, because international carriers will continue to make improvements to keep competition steady in their home countries, some of which might seep into the US, though very slowly.

There are a few interesting points here. Bottom line, this will be mostly good for AT&T and T-Mobile (though T-Mobile customers might not enjoy it as much as AT&T customers might), however this will severely hurt competition with wireless within the US and will probably raise prices for all wireless consumers.

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