What’s the News: Yesterday, AT&T announced plans to buy T-Mobile USA for $39 billion from parent company Deutsche Telekom, making the new behemoth the hands-down largest wireless company in the United States. Though AT&T touts this merger as good for everyone, some technology writers, such as GigaOM’s Om Malik write that “it’s hard to find winners, apart from AT&T and T-Mobile shareholders.”
What’s the Context:
- AT&T says the combined skills of the two companies will improve high-speed mobile broadband service and extend coverage to more rural communities, achieving President Obama’s goal of connecting “every part of America to the digital age.”
- With T-Mobile’s 33.7 million wireless subscribers, AT&T will have 129.2 million subscribers, dwarfing Verizon Wireless’s 94.1 million. So begins a new chapter in the companies’ long-term rivalry, as previously covered in 80beats.
- T-Mobile is the fourth-largest mobile provider in the U.S., and offers cheaper plans than category leaders AT&T and Verizon.
Not So Fast: The company merger is still awaiting regulator approval. Some argue that the bigger AT&T will hurt smaller companies like Sprint and even larger ones like Google. “Sprint and T-Mobile often stood against AT&T and Verizon on a variety of regulatory issues, so if AT&T succeeds, Sprint will stand alone on special access and other issues,” writes Malik. With more power, it’ll be easier for AT&T to “impose its own will” on what services and apps are placed on Android smartphones. If the FCC or Justice Department agree that the acquisition will give AT&T too much power or lead to higher prices, they may veto the deal.