News Analysis
NEW YORK—Before T-Mobile customers start browsing what apps they would download to their new Apple iPhones with the recently announced AT&T merger, experts say that the deal is anything but assured.
Jonathan Chaplin, an analyst at Credit Suisse, wrote in a research note that he had “never seen a deal with more regulatory risk be attempted in the U.S.” than the proposed AT&T and T-Mobile USA merger.
The regulatory hurdles are huge. The merger would create a telecom behemoth that would have more than 130 million consumers. It would severely decrease competition as the top two wireless providers—No. 2 is Verizon Wireless—would have combined market share of almost 80 percent, leaving Sprint Nextel as a distant No. 3 player in the market.
Sprint released a statement this month, saying that the proposed AT&T and T-Mobile merger would “alter dramatically the structure of the communications industry.”
It all points to a drawn-out battle in Washington to gain Department of Justice approval. “The explosion of cell phone usage—especially smartphones—makes competition in this market more important than ever as a check on prices, consumer choice, and service,“ said Sen. Herb Kohl, chairman of the Subcommittee on Antitrust of the Senate Judiciary Committee, in a statement. ”That’s why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family, and the Internet.”
AT&T argues that there is still enough competition in the market, especially from smaller providers such as Metro PCS and US Cellular, in a region-by-region analysis. It also says that the merger supports President Barack Obama’s goal of expanding wireless broadband coverage.
“AT&T will have to pay a price to get this done. They will have to spin off several assets to companies like Verizon Wireless or Sprint Nextel,” said wireless industry analyst Jeff Kagan in a comment from his website. “It will take several quarters,” he added.
Current T-Mobile customers may not see any noticeable differences for quite some time. In a posting to its customers, T-Mobile stated that the integration would take at least 12 months, and the company does not expect to receive the Apple iPhone any time soon.
GSM technology is where similarities between AT&T and T-Mobile end. T-Mobile is known in the industry for its superb customer service, as evidenced by its J.D. Power & Associates awards over the years, and it is a value leader in the industry catering to the lower end of wireless subscribers.
Jonathan Chaplin, an analyst at Credit Suisse, wrote in a research note that he had “never seen a deal with more regulatory risk be attempted in the U.S.” than the proposed AT&T and T-Mobile USA merger.
The regulatory hurdles are huge. The merger would create a telecom behemoth that would have more than 130 million consumers. It would severely decrease competition as the top two wireless providers—No. 2 is Verizon Wireless—would have combined market share of almost 80 percent, leaving Sprint Nextel as a distant No. 3 player in the market.
Sprint released a statement this month, saying that the proposed AT&T and T-Mobile merger would “alter dramatically the structure of the communications industry.”
It all points to a drawn-out battle in Washington to gain Department of Justice approval. “The explosion of cell phone usage—especially smartphones—makes competition in this market more important than ever as a check on prices, consumer choice, and service,“ said Sen. Herb Kohl, chairman of the Subcommittee on Antitrust of the Senate Judiciary Committee, in a statement. ”That’s why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family, and the Internet.”
AT&T argues that there is still enough competition in the market, especially from smaller providers such as Metro PCS and US Cellular, in a region-by-region analysis. It also says that the merger supports President Barack Obama’s goal of expanding wireless broadband coverage.
“AT&T will have to pay a price to get this done. They will have to spin off several assets to companies like Verizon Wireless or Sprint Nextel,” said wireless industry analyst Jeff Kagan in a comment from his website. “It will take several quarters,” he added.
Current T-Mobile customers may not see any noticeable differences for quite some time. In a posting to its customers, T-Mobile stated that the integration would take at least 12 months, and the company does not expect to receive the Apple iPhone any time soon.
GSM technology is where similarities between AT&T and T-Mobile end. T-Mobile is known in the industry for its superb customer service, as evidenced by its J.D. Power & Associates awards over the years, and it is a value leader in the industry catering to the lower end of wireless subscribers.
