AT&T Buys T-Mobile: Great For Them, Bad For You

AT&T just announced it will buy T-Mobile USA for $39 billion. If the transaction gets approved by the government and closes in a year as planned, it will create the nation's largest wireless carrier by far.

While this is great news for both companies, it's an awful idea for consumers - and I desperately hope the US antitrust authorities rake this merger over the coals.

An AT&T/T-Mobile merger at least makes more sense than the silly T-Mobile/Sprint idea which was being bandied about. Both carriers use the same technologies: GSM, HSPA+ and LTE. While they're on different frequency bands, radios which use all of the relevant bands are becoming easier to build.

The merger neatly solves T-Mobile's long-term problem of not having enough spectrum for LTE, the 4G technology which will soon be a global standard. It gives T-Mobile's struggling parent, Deutsche Telekom, a gigantic cash infusion. And it lets AT&T once again position itself as the number-one carrier against Verizon Wireless, which leapfrogged AT&T technologically this year with Verizon's 4G LTE launch.

AT&T is ahead of T-Mobile on building LTE. T-Mobile is far ahead of AT&T on building HSPA+, a intermediate 4G technology that fits right between the carriers' existing 3G networks and LTE. Together, they could have a smooth and powerful nationwide network.

AT&T's press release for the merger backs this up. The combined carrier will be able to build out much more LTE Than AT&T could alone, by combining AT&T's 700 Mhz spectrum with T-Mobile's AWS spectrum.

For stockholders, this all sounds great. With reduced competition and the efficiencies of a combined network, the new company will probably be quite profitable.

For phone owners, tech lovers, and American consumers, this is a total disaster.

Rates Will Rise, Customer Service Will Drop

Let's start with a basic fact: less competition always results in higher prices than you would have had otherwise. T-Mobile has always been a value leader, offering low prices and some innovative plans, such as its Even More Plus plans which gave monthly discounts in exchange for paying the full up-front price for phones. These plans will go away and the combined carrier will normalize at AT&T's higher rates.

rest http://www.pcmag.com/article2/0,2817,2382267,00.asp