On March 20, 2011, AT&T announced that it would purchase T-Mobile from Deutsche Telekom for a staggering $39 billion dollars. The now second largest wireless distributor AT&T would become the largest over its competitor Verizon wireless by acquiring the 30. 8 million subscribers that T-Mobile currently holds. This would not be the first time a merger took place between Wireless providers, in 2004 Sprint and Nextel merged and in 2009 Alltel merged with Verizon.
So it came as no surprise when the two carriers with compatible networks (GSM) announced a potential merger. AT&T has over 71 million subscribers with about 60 percent of these customers carrying a smart-phone. AT&T claims to have the “nations fastest network,” but with so many subscribers, the company network begins to build latency or “lag time. ” This is why the merger was so critical for AT&T, so the company can continue to trademark their “Nations Fastest Network” slogan. Not only would AT&T acquire all of T-Mobile’s customers, but their entire network as well.
This would provide a larger data network and better voice quality around the United States providing AT&T customers with a better experience. Unfortunately, on August 31, 2011 the Antitrust Division of the United States Department of Justice announced that it would seek to block the merger, and filed a lawsuit. Regulators questioned the effects the deal would bring not to consumers but the market in general. The acquisition would give AT&T 130 million subscribers and saturate the wireless industry to three main players. The market would essentially be an oligopoly.
Regulators feared that the merger would cause higher prices, fewer choices and less innovation. AT&T chief executive Randal Stephenson stressed the fact that the deal would improve overall network quality and lead to large saving of the company, just a few of the benefits that the merger would behold. AT&T’s plan to buyout T-Mobile, were done in order to provide better services for all its present and future customers. The 39 billion dollar deal would not only perk up call quality, but it would also be able to increase broadband service and availability as well.
If AT&T and T-Mobile were able to carry out their plans and merge their companies together, they would have potentially provided cell- phone services to at least ninety-five percent of the American population. The two companies together would be able to create a more advanced cell phone service that would enhance the overall coverage provided to consumers. This may sound like a difficult process; however, both providers are compatible, because they use the same GSM technology.
This made their course of action a lot less difficult and would have made way for an effortless integration. With the new expansion, AT&T would have been able to invest billions of dollars for more increased and wide-ranged coverage. This included better service for rural areas and 30 percent more cell phone towers for the merged companies; on consumers’ side it meant less dropped calls. When there are more towers than before there is more service availability, which is a huge advantage for both companies.
This is a win-win situation for both the consumers and the merged companies because it would first and foremost ease the present congestion of AT&T’s network, which in turn will make it a lot more desirable and more satisfying on the consumers end. This is the ultimate objective for any cell phone service provider who wants to maintain a successful company reputation. With a better company status, and more contented customers, AT&T would have become an unstoppable force in the cell phone arena; they also would have become the largest cellular carrier in the U. S.
with around 130 million customers to service. The previous T- Mobile customers would still have been able to use their existing handsets, even if it is 2G or 3G, along with having a larger variety of phones to choose from. This would most likely have been the biggest gain for T mobile customers who were itching to get the latest iPhone. Ultimately, the $39 billion merger between AT&T and T-Mobile fell through after the United State Justice Department and the FCC with the backing of seven states filed suit against AT&T. The merger was said to be a bad idea in keeping good competition within the marketplace.
T-Mobile is currently the #4 cell phone service provider while AT&T remains just behind Verizon as the #1 service provider in the United States. If the merger were to have occurred, AT&T would have gained a monopoly in the marketplace that Verizon would have a tough time catching up with. T-Mobile remains in the lower regions of cell phone service companies, providing consumers with a less expensive data plans. If T-Mobile were to merge with AT&T, the company would lose that customer base and position in the market place.
T-Mobile was in a similar position with Sprint wanting to merge with the company. These two companies are similar in the special access that they provide for the consumer but that deal fell through when AT&T came in with a bigger offer to T-Mobile. If Sprint and T-Mobile would have merged they would have similar goals for the consumer, whereas with AT&T, they would most likely lose the consumer that would normally be a T-Mobile customer. Not only would consumers lose from the merger, but the companies that deal with the service providers would also eventually lead a path to great downfall.
Certain network equipment suppliers that deal exclusively with one company or another would lose their contracts with the cell phone service providers to AT&T’s exclusive providers. Also, AT&T would use the Android phones that T-Mobile has in order to gain a monopoly in the marketplace by creating an Apps Store exclusively for those Android phones. This would translate to consumers being limited to just one Apps Store. The AT&T/T-Mobile merger ultimately fell through less than a year after it was introduced, because consumers and secondary companies that deal with both companies would suffer in the end.
AT&T’s shares dropped 1 percent after the merger was dropped while Sprint’s shares jumped 5 percent in the marketplace, which proves that consumers are happier without the merger taking place. In weighing both the pros and cons, we believe that the merger between AT&T and T-Mobile should not have been prevented by the FCC because this would have been a key factor in the increased access to affordable and sustainable wireless broadband services in areas where it currently does not exist.
The merger would have created more jobs for Americans which is needed more than ever in today’s economy. Both companies were willing to go through with the merger, and if it were not for the few people who frowned upon its creation, its success would have been felt through the job industry for years to come. AT&T is one of the largest American companies and a key player in the advancement of wireless communications technology. The company is known for having a great network which is considerably larger than T-Mobile’s.
If the FCC would have allowed the deal to pass, millions of Americans would have access to a greater wireless service. The merger would have accelerated AT&T’s 4G wireless distribution and stimulated job creation throughout the country. This would have included the rural and disadvantaged urban communities who would have gained access to the affordable and sustainable network which would thus promote civic engagement. While the FCC was opposed to the merger and eventually prevented it from happening, there were many groups and organizations that supported AT&T in this potential merger.
Groups such as the NAACP, League of United Latin American Citizens and the Communications Workers of America all voiced their support for the merger. 26 governors also showed their support for the merger to go through. All of these groups recognized AT&T’s commitment to labor, social and environmental standards. Since AT&T has been proven to be socially conscience and aware, we believe that the company would create jobs and a better service rather than take advantage of their position by exploiting their employees and customers.
As if to make things worse for T-Mobile, the company is continuing to lose customers and money each year to the bigger and faster networks such as Verizon. Its parent company, Deutsche Telekom, has made it clear that it is not interested in sinking any more money in the U. S. wireless market and is still looking for a buyer. Since T-Mobile is slowly going to be exiting the market anyways, it would make sense for this merger to go through because it would be the best deal for all parties involved.
First, it would help AT&T immensely by expanding their network to even bigger heights, secondly, it would help T-Mobile by moving along their process of exiting the market and paying them for whatever leftover assets still remain, and finally it would help the American people by giving them access to a much broader and better network. So in all of this debate, we equate the whole merger to a group of friends playing Monopoly. Say there are 5 players to start off, and as everyone knows that at the beginning of the game, it’s always fun.
There are so many choices in property to buy and the sky’s the limit on what can be achieved in the time you will spend playing with your friends. However, as the game progresses, and more and more property begins to get bought by everyone else, there’s always that one person who has the one piece of land that will help another player begin to build houses and hotels. Although the rules condone the option of a merger, somehow the game is always more fun when players unite. Thus, the slow demise of one person is not drawn out and the inevitable has just become a new reality.
This is what the AT&T/T-Mobile merger would have been like; AT&T has enough property to continue playing strong in the game, it still needs that one piece of land that is T-Mobile to reach new levels of competition it could not get to before. Sometimes a little bit of rivalry is needed between companies to spur on imagination and creativity. By not allowing the merger to take place, the FCC has essentially placed the mobile phone service field in a purgatory just waiting for the final piece to be added.
Nobody likes to lose at Monopoly, especially when we are bound by a set of “rules” that are created simply to do what one person may feel is right. Works Cited “5 Pros and Cons for AT&T’s T-Mobile Buyout. ” PCWorld. Web. 04 Mar. 2012. . “AT&T To Buy T-Mobile for 39 Billion Dollars, Pros and Cons. ” Tech Gadgets News. Web. 04 Mar. 2012. . Daw, David, and Mark Sullivan. “AT&T, T-Mobile Merger Collapse a Victory for Consumers. ” PCWorld. 19 Dec. 2011. Web. 04 Mar. 2012. . Ulanoff, Lance. “5 Reasons the AT&T, T-Mobile Merger Is as Good as Dead. ” Mashable. 28 Nov. 2011. Web. 04 Mar. 2012. .