[Editorial] The Problem with the AT&T / T-Mobile Acquisition

I have issue with some of the statements finding their way around the Internet concerning AT&T’s acquisition of T-Mobile.  Let me share some thoughts with you.

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I can’t get past people calling this acquisition a good thing.

First, let me state this: this is an attempt at acquisition, not a merger.  While this acquisition was friendly between the two companies, make no mistake that AT&T is actually trying to buy T-Mobile.

Second, this acquisition in it’s current state has about a snowball’s chance in hell of being approved. I have no doubt that the federal government will find some way to approve this, but not without making some very apparent changes to the deal. On top of that, we’re probably looking at least a year before anything is finalized - a lot can change in a year. And with AT&T, Deutsche Telekom (owner of T-Mobile), the FTC and possibly the FCC all getting into the game on this, you know a lot will be hashed out over a year’s time. Most likely, the US government will force AT&T to divest a huge part of the T-Mobile carcass.

I can get past the fact that some people online aren’t quick enough to catch on that a major corporation stating it’s buying another doesn’t suddenly make the two companies one entity. I can get past the desperate consumers who started asking within an hour of the announcement, “can I get an iPhone for T-Mobile?” I can even get past those who think that a combined AT&T and T-Mobile will somehow make their bill cheaper.

But I can’t get past people calling this acquisition a good thing.

Let’s face facts. T-Mobile hasn’t been doing so hot these past couple years - a lesson, I think, that Sprint needs to heed. T-Mobile has long been the big operator with the value pricing. I’ve known people who have stuck with T-Mobile for close to ten years simply because they had some old 3000 minute plan for $40 (when everyone else seemed to be giving out 400 minutes for the same price). Never mind the fact that it didn’t have mobile to mobile calls, or nights and weekends free - it was 3000 minutes, and it was cheap. Even though they had some awesome devices over the years, for whatever reason, being the value-oriented carrier got old. At the end of the day, they started to lose customers and money, even though they were often cheaper than the rest. You would think that customers would flock to T-Mobile for the “Get More” mentality, but they haven’t.

T-Mobile’s demise became an inevitability, and that move was made years ago before anyone could predict its results.

 

In so many ways, it seems like T-Mobile customers are just screwed.

 

So on one side, it makes sense for the government to allow this acquisition. If they didn’t T-Mobile would go out like a black hole, sucking in everything on top of itself. There would be a mass exodus of customers, followed by a large void of customers without any service, scrambling to find somewhere to go. A boon to all the other carriers, perhaps, but not a good situation for consumers.

On the opposite side, an AT&T-Mobile corporation limits most consumers to only three service provider choices. Fewer choices mean fewer competitors, which could cause a situation where you’ve got two big companies calling the shots in the industry.

But swinging back to the effect on customers, we have the inevitability of moving to the “Get Less” mentality.

T-Mobile’s tag line for many years has been “Get More.” But now, as T-Mobile customers are sold off to other companies, and a large number of them assimilated into AT&T, they will find themselves getting less and less. Sure, the companies will have to honor their contracts. But they don’t have to be so easy to work with later on, when there is no contract. They can insist that you switch to something more… AT&T. And seeing as how AT&T mimics about 95% of Verizon Wireless plans and policies, that means that T-Mobile customers are stuck in the middle of something they had been trying to avoid anyway: paying AT&T and Verizon rates.

That leaves regional carriers (many of which are decent companies), and Sprint. And as I said at the start of this editorial, Sprint needs to be cautious of continuing with the current models they’ve been running for so long. T-Mobile was cheaper than the big two, and look at where it got them. And Sprint can’t tell me the past three years have been wonderful for them. I worry that T-Mobile customers will be swayed over to Sprint, only to further devalue that company, leading to more consumer choice issues down the road.

In so many ways, it seems like T-Mobile customers are just screwed.

The problem here is that we have no idea what to expect.

The Internet is rife with rumors at the moment.  Customers want to know what to expect.  Competitors are already taking issue with AT&T’s move.  Wireless-related sites are doing what they can to milk more advertising impressions with every article they write.  And forums are abound with the confusion of employees waiting to know if they’ll have a job.

The problem is, this acquisition is perhaps a year away, and it hasn’t even been approved yet.  Who knows what the answer will be to any of these questions.  A T-Mobile employee and customer in a certain area just might end up as a Sprint employee or customer.  Or Verizon.  Or MetroPCS or US Cellular.  Only time will tell.  And because of this, all we can do is give this thing time.  It has to be cleared by the government.  It has to be cleared through court.  It will be challenged in it’s current state.  Multiple solutions will be proposed.  This deal - as it stands - will change, and we need to let it change before we have any answers.  And that’s good, believe it or not.

So for now, we need to sit and wait.  Stop guessing.  Stop freaking out.  Let the process already in place work through this deal and pull it apart.  It will change.  If you had all the answers now, the answers would likely change as time goes on.  Be patient - answers will come.

The problem here is that we have no idea what to expect.  Speculation will surround this topic for some time.  Let things run their course.