What the AT&T & T-Mobile Acquisition Means for Everyone

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Yesterday, both AT&T and T-Mobile announced that AT&T would acquire the latter in a deal worth $39 billion. Thoughts raced through millions of heads, wondering how the acquisition would affect them, mine included. As a T-Mobile customer, I wondered what options were now left to me.

What does the $39 billion deal mean in a nutshell? Instead of having four major U.S. carriers to choose from, there would only be three options available. It also means that if you want to stick to GSM (the mobile standard 80 percent of the world uses), there would be only one player left in town: AT&T.

Ultimately, across the board from customers to manufacturers, there will be less choice and less competition, effectively letting AT&T set the standard however they want.

Even if T-Mobile is currently the nation’s fourth-largest carrier, they still provide an alternative GSM choice to AT&T’s service. They never had the hottest ticket in town, Apple’s star-studded iPhone, but they were the first carrier to introduce Android. They also consistently offer competitively-priced phone plans, and have ranked at the top of the J.D. Power and Associates’ list for customer service in the past few years. That’s a stark contrast to what has been called the worst phone company in the United States.

But is it all bad? According to AT&T, the deal will increase the number of cell towers by about 30 percent in densely populated areas (meaning, perhaps, San Francisco and New York users can stop complaining). Both companies say that the merger means an enhanced data network for its customers, something that AT&T users would definitely stand to benefit from:

The merger will ensure the deployment of a robust 4G LTE network to 95% of the U.S. population, something neither company would achieve on its own. Also, because of our compatible networks and spectrum, the customers of T-Mobile USA and AT&T will experience improved voice and data service almost immediately after the networks are integrated.

In fact, AT&T is probably counting on the increased network coverage to be a major selling point to the FCC and FTC to push the acquisition through.

The deal doesn’t only concern GSM users: in fact, it’ll probably shake up the whole telecom market in general. Verizon and Sprint, both CDMA carriers, will also be affected. As a result, AT&T will become the United States’s biggest mobile network with a projected combined customer base of almost 130 million, far surpassing Verizon’s.

There’s also the question of what will happen to Sprint. The carrier was reportedly in merger talks with T-Mobile before news of the AT&T deal came through Sunday. If the acquisition goes through, Sprint will take a backseat in the mobile arena, constantly trying to stay on its toes to keep up with big boys Verizon and AT&T. And if the deal isn’t approved by the FCC, there will be a new price standard set for T-Mobile’s head.

GigaOm points out that the immediate resulting impact of the deal goes far beyond a shoddy selection of phones and more expensive plans for customers:

Before the merger was announced, the handset makers such as HTC and Motorola had two major carriers who could buy their GSM-based phones. They just lost any ability to control price and profits on handsets because now there is a single buyer that can dictate what GSM phones come to market. Even with LTE becoming the standard for the 4G world, it would essentially be a market dominated by three buyers (should Sprint go with LTE), which would place handset makers at the mercy of the giants.

Both AT&T and T-Mobile customers probably won’t see any major changes for a while, at least not immediately. If the government regulatory agencies approve the deal, it will still take at least 12 months to iron out all the kinks.

There’s a lot that’s still unknown. The cell phone bands on T-Mobile and AT&T, while compatible, aren’t exactly the same, so its unclear, for example, how T-Mobile 3G users will be able to hop onto AT&T’s 3G network for the time being. (Short answer: they won’t probably be able to for now.)

[Update: AT&T reported that they eventually plan to migrate everyone to AT&T’s 3G and 4G network, so T-Mobile customers will eventually have to replace their 3G phones.]

As to what will happen to T-Mobile? The outlook isn’t great. AT&T will either slowly absorb the currently Deutsche Telekom-owned company, meaning that consumers will lose out on a viable carrier alternative. The other option would be to let T-Mobile stand as it is, which would be better than nothing. Given AT&T’s past acquisitions with Alltell and Cingular, that doesn’t look too likely.

However, current T-Mobile customers may be able to continue the contracts that they originally signed up for. According to AllThingsD, the new company “will honor all contracted plans that are entered into before the change of ownership.”

Who knows? Maybe T-Mobile users will finally get iPhones, although that doesn’t look too likely either.

(via AT&T, T-Mobile)

More on TIME.com:

AT&T & T-Mobile: The Early Reactions

AT&T Cracks Down on Unofficial Tethering

T-Mobile’s 4G Sidekick Is Poised for a Spring Comeback

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