By Kyle Grabowski
T-Mobile’s new advertising campaign involves a parody of the old Apple commercials with “Mac and PC,” but this time with “T-Mobile MyTouch 4G and iPhone.” Those commercials could get a little more awkward now that AT&T has announced they are buying T-Mobile USA from Deutsche Telekom in a cash and stock transaction valued at $39 billion. In combining with T-Mobile, AT&T would become the largest wireless carrier in the United States, according to arstechnica.com. The deal was announced on March 20, 2011 and is currently undergoing FCC regulatory protocol.
CSU student Corinne Winthrop currently uses T-Mobile, and like many people was aware of the merger, but didn’t know much about it. Winthrop has had T-Mobile for several years now, and stayed on it because of her parents. Recently though, she has been dissatisfied with the service she received from T-Mobile.
“I don’t get (service) a lot,” she said. “I was hoping that T-Mobile was going to get more coverage area (due to the merger with AT&T).”
The merger is expected to take roughly 12 months, and at the end of the process the two companies will merge into one entity, according to AT&T store employee Sandy Goldberg. “We expect a smooth transition overall,” Goldberg said. “We have experience managing acquisitions of this size and both companies use a GSM-based network.” GSM stands for Global System for Mobile Communications, and is a standard for mobile communication technology that covers 71 percent of the world market. Essentially, both networks run on the same frequency, so once the networks have merged it will be a smooth transition for consumers. AT&T launched the website mobilizeeverything.com to provide information and answer consumer concerns about the merger.
(Photo from arstechinca.com)
Mergers and takeovers are commonplace in today’s corporate world, according to CSU corporate strategy professor Paul Mallette.
“Since the economic downturn though, numbers have really fell,” he said. “One of the things that is really driving US activity is the weakness of the dollar. US companies are a better buy now.”
The process of actually buying another company can take months if due diligence is done, according to Mallette.
“Companies that do it a lot have units where that’s all they do,” he said. “They prospect for acquisitions and go about the process of purchasing them.”
Managers at the T-Mobile kiosk in the Foothills Mall in Fort Collins could not answer specific questions, but did provide a memo from T-Mobile USA CEO Jim Alling with comments they were allowed to give.
“Until the deal is closed, T-Mobile remains an independent competitor to AT&T,” the memo said. “During this time, you will continue to receive the great service you have come to expect from T-Mobile and we remain committed to ensuring that you have the best experience possible using T-Mobile products and services.”
Current T-Mobile customers will not have to update their devices once the network shifts because T-Mobile has no plans to alter its 3G/4G network in any way that would make current devices obsolete. The quality of T-Mobile’s network will not be reduced due to the merger.
“In fact, the combination of AT&T and T-Mobile USA will offer an even stronger service to customers,” Alling said in the memo. “Until the acquisition is closed, we will work hard to maintain our position as the value leader with America’s largest 4G network.”
AT&T has it’s own hist
ory of mergers, being born from a union between Cingular and the old AT&T Wireless. At time AT&T was struggling, and Cingular had to outbid Britain’s Vodafone, who at the time owned 45 percent of Verizon Wireless, and ended up purchasing AT&T for $41 billion, more than twice of its estimated market value. The FCC gave the deal the green light, and it was ultimately finalized on December 29, 2006.
Both T-Mobile and AT&T filed applications for the FCC’s consent to “transfer of control of the licenses and authorizations held by T-Mobile USA and its wholly-owned and controlled subsidiaries from Deutsche Telekom to AT&T” according to the FCC website on April 21, and the pleading cycle was established a week later. At this point in the process, the FCC has essentially opened the floor for public comment, and concerned citizens can submit information on the FCC’s website.
Even with all of AT&T’s positive PR, technology bloggers are up in arms about the deal, declaring the downfall of wireless communication. Om Malik, founder of GigaOM Network and former senior writer at Forbes magazine, wrote that everybody loses in the deal.
“It’s hard to find winners, apart from AT&T and T-Mobile shareholders,” he said. “It doesn’t matter how you look at it; this is just bad for wireless innovation, which means bad news for consumers.”
Due to the widespread outrage, the Senate Judiciary will hold hearings about the merger on May 11, according to the committee’s website. The Senate Judiciary antitrust subcommittee, headed by Herb Kohl, D-Wisc., will try to ensure that the deal is not an attempt to recreate the “Ma Bell” AT&T monopoly broken up by the government in 1982. “Ma Bell” was the American Bell Telephone company, which existed from 1877 to 1984 and was a monopoly for much of the time.
Senator Kohl, head of the Senate Judciary antitrust committee
If all of the regulatory procedures go smoothly and the merger goes through, AT&T would “become by far the largest wireless carrier in the United States,” according to networkworld.com, with more than 130 million subscribers. That’s as many people as speak Japanese in the world, according to Wikipedia.
Due to these monopolistic tendencies and concerns over price, Corinne Winthrop and her family, as well as many other T-Mobile subscribers, are preemptively jumping ship for fear their bill will skyrocket.
“We’re just thinking it will be cheaper,” she said. “Plus (T-Mobile’s) service just isn’t worth it.”
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