AT&T's T-Mobile Deal Ominous for Consumers
There are clear winners and losers in AT&T's bid to purchase T-Mobile USA, the fourth-largest mobile phone company in the United States.
The winners are AT&T shareholders (the stock rose 1.4 percent on Monday) and T-Mobile's German parent company, Deutsche Telekom (its stock was up more than 12 percent in late trading).
The losers are Sprint (currently the United States' third-largest carrier), U.S. regulators and you.
This is another deal that may enrich a few companies, but will almost certainly be bad for all consumers.
U.S. regulators need to ask AT&T some tough questions. If they approve this deal, AT&T will become the country's biggest carrier. But what will happen to T-Mobile customers?
T-Mobile was known for its excellent customer service and its lower-priced wireless plans. AT&T is known for, well, neither of those things. Most analysts expect that AT&T will raise prices for T-Mobile customers, and that it's a matter of when, not if.
What impact will this deal have on Sprint? Many analysts believe that the AT&T/T-Mobile merger will force Sprint into the arms of Verizon Wireless, currently the top carrier in the United States. Should that be the case, we'll have only two major carriers in this country. That's not nearly enough competition for an industry as complex and price-sensitive as this one.
This deal won't stop with the top carriers, either. There are still smaller, more regional carriers with price-sensitive plans out there (including Leap Wireless, Virgin and MetroPCS). But the AT&T/T-Mobile deal increases the pressure on them to run into the arms of a larger company or be crushed by the competition. The deal will have ripple effects, and they won't be pretty for consumers.
In short, we can understand why AT&T and Deutsche Telekom are celebrating. The companies are anticipating an easy regulatory filing and a clear path to high prices ahead. Regulators need to remember that they are here to protect consumers and that this won't be a good deal for them.
© 2011 The San Francisco Chronicle