Following an upcoming merger with T-Mobile, AT&T, one of the largest cell phone carriers in the United States, is poised to become even larger. AT&T is paying Deutsche Telekom, parent company of T-Mobile, $39 billion for the acquisition according to a press release. AT&T claims coverage will be improved in urban areas, but students are concerned about the potential changes in service and price.
After the deal is complete, there will only be three major cell phone carriers in the United States. AT&T’s customer base will grow from 86 million to around 120 million; Verizon, the next largest provider will have 94 million. Sprint will remain a “little” major carrier with fewer customers than the new AT&T and Verizon – 50 million.
AT&T is promising much better coverage in all urban areas. In addition, they promise 95.5 percent of all customers current generation phones and data services as a result of the proposed merger, according to a press release.
The deal will take 12 months to finalize. The Federal Communications Commission and Department of Justice will review all of the merger’s consequences before approving it.
According to economics professor Bobby Puryear, the merger is concerning on several fronts.
“The U.S. cellular market is already quite concentrated,” Puryear said. “Government regulators will likely focus on the degree of competitiveness in the industry [both] currently and what is expected post-acquisition.”
Additionally, Puryear said the merger may affect consumers.
“AT&T will face significant pressure to demonstrate how this move will be good for the industry, but more importantly how the merger can benefit consumers with regard to service price and quality,” Puryear said.
Macklin Frazier, a sophomore in arts applications and currently a T-Mobile customer, is also concerned about the merge. He is worried that if the merger occurs, “the costs of [his] phone bill will go up quite a bit and [he] cannot pay much more than [he] already is.” AT&T’s service plans are typically more expensive than comparable T-Mobile plans.
What AT&T will get from the merger is improved coverage. AT&T will acquire a number of T-Mobile service towers that would’ve taken years for AT&T to build. According to a press release, coverage in densely populated areas will increase by about 30 percent.
Mike Holsten, a sophomore in social work, is an AT&T customer who says he is not satisfied with the current state of his provider. He said he has had numerous dropped calls and unsent text messages, and is looking forward to the acquisition of more cell towers.
“I would hope that the merger would bring better service, because right now AT&T coverage is sketchy at best,” Holsten said.
In an open letter dated March 21 to the Federal Communications Commission and Department of Justice, Minnesota Sen. Amy Klobuchar urged the regulators to take a close, hard look at the proposed deal. Klobuchar said if the two companies merge, there would be enormous consequences on price and service in the cell phone industry.
AT&T claimed in a press release that the deal the market will remain “fiercely competitive,” and that most major markets have several competing providers.
