Saturday, December 10, 2011

AT&T warns of higher prices if they do not acquire T-Mobile


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AT&T‘s proposed $39 billion acquisition of T-Mobile has been one of the hottest topics in the tech industry this year. AT&T claims to need T-Mobile’s spectrum to build out their LTE network, and T-Mobile is going bankrupt – best option would be a merge, right? We wouldn’t be ranting and worrying if things were that simple, though. Such acquisition would bring many consequences, with some being potentially harmful to the cellphone industry.
One of the main concerns is that this deal could substantially harm competition. Not only would one of the 4 biggest carriers be disappearing, but AT&T would easily become the largest carrier in the US, and would give them an essential monopoly on the GSM market. If competition goes down, this means that carriers would have the freedom to charge higher prices, since less companies would be taking away the customers. And we all know that carriers are big businesses, and if they can get away with charging more, they will.
What happens if this deal happens to be blocked, though? While Verizon is not very worried about this, Sprint happens to be one of the most important companies fighting against this merger. And while we are all trying to stop it (or support it), the companies still have their problems to deal with. AT&T needs spectrum for LTE, as they will not be able to handle the load of users, and T-Mobile is still broke and Deutsche Telekom doesn’t want to give them any money.
According to AT&T CEO Randall Stephenson, blocking this deal would be the worst outcome for customers. Claiming that AT&T is still in need of spectrum, he mentions that prices would have to rise in order to offer good service to its customers, a move AT&T customers would none too happy about.
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