About US$39 billion is the price for Deutsche Telekom’s T-Mobile USA. AT&T is willing to pay the huge sum because? T-Mobile’s 35 million customers making AT&T the largest wireless carrier in the US by a good margin: 130 million to Verizon’s 100 million. But is that all? No.
AT&T is way behind in deploying a “4G” network relative to Verizon. Instead of building out its next generation data network AT&T has decided to buy. Verizon went LTE and AT&T will go LTE as well by freeing up and using T-Mobile’s AWS spectrum. AT&T might be second biggest but is dead last when it comes to 4G. Case in point: Verizon’s LTE spanked the competition in a recent RootMetrics study.
Their findings showed that Verizonâ€™s LTE network performed at a 100 percent data-success rate. Its average data speeds were between four and 14.5 times faster than competitors, and average upload speeds were between 4.7 and 49.3 times faster.
AT&T might be boasting about having faster 3G speeds compared to Verizon but Verizon crushes the competition when it comes to 4G. According to RootMetrics study AT&T came in dead last. So it’s clear AT&T needs to do something and quickly. There’s a political bent to it, too.
AT&T CEO Randall Stephenson via TechCrunch:
With this transaction, AT&T commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans â€“ including rural communities and small towns. This helps achieve the Federal Communications Commission (FCC) and President Obamaâ€™s goals to connect â€œevery part of America to the digital age.â€ T-Mobile USA does not have a clear path to delivering LTE.
But that does not mean AT&T has to purchase T-Mobile, does it? AT&T could instead invest the $39 billion into upgrading its network. Pure political marketing.
And then there’s the iPhone angle by Scott Craig, BofA Merrill via The Wall Street Journal:
We believe T-mobile could add ~3 million incremental iPhones in its first full year, which could be conservative.
Doug Reid, Stifel Nicolaus:
We view AT&Tâ€™s acquisition of T-Mobile as a minor positive for Apple, as the deal gives us increased confidence that iPhone and iPad will be made available to the customer base of T-Mobile USA in 2012, an assumption already reflected in our Apple estimates.
But you can get your iPhone to work on T-Mobile, right now. Yes, you’re limited to 2G but a lot of AT&T iPhone users (me included) can’t get a solid 3G signal where I live so I’m almost always on 2G. I’m paying 3G prices but am forced to be on 2G.
Of course Sprint isn’t happy about this situation, at all, via Cult of Mac:
The merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80 percent of the U.S. wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete.
I don’t like either AT&T or Verizon. AT&T still can’t provide solid call or data connectivity to iPhone users in the SF Bay Area or New York City. Verizon? The company has only one goal in mind: to separate you from your hard-earned dollars by nickel and diming you with an unimaginable variety of fees. I’m with Sprint: let there be more competition, not less. Speaking of which Fortune reports Sprint has teamed up with Google to provide the option of connecting to Google Voice and getting transcribed voicemail messages, really low international rates, personalized voicemail greetings, call recording, etc.
If I continued as an iPhone customer on AT&T would purchasing T-Mobile improve connectivity to my iPhone 4? I’m not so sure. I doubt it. I’ll most likely have to upgrade to a LTE-enabled iPhone to see any benefits. To iPhone users on Verizon this doesn’t mean a thing. T-Mobile customers who are waiting for the iPhone will have to wait about 12 months. And finally Sprint customers will have to jump ship for an iPhone because it doesn’t look like the iPhone is coming your way.