Mar 23, 2011
AT&T recently announced its agreement to buy T-Mobile USA from Deutsche Telekom for $39 billion with the German company receiving $25 billion in cash and $14 billion in stock, giving it an 8% stake in AT&T, assuming all goes well and the merger happens.
It’s important to note that while the two companies have reached an agreement, it could take up to a year for the deal to go through, essentially creating a GSM monopoly within the United States. Obviously, the regulatory commission will be taking a special look at this situation and will have the final say in any proceedings.
Once the deal does go through, however, those of us in the States will be left with only 3 major carriers and the usual headaches that go along with a distinct lack of choice. Will Americans be able to get a good wireless service at a decent price when they have, basically, nowhere to go? Time will tell.
One nasty bit for AT&T to consider is that if the deal goes South, it’ll be liable to T-Mobile for a sum of $3 billion. It’ll also be required to transfer some Advanced Wireless Services (AWS) spectrum that it won’t need for its LTE efforts to T-Mobile, along with granting T-Mobile a roaming agreement at a value both parties can agree to.
While the merger means expanding AT&T’s LTE footprint and user base to a potential 130 million customers, what does it mean for Android?
For one, it means that T-Mobile users may now have access to the iPhone, giving them the ability to jump ship from their existing Android handsets. Devindra Hardawar at Venture Beat predicts that T-Mobile may have the iPhone in about a year.
For another, according to Damon Brown of Bnet.com, it means that Android is now in a weaker position in the fight against Apple, especially with Sprint gaining a better bargaining chip to reduce the amount of Android handset subsidies it’s required to take a financial hit on. If customers have to pay a higher premium for Android handsets, it’s hard to say which way they’ll go.
The news isn’t all bad, however. Amanda White of Gather.com has several reasons Google and Android might benefit from the merger, including AT&T’s post-merger plans to invest $8 billion into bolstering its network, offering an improved service for Google Voice users and VOIP, in general. It also means that existing Android users will have an improved network with better coverage for their phones.
No matter how you look at this deal, though, it doesn’t look good for Android or the amount of choice Americans will have in deciding on the hardware they want on the carrier they want.