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Archive for April, 2011

….and then there were three

AT&T has moved to the top of the cell phone carrier chain with its $39 billion plan to buy T-Mobile.  The move would make AT&T the largest cell phone carrier in the nation with 130 million customers, surpassing Verizon Wireless’ 102 million.  AT&T will know serve about 43 percent of the U.S., according to a report by the Huffington Post.

What does this chess move by AT&T mean to consumers?  It means down the line consumers may only have two cell phone carriers to choose from, but more on that in a second.

T-Mobile had been aggressive in offering lower prices for their voice and data plans as well as being on the forefront of the Android Market, after all, it was with T-Mobile that Android had its debut (G1).  By doing this, T-Mobile was able to stay competitive with the likes of AT&T, Sprint, and Verizon.  But in the end it was no match for the big boys, which led to it eventually being swallowed up by AT&T.

With the merger there will be three remaining cell phone carriers in the U.S., AT&T, Sprint and Verizon.  For current T-Mobile customers, what promise do they have that AT&T won’t raise prices?  With less cell phone carriers in the nation the big boys will will be able to raise prices knowing consumers have no other choice, besides going the pre-paid route.

“We know the results of arrangements like this – higher prices, fewer choices, less innovation,” said Public Knowledge president Gigi Sohn in the same Huffington Post report.

AT&T CEO Randall Stephenson said in the same article that one of the goals of the acquisition would be to move T-Mobile customers to smart phones, which have higher monthly fees.

Like it or not, T-Mobile was keeping cell phone plans affordable and in the process making the big boys like Verizon. AT&T and Sprint play down to its level.

According to a report in December 2010 by Consumer Reports, AT&T was rated as the worst cell phone carrier in the nation.  But consumer rating matter none to AT&T, as long it is the country’s leading cell phone carrier.

Now, on to consumers having only two cell phone carriers to choose from in the future.  AT&T plan to purchase T-Mobile will open the conversation once again about who’s going to buy Sprint.  It’s important to note that Sprint had been in talks to buy T-Mobile and then take on the big boys, but the fairy tale ended when AT&T unveiled its plan.

Meaning Sprint’s future may be numbered, unless it antes up and decides to buy up all the small market cell phone providers.  If not, Verizon may swoop in like a hawk and snatch Spring right up.  Verizon may feel the pressure now to buy Sprint just to stay even with AT&T, but Verizon Wireless CEO Daniel Mead said to Reuters ahead of the CTIA Wireless Conference.

“We’re not interested in Sprint. We don’t need them.”

But of course, consumers know better than to trust CEO’s.  And for current Sprint customers be wary of what’s to come next.  If Verizon is indeed not interested, there are other big boys, such as Comcast, and Google to name a few.

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Categories: Uncategorized