How will the AT&T T-Mobile USA merger affect you?

Surely there are easier ways for T-Mobile USA to get iPhone than to sell out to AT&T. Or for AT&T to dramatically improve the reach of its high-speed network or to increase its cache of Android handsets. Kidding aside, today's merger announcement between AT&T and T-Mobile is simply stunning. It's an atomic blast occurring right before one of the biggest wireless tradeshows of the year -- CTIA, which officially opens on March 22nd.

The real question: What does it mean for you the AT&T or T-Mobile customer?

The Merger from 30,000

Messiness is the easy answer, but uncertainty first. While the boards of directors for AT&T and T-Mobile USA parent company Deutsche Telekom agreed to the deal in principle, regulators and shareholders must still grant approval. Changes won't be immediate. AT&T and Deutsche Telekom expect the deal to take about 12 months to close. US regulators may not look too favorably to reducing a market by one to just three major carriers. The merger conceptually creates the largest US carrier. If the two companies combined now, there would be more than 129 million subscribers based on fourth calendar quarter earnings releases. By comparison, during the same time period, Verizon had 102.2 million subscribers.

However, competitors may pick off T-Mobile subscribers between now and the deal closing -- assuming, of course, it's approved. T-Mobile already was bleeding customers. In calendar Q4, the nation's fourth largest carrier lost 318,000 contract customers -- or 2.5 percent "churn" rate. By comparison, AT&T picked up 2.8 million subscribers during the same quarter. T-Mobile customer pickings could be easy for carriers like Cricket and Sprint. T-Mobile is known for offering considerably lower pricing than AT&T, which could scare off some subscribers ahead of the merger's completion.

T-Mobile's network is perhaps more important to AT&T. The combined network will increase the density of towers in many areas -- gasp, could it be the end of AT&T dropped calls? Both carriers use GSM technology but on different frequencies. For example, T-Mobile's data service runs on 1700MHz and 2100MHz bands for sending and receiving. Phones must support both bands to use T-Mobile's high-speed data network, which tops out at 21Mbps. Using the SpeedTest app on the Samsung manufactured, Google-branded Nexus S and on Apple's iPhone 4, I recently compared the networks in same locations. While both smartphones are capable of 7.2Mbps, in testing around San Diego, Calif., last week, Nexus S consistently tested between 4.2Mbps and 5Mbps download speed. By comparison, iPhone 4 ranged between .88Mbps and 1.4Mbps.

T-Mobile claims its 3G network really is 4G, which is a matter of debatable definition. The larger question now is commitment to expansion. T-Mobile had been rapidly building out its 1700MHz/2100MHz data network. The merger raises legitimate question: Will T-Mobile slow down expansion? There are issues of investment and merger logistics to consider. Even if the deal closes in early 2012, the companies will be preparing for such circumstance, which affect both their network expansion plans.

The deal will likely impact Google, which has limited Android presence on AT&T's network and for which T-Mobile had been the premiere network supporter. For example, the first Android phone, the G1, launched on T-Mobile's network in September 2008. The G2 followed and many other Android handsets. When Google released its first branded phone, the Nexus One, in January 2010, it did so supporting T-Mobile 3G. A model supporting AT&T 3G came later. So how will iPhone's long-time US carrier and Android's major developer get along? Time will answer that one.

AT&T will pay $39 billion for T-Mobile -- $25 billion in cash. The remaining amount, paid in shares, will give Deutsche Telekom an 8 percent stake in the entity. A merger this size takes time. Based on other mergers, T-Mobile customers can expect a long transition bringing them to the combined company, even if the deal closes in less than 12 months. In late 2003, I switched to AT&T Wireless after the carrier rolled out its new GSM service with a limited-time $99/month unlimited calling plan. Nobody offered unlimited calling 8 years ago, so the promotion was a steal. In February 2004, Cingular announced acquisition of AT&T Wireless. The deal closed 8 months later. But it would be more than another year before the new Cingular integrated both carriers' networks. I witnessed it firsthand as a customer. Cingular-parent SBC would later acquire AT&T and rebrand under the same name concurrent with the June 2007 launch of iPhone. Is all this AT&T branding confusing enough for you?

The View at Ground Level

So what can you expect?

1. No iPhone, if a T-Mobile customer. A company-issued merger FAQ asks: "Is T-Mobile USA getting the iPhone?" Answer: "We do not offer the iPhone. We offer cutting edge devices like the Samsung Galaxy S 4G and coming soon our new Sidekick 4G." Perhaps there will be an iPhone for you post merger, but nothing sooner.

2. Phones with better data options -- soon. Right now many new smartphones either support AT&T's or T-Mobile's data network. That's sure to change, as AT&T prepares customers for the big network integration. The carrier can smooth the transition by offering more phones that support both data networks before the merger closes.

3. Billing cycles change. AT&T using the popular money-grubbing method of charging customers ahead -- for the next month's service (aside from overages). T-Mobile charges for the billing period just passed. Surely AT&T's method will rule.

4. Higher fees for T-Mobile subscribers. AT&T Wireless fees were generally less than Cingular's before the acquisition, like T-Mobile's are today. I expect AT&T (formerly Cingular) to raise fees for T-Mobile subscribers.

5. Bye, bye unlimited data plans. T-Mobile offers unlimited data plans. AT&T doesn't. Expect these to go away post merger. Qualification: Unlimited in T-Mobile parlance means 5GB or 10GB per month, followed by throttling when customers pass the data cap. AT&T data maxes out at 2GB, and customers incur extra fees for overages.

6. No more unlocking. T-Mobile has long provided customers unlock codes for their phones. The carrier recognizes that people travel and want to use local SIM cards. AT&T wants to sell subscribers costly roaming services instead. T-Mobile unlocks phones by request, and typically customers must own them for a few months first. I don't see AT&T unlocking T-Mobile subscriber handsets post merger.

7. Hello, rollover minutes. T-Mobile minutes expire if unused. AT&T lets customers stockpile unused minutes for 12 months. As T-Mobile subscribers migrate to AT&T plans, they will pick up the benefit of rollover minutes.

So, AT&T and T-Mobile subscribers, what do you think of the merger? Please answer in comments, or email joewilcox at gmail dot com.

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