What do you think about the AT&T T-Mobile merger?

As the new work week opens up, AT&T and T-Mobile USA customers have plenty to say about the proposed merger. Yesterday, Deutsche Telekom agreed to sell T-Mobile USA to AT&T for $39 billion -- $25 billion of it in cash. Last night I posted a long analysis about what the merger could mean to subscribers of both carriers, also asking Betanews readers: What do you think of the merger? Whoa, did you answer.

"I have been a loyal customer of T-Mobile for over nine years," Reese Burton writes by email. "Even with Verizon getting the iPhone I did not want to change from T-Mobile. However, if everything in your blog comes about, I will change from AT&T to Verizon. I don't know what Verizon's plans are, but they have to be better than AT&T."

One of the major concerns is increased costs. When AT&T was Cingular, it bought AT&T Wireless in 2004. Like T-Mobile today, AT&T Wireless fees were considerably less than Cingular's. Post-merger, former AT&T Wireless customers paid more than before.

"This buyout will give AT&T even less incentive to offer competitive pricing and services," S Okuda writes in comments. "It will decrease the value for the consumer. There's a slim hope that this might spur more aggressive pricing from Verizon and Sprint, but it's highly unlikely."

Not surprisingly, Sprint sees the merger as being bad for consumers, arguing the deal "would alter dramatically the structure of the communications industry. AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80 percent of the US 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."

"Sprint will be gaining a lot of customers from this," Dave Kratter predicted in comments. "No one besides T-Mobile competed with Sprint on price. All those T-Mobile customers who will get new high AT&T prices once their contracts end will jump ship immediately, and they'll jump right to Sprint." Miguel De La Vega responded: "Being a Sprint customer, let's just hope this doesn't give Sprint the urge to raise prices."

Kevin Baron is guardedly optimistic. "I am a AT&T iPhone user, and I guess in the long run this might be good for speed and coverage for me," he writes in comments. "We shall see what the future brings. But it does also mean less choice should I ever wanna change carriers."

In a statement yesterday, AT&T predicted the merger would increase "network density by approximately 30 percent in some of its most populated areas." I have AT&T and T-Mobile service and can say that where I live, AT&T drops calls less than it used to but still as often as once a day. By comparison, I've had maybe a half dozen dropped calls in 18 months of T-Mobile service. Using the SpeedTest app, AT&T download bandwidth has yet to top 1.5Mbps on an iPhone 4, while I consistently see 4.5Mbps from T-Mobile using the Google Nexus S. How many other metropolitan areas are the same?

"It sucks," Paul Gorski writes in comments. "I will probably switch to Verizon."

"I've been with T-Mobile for about 10 years now," writes Heather Marie by email. I have an 'Unlimited Loyalty Plan,' and my unlimited texts/unlimited data are bundled together. Reading your story, it sounds like my 'loyalty' is going right out the window. If T-Mobile customers do not get to keep their plans, I'm out. I'm not under contract, so it'll be easy to get out." She wonders about the impact on customers under contract and continues: "My phone number has been the same, and I have only known T-Mobile. I like the billing cycle, the costs of the plans. The service has gone south, and the phones are kind of 2nd rate, but I'm comfortable here, and now I'm scared. Is there any chance [AT&T] continue with the T-Mobile ways, do you think?"

I don't think so, based on AT&T's behavior following earlier acquisitions. AT&T is paying $25 billion cash and giving up 8 percent stake to Deutsche Telekom. The US carrier isn't going to make that kind of investment without expecting to recoup something. Services defy gravity; they're more likely to go up than down post merger. Reality is this: AT&T's primary motivation for the acquisition is network expansion. The carrier can't put up new towers fast enough. AT&T is mainly paying for infrastructure. T-Mobile subscribers are a bonus.

Something else: Today, AT&T affirmed that it won't support T-Mobile 3G frequencies post merger. The carrier will convert T-Mobile towers to 4G. Subscribers can expect about a year's transition like when Cingular (now AT&T) bought AT&T Wireless. That means that all T-Mobile subscribers will have to buy new phones in about two years. That's the stick AT&T will use to get subscribers off their older T-Mobile plans and on to costlier new ones.

In closing, I'd like to thank AT&T and Deutsche Telekom for quieting persistent noise about iPad 2. Hopefully, the big merger will give at least 24 hours respite from analyst reports, blog posts, Facebook and forums chatter and news stories about Apple's tablet.

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