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AT&T to buy T-Mobile USA, puts Android at risk

updated 03:20 pm EDT, Sun March 20, 2011

ATT agrees to buy T-Mobile USA for 39 billion

AT&T in a dramatic turn has said it will buy T-Mobile USA for $39 billion. The combination of cash and stock is mutual and will create what will be the largest carrier in the US by a wide margin, at over 130 million customers. Its deal will also give T-Mobile clear expansion into LTE-based 4G instead of the purely HSPA+ 3G path from before.

Coverage would also get better by increasing the number of cell sites in a given area; the move would give the equivalent of five years of expansion.

The two companies insisted that carrier competition would stay in the US as there were five or more carriers in 18 of the top 20 cities. Battles between both larger and smaller carriers were "escalating," the companies said, and would get fiercer with 4G creating a more common battleground. The deal still depends on regulatory approval as well as a breakup fee if the deal soured.

Both expected the deal to complete within a year.

The takeover comes despite repeated, strong rumors of a Sprint/T-Mobile deal and could lead to a major upset in smartphone market share. As long as T-Mobile cell sites begin using AT&T frequencies, the merger would automatically grant T-Mobile users the iPhone without Apple having to develop a separate version. T-Mobile's need to use the rare 1,700MHz band has often meant that it needed special-run versions of a phone or was locked out entirely.

Android could face some of the greatest damage from the deal. T-Mobile was the original Android carrier and has always been the first to get Google's "halo" phones, including the G1, myTouch 3G, Nexus One, and Nexus S. It quickly lost the position after Verizon launched the Motorola Droid but has always contributed significant share. AT&T has always been dominated by the iPhone, even after the launch of flagship phones like the Motorola Atrix and Samsung Captivate, and could see some T-Mobile users trade in Android or go to the iPhone as their first smartphone.

Incidental effects are also likely for tablets, since T-Mobile users would now have access to the iPad, not just Android hardware like the LG G-Slate.



By Electronista Staff
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Comments

  1. bigmig

    Fresh-Faced Recruit

    Joined: Jan 2004

    +5

    Well...

    With no Sprint iPhone, Android can still maintain 50/50 share against iPhone as long as iPhone "only" outsells Android by 2.5-to-1 on AT&TMo/Verizon. We know that iPhone has outsold Android by more than 2.5-to-1 on AT&T, but we don't know what the Verizon numbers look like yet.

    Comment buried. Show
  1. facebook_Clay

    Via Facebook

    Joined: Mar 2011

    -27

    Customer Service

    Well, there goes T-Mobile's customer service. hAte T&T has customer service only a n*** could appreciate.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    +10

    only a what?

    so, Clay, what n-word did you put in there?

    I have found AT+T customer service - at least for iPhone customers - to be very, very good. Verizon having the iPhone made AT+T try even harder to please us.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    +10

    so what happens to AAPL

    my guess is it should get a significant boost, but who can really tell what the market will do...

  1. SergioRS

    Fresh-Faced Recruit

    Joined: Sep 2004

    +9

    Love T-Mo - HATE AT&T

    Going on 8 years with T-Mo - NEVER NOT EVEN ONCE a billing error. Have had to call them 1 time in 8 years to get warranty service on a phone under contract. Was forced to buy a pre-pay AT&T burner phone for coverage during the summer in a non T-Mo area, AT&T double billed me for the phone AND the minutes, 30min on hold to have Doogie Howser customer service dork extraordinaire tell me that even though he saw in their system where I was double billed I needed to wait till my Amex bill came in showing the overcharge, then FAX (yes - Fax, in 2009) a copy and wait 30-60 days for credit. f*** AT&T.

  1. comanche8

    Fresh-Faced Recruit

    Joined: Jun 2010

    +10

    the little competition - will be gone

    Expect collusion in keeping phone plan charges increasing.
    Doesn't this have to go through the FTC?

  1. Madison

    Mac Enthusiast

    Joined: Nov 1999

    +2

    Looking forward to expanded coverage

    I've been a T-Mobile customer for 8 years, and I, like SergioRS, have enjoyed their customer service. However, their coverage has been only okay. It's been better recently, but, I'm looking forward to having even more coverage with AT&T's towers added into the mix. We'll see I guess. Plus, I'm due for a smartphone upgrade in November, if they're done by then, I'll get an iPhone :)

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +11

    Android is *even more* at risk now

    Android is already on extremely thin ice now that Oracle has asserted its rights. Sun didn't protect its Java IP too vigorously, but they did get Microsoft to pay $20 million for a license violation. Oracle is very protective of their IP, and they're going for Google blood.

    The lawsuit requires all copies of Android to be "impounded and destroyed," but a more likely scenario is for Google to pay a license fee for every Android smart phone their hardware partners sell. (And for each of the few tablets they manage to sell.) Either way, the lawsuit will put a boot on Android's neck.

    Funny that every single Android user I talk to has always got some kind of excuse for using Android. For example "Well, I'm on Verizon and they didn't have iPhone until this year, and my contract isn't up until this summer." Or "Yeah, well, it was a few bucks cheaper than iPhone and it has this cool Chiclet keyboard."

    Now there's one less excuse.

    Comment buried. Show
  1. facebook_Justin

    Via Facebook

    Joined: Mar 2011

    -17

    comment title

    This means the US will only have one GSM network, this is a monopoly. GSM is the world standard, Verizon and Sprint aren't real networks and don't count. This is a monopoly.

  1. jfgilbert

    Fresh-Faced Recruit

    Joined: Jan 2010

    0

    That's not such a risk for Android

    Google does not expect to make money from Android, so its market share does not matter too much. Plus AT&T will be happy to push Android if they need to, at least as leverage against Apple.
    Android is much more at risk from its own strategy. Carrier customization (read unremovable crapware), bad UIs, fragmentation, delayed or unavailable upgrades, malware, and Google's immature and unpredictable approach to software management and releases: all these will make the user experience inconsistent and sometimes scary for all but the dedicated nerds.
    That will do much more damage to Android than the hypothetical loss of T-Mobile.

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