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AT&T Continues 4G Spectrum Grab with T-Mobile Buy

EL SEGUNDO, CA — With its purchase of T-Mobile USA, AT&T Inc. appears to be continuing to use acquisitions to gain control of more of the limited supply of wireless spectrum required to compete in the market for 4G services. AT&T announced it will buy T-Mobile USA from Deutsche Telekom AG in a deal worth $39 billion.

The deal represents the second acquisition that AT&T has undertaken recently that will give it additional 4G spectrum. AT&T in December 2010 expanded its long-term evolution (LTE) downlink bandwidth by acquiring Qualcomm Inc.’s defunct MediaFlo mobile TV service.

The addition of T-Mobile’s spectrum will allow AT&T to immediately gain network capacity and to gain a better competitive position against Sprint Nextel Corp. and Verizon Communications Inc. in the key 4G area. The 4G segment represents a fast-growing portion of the wireless market in North America. Subscriptions to 4G in North America took off in 2010, and the service has become a competitive differentiator for AT&T and competitor Sprint.

AT&T has two options for how to use the T-Mobile spectrum. First, AT&T could continue running the two companies separately, since the two have very distinct subscriber bases.

However, IHS believes AT&T is more likely to take another approach and use T-Mobile’s 1700 band spectrum for its LTE 4G service. This move will require the consolidation of the companies’ 3G networks, migrating T-Mobile 3G customers to AT&T's legacy network, as well as offering the option of a discounted upgrade to T-Mobile's existing 3G customers who don't have the devices to support AT&T's bands. This process could be lengthy.

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2 comments on “AT&T Continues 4G Spectrum Grab with T-Mobile Buy

  1. Mydesign
    March 23, 2011

    AT&T plans to acquire T-Mobile USA for $39 billion in cash and stock. Who wins and who loses in this deal? It’s hard to find winners, apart from AT&T and T-Mobile shareholders. 

       From customer point of view, they are going to be the biggest losers because

    • When AT&T and T-Mobile are going to combine wireless spectrum assets, T-Mobile USA is now out of the market.
    • T-Mobile USA has been offering cheaper voice and data plans as a part of competition and hence the prices are low in market. Post mergering, the market is now reduced to three national players (AT&T, Verizon and Sprint) and hence consumers are going to lose the price war & selectivity.
    • For Phone Handset Makers, they had lost their ability to control price and profits on handsets because now there is a single buyer that can dictate what GSM phones come to market.
    • Network Equipment Suppliers like Alcatel-Lucent, Ericsson, Nokia Siemens are major suppliers for both AT&T and T-Mobile USA. By merging as a single customer, they will lose ability to control the pricing and as a result their profits suffer.
    • Google, it’s going to be a shock because T-Mobile is a great partner for its Android OS-based devices. There may be chance that AT&T may impose its own will on what apps and service are put on its Android smart phones. They may create its own app store and force everyone to buy apps through it, like apple.
  2. mario8a
    April 28, 2011

     

    Hi Tom

    Excellent comment, great info.

    don'y you think At&T will benefit with the supplier merging as a single customer?

    I know it will be some drop in price, but how about managing inventory turns?

    Network Equipment Suppliers like Alcatel-Lucent, Ericsson, Nokia Siemens are major suppliers for both AT&T and T-Mobile USA. By merging as a single customer, they will lose ability to control the pricing and as a result their profits suffer.

    Just asking….!!!

     

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