AT&T’s much-maligned wireless service is expected to improve in Colorado and across the country after its proposed acquisition of T-Mobile USA.
But AT&T subscriber Patrick Mahoney doesn’t want the federal government to approve the deal because it would further consolidate an ever-shrinking wireless industry.
“When I think about the industry contracting down to three main companies nationwide, it seems to me like that would only be a losing situation for the customer,” said Mahoney, an engineer in Fort Collins.
That’s the dilemma facing regulators reviewing a merger that has garnered as much scrutiny as any in recent years.
AT&T says acquiring T-Mobile USA’s cell sites and radio spectrum would bolster its coverage and allow the carrier to deploy a 4G mobile broadband network to 97 percent of the U.S. population. But critics say the merger would essentially knock out a quarter of the wireless phone competition and lead to higher prices for a ubiquitous service.
The Federal Communications Commission has received more than 43,400 public comments about the deal, according to the agency’s website. That compares with nearly 33,800 for the controversial Comcast-NBC Universal merger, which closed in January.
More than 1,200 Colorado residents, including Mahoney, have weighed in. Not all are against the $39 billion buyout announced in March.
Supporters point to the prospect of receiving mobile broadband in hard-to-serve rural areas that AT&T has promised to reach if the deal is approved.
“It makes sense for our residents and our businesses to embrace the possibility of rural broadband in what is a very rural part of our state that, quite honestly, has been long overlooked,” Ellen Larson, mayor of the southern Colorado town of Aguilar, wrote to the FCC.
Dallas-based AT&T is perhaps best known as the first carrier to land Apple’s game-changing iPhone. But serving as the exclusive provider for the bandwidth-hogging device for four years hammered AT&T’s network, leading to widespread complaints about sluggish Internet connections, delayed voice mails and dropped calls.
AT&T has nearly 100 million subscribers, second to Verizon Wireless.
T-Mobile ranks fourth with about 33 million subscribers and has a reputation for offering lower-priced service plans.
The carrier holds about 19 percent of the wireless market share in metro Denver, according to a report by the Yankee Group research firm. That’s the third-highest market share for T-Mobile among 27 of the country’s largest metro areas.
Many subscribers say T-Mobile’s service is far better along the Front Range than other parts of the country. A report released last week by RootMetrics placed T-Mobile second behind Verizon in terms of overall service in Denver and first in terms of fastest delivery for text messages.
As such, local AT&T customers should see vast service improvements if the takeover is approved because T-Mobile’s cell sites would help alleviate AT&T’s traffic. AT&T’s market share in Denver stands at 21 percent, which ranks among the lowest for the carrier, according to the Yankee Group report.
With AT&T and T-Mobile both using GSM wireless technology, the network transition should be relatively short and seamless, said Bill Soards, AT&T’s Colorado president.
“If AT&T has X number of cell sites in the metro area, and we double that by integrating T-Mobile’s, you’re going to have stronger signals and faster speeds, just by having twice the number of network points of presence in addition to the increased radio spectrum,” Soards said. “So it’ll be a much more robust network experience.”
Existing T-Mobile devices would work on the combined network for the foreseeable future, he said.
“Whatever rate plan you’re on at T-Mobile today, you can bring with you to AT&T and keep for as long as you want, even if you change devices,” Soards said.
Despite those assurances, many analysts and researchers say the deal would do customers more harm than good.
The Yankee Group’s chief research officer, Gigi Wang, said the merger should lead to better coverage but “will reduce choice for consumers and, more importantly, leave little incentive for AT&T to offer competitive pricing.”
If approved, she said, it will only be a matter of time before Verizon purchases Sprint Nextel, creating a national duopoly.
The Yankee Group estimates that by 2015, more than half of T-Mobile’s subscribers will have switched service plans. That means they probably will be paying higher AT&T rates if they stay with the merged company.
In the Denver area, though, T-Mobile subscribers are currently paying slightly more a month than AT&T customers, which Wang attributed to higher usage of data and minutes. The Yankee Group report was based on surveys with more than 15,000 consumers, including 127 in metro Denver.
Sprint, the nation’s No. 3 wireless carrier and an opponent of the merger, disputes AT&T’s claims that it needs T-Mobile’s spectrum to roll out a 4G network to 97 percent of the nation. The carrier believes the driving force behind the merger is to eliminate a competitor.
“AT&T already has more licensed spectrum than any other carrier in the country,” said Larry Krevor, Sprint’s vice president for government affairs. “They’re not using today, on average, 40-plus megahertz of their spectrum.”
Sprint reportedly also was interested in buying T-Mobile USA from Deutsche Telekom AG, a merger analysts said would have made more sense from a consumer standpoint as it would competitively bring Sprint closer to AT&T and Verizon.
But after a string of industry consolidation that has included Verizon acquiring Alltel and AT&T taking out Cingular, it may be time for regulators to “draw a line in the sand” with respect to mergers, said independent telecom analyst Jeff Kagan.
“Ten to 15 years ago, there were a lot of small wireless companies,” Kagan said. “Now, there are very few large companies.”
“The deal is good for AT&T,” he said. “I don’t think it’s good for the marketplace.”
In response to concerns about shrinking competition, AT&T notes that there are additional options available through regional carriers such as MetroPCS and Leap Wireless, which offers service under the Cricket brand.
Observers say the Justice Department and FCC could issue decisions by year’s end, though the review could extend into early next year. The FCC asked AT&T last week to provide more information about its interest in acquiring T-Mobile USA. The request was made after AT&T’s lawyers accidentally released a portion of an internal document that showed the carrier could expand its 4G coverage from 80 percent to 97 percent of the U.S. population for $3.8 billion — far less than the $39 billion T-Mobile purchase price.
If the merger is approved, the FCC would probably include conditions on AT&T to protect consumer interests, similar to the requirement placed on Comcast to offer discounted Internet access to low-income households as part of the cable giant’s acquisition of NBC Universal.
Lone Tree resident and T-Mobile subscriber Susan Kim said she doesn’t plan to stick around after the merger. She switched from T-Mobile to AT&T five years ago because she wanted a phone that only AT&T offered. She left the carrier after a year.
“The reason I changed back to T-Mobile was because the service (was bad),” Kim said. “I probably will never sign up with AT&T again. I would probably go with Sprint if I had to choose.”
That choice, however, may not be around long.
Andy Vuong: 303-954-1209, avuong@denverpost.com or twitter.com/andyvuong
