Networking

AT&T buys T-mobile: The 4G race is on in the US

Deutsche Telekom has agreed to sell T-Mobile USA to AT&T for $39 billion, which will help AT&T create America's largest mobile phone provider. The real news: The 4G race is about to heat up.

On Sunday, Deutsche Telekom agreed to sell its T-Mobile USA property to AT&T to help AT&T create America's largest mobile phone provider, trumping Verizon Wireless. The deal involves cash and stock and is currently valued at $39 billion.

The move also has larger global implications as Deutsche Telekom establishes a relationship with AT&T that makes the US provider a part of its global family of wireless carriers -- similar to how Verizon is connected to Vodafone. How's will work? Deutsche Telekom gets an executive seat on the AT&T board of directors and becomes a major shareholder in the company.

This move makes a lot more sense than the rumors earlier this month of Sprint buying T-Mobile. Even though both of those carriers needed a shot in the arm to compete with US wireless leaders AT&T and Verizon, the integration of the two companies would have been extremely difficult since both their 3G and 4G wireless networks are completely incompatible.

On the other hand, both AT&T and T-Mobile have similar GSM networks. Their 3G networks are based on different frequencies but both companies have been building faster networks based on HSPA+ so we should really look at this as a 4G move. The two companies have been badly trailing Verizon Wireless in 4G now that Verizon has aggressively begun rolling out LTE across the US. While HSPA+ isn't as fast or as robust as LTE, the combined HSPA+ networks of AT&T and T-Mobile will give them a larger footprint than Verizon's current LTE network.

Of course, integration still takes time - even for compatible networks. CNET's Maggie Reardon perfectly sums up the 4G challenges that lie ahead for AT&T in integrating T-Mobile (if the deal gets regulatory approval):

While it's true that T-Mobile and AT&T each use GSM technology, the carriers also use different bands of spectrum to deliver their services. Specifically, T-Mobile uses the spectrum it bought in the AWS spectrum auction in 2006 to build its 3G wireless network. AT&T also acquired spectrum in that auction. And it is using this AWS spectrum to build its LTE network. AT&T uses its 850MHz and 1900MHz spectrum to deliver its 3G service. Part of the reason that AT&T wanted T-Mobile in the first place was to get more of the AWS spectrum for its LTE network. Meanwhile, T-Mobile has no additional spectrum to deploy LTE, since it's been using the AWS spectrum for its 3G service. What this means is that once AT&T and T-Mobile merge, AT&T will have to move all of T-Mobile's existing 3G customers (which includes the supposed 4G HSPA+ customers) to AT&T's 850MHz and 1900MHz spectrum. This means T-Mobile customers will need new handsets, since the existing T-Mobile 3G HSPA and 4G HSPA+ handsets will no longer work on the AWS spectrum.

Meanwhile, Verizon is planning to upgrade its entire nationwide network to LTE by the end of 2013. This unexpected AT&T/T-Mobile tie-up could have the effect of accelerating the 4G race in the US, which would make the American 4G networks some of the best on the planet -- a reversal of fortune after the US fell behind Europe and Asia in 3G.

Note: We're likely to hear more about the AT&T/T-Mobile merger and its potential implications this week at the CTIA Wireless conference on Orlando. I'll be there covering it from beginning to end. You can read my posts here as well as follow me on Twitter for the latest updates from the conference.

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About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

51 comments
crcteacher
crcteacher

does that mean I have to get new handsets?

fhrivers
fhrivers

It will benefit the shareholders and no one else!

fhrivers
fhrivers

This is bad for an already abusive cellphone market. T-mobile was the only thing keeping AT&T in check in the GSM space. AT&T's crackdown on tethering apps is one example of a cell carrier strong-arming consumers. A couple of powerful carriers is the last thing we need in this market. We need more competition to discourage these predatory practices. Charging for text messaging which costs them NOTHING was bad enough, but forcing people to pay a monthly fee just to connect their computer to their phone is BS. It's none of their business and if they want to cap data they can do it and then charge people who go over. But now they're dictating which apps we can and can't use.

brike
brike

T-Mobile has been my carrier since 2001. Excellent customer service, excellent plans and excellent cover in the US, South America and Europe. Will the service be as bad as ATT is today, or will ATT improve? History tells of ATT buying Cingular and killing it with its bad customer service - which should actually be called customer bullying.

Silverfox5480
Silverfox5480 like.author.displayName 1 Like

The avaricious AT&T are at it AGAIN. Bad For The End User. CINGULAR's technical service and support was excellent (far superior to AT&T) today. I respect anyone who disagrees and will listen to their talking points. It didn't seem that the AT&T -> Cingular -> AT&T nightmare worked out for the good of the end user, so, why is AT&T -> T-MO going to be any different? If the merger goes through, I think I will have better service roaming with a Telus Mobility (CAN) or O2 (UK) or VodaPhone (NZ) SIM card in the USA! Heck, I've had better results with an IAM Maroc Telecom SIM card than AT&T provided in my part of the USA (the tech support was better, too!... And they only speak French and Arabic!). It's going to be a sad day if it goes through. I bet well get better service if we dust off the old AirTouch Cellular "Bag Phone" or Moto StarTac!

mpersic
mpersic

Bad Idea. Bad For The End User. AT&T provided excellent technical service and support in TDMA heydays - they are abysmal now (and for the last decade plus). T-MO technical service and support is excellent (far superior to AT&T) today. I respect anyone who disagrees and will listen to their talking points. It didn't seem that the AT&T -> Cingular -> AT&T nightmare worked out for the good of the end user, so, why is AT&T/Cingular + T-MO going to be any different? If the merger goes through, I think I will have better service roaming with a Telus Mobility (CAN) or O2 (UK) or VodaPhone (NZ) SIM card in the USA! Heck, I've had better results with an IAM Maroc Telecom SIM card than AT&T provided in my part of the USA (the tech support was better, too!... And they only speak French and Arabic!). It's going to be a sad day if it goes through. I bet well get better service if we dust off the old AirTouch Cellular "Bag Phone" or Moto StarTac!

Twilight23
Twilight23

I've been an AT&T Wireless customer pretty much from the beginning of GSM in the US (eg Cingular -> AT&T -> Cingular -> AT&T) and have never had any issues with them. AT&T's prices are just as bad as most other carriers in the US (and conversely, most other carriers prices are just as bad as AT&T).

seanferd
seanferd

What do we call this now? Mock and embrace?

Baldrick9
Baldrick9 like.author.displayName 1 Like

Less competition. When I was in the US recently I was able to buy a 3G, 1 month, no contract, pre-paid unlimited data service - great for travellers who don't want any sort of lock-in. But apparently the only place I could get this was T-Mobile. With AT&T's grubby uncompetitive fingers in there, this will probably go by the wayside. I'm surprised the competition regulator is allowing this, in Australia it would not be allowed.

JCitizen
JCitizen

have pretty good deals. But it depends on the state you buy it in. The regulators of some states believe in consumer protection. If they had the deal from the original company, then they have to keep the deals to OK the buyout.

John Fantel
John Fantel

a Monopoly? AT&T and T-Mobile were the ONLY TWO GSM carriers of any relevance in America. With this move now there will be only one GSM carrier. I don't think you could be more of a monopoly if you tried! Any chance the US Regulatory rejects or does not allow this to go through? I say less than zero percent of it being blocked.

JCitizen
JCitizen

say what Verizon uses? Or Sprint? Or Cellular South, which includes Cox Wireless now. Cox wasn't a small player exactly. In fact the acquisition cycle isn't over with, I bet. There will be more than a big three after it is over with.

Twilight23
Twilight23

GSM is different than Verizon, Sprint, et al because GSM is what the US should have been using from the beginning (eg the same thing as the rest of the world). If you want a phone that will work pretty much anywhere outside the US, it has to be GSM.

kenneth.mitchell
kenneth.mitchell like.author.displayName 1 Like

Lower the demand and watch them scramble for your business. We are suckers waiting to be pumped dry. As soon as the new product come available we cant wait to throw our money away for some new feature we use as a novelty. If we pay more it's our own fault!

tkejlboom
tkejlboom

Since Sprint, AT&T, and Verizon are more dedicated to the vertical integration model of monopoly, there will likely be even fewer options for handsets, and they're likely to be even more inferior in virtually every spec compared to what everyone else in the world enjoys. My cousin in Taipei laughed his ass off when I mentioned the iPad 2 had a front facing camera.

parksdevcorp
parksdevcorp like.author.displayName 1 Like

compeition always makes better products and pricing for the consumer. This in my opinion decreases compeition. I'm on T-mobile now. It makes me want to move to Verizon!

JCitizen
JCitizen

Since everyone thinks ATT is so greedy, then they will want to destroy the competition with price gouging. This will fail of course - meanwhile the consumer wins.

EzeXpl01t
EzeXpl01t

If you think this sucks, you have no idea how company business models work. This is a great opportunity for customers of both at&t and T-Mobile.

BBuck76
BBuck76

Pot calling the kettle black, no? This is not a great opportunity for us T-Mo customers by any means unless you consider increased monthly charges a benefit. I'm perfectly happy with my service and the low monthly bill.

elangomatt
elangomatt like.author.displayName 1 Like

A great opportunity for what? a great opportunity to spend more money because they know you are stuck with their monopoly on GSM service?

SonhadorPR
SonhadorPR like.author.displayName 1 Like

Now all the new handsets, including the HTC G2, HTC MyTouch 4G, LG Optimus T, and Samsung Galaxy S2 4G, WIL NOT WORK ON AT&T, and they have to give us new phones. My phone is brand new, and I love my G2!!! CRAP!!! Plus, their data caps truly suck! I have Unlimited Data and 400 msg/mms for $25/mo. I Really don't like this. Since I really don't like non-GSM carriers, I'm stuck in the US, here in Puerto Rico, I guess I can try Claro. I'm not happy, to say the least!!!

Fireboss
Fireboss

Or at least domestic partnership...Does this mean the shirtless blond AT&T guy seduced the skinny T-Mobile gal in the stripped dress? If so does the bald old guy play that piano thing at the nuptials? Will the commercial wedding be televised? Enquiring minds want to know

randyharwell
randyharwell

Changes corporate name to "AT&TT-Mobile"...

randyharwell
randyharwell

Changes corporate name to "AT&TT-Mobile"...

randyharwell
randyharwell

Changes corporate name to "ATTT-Mobile"...

franharry2
franharry2 like.author.displayName 1 Like

Wondering whether AT&T will honor all the good things T-Mobile currently offers such as free wifi calling. Knowing AT&T I seriously doubt that.

SonhadorPR
SonhadorPR like.author.displayName 1 Like

I get Free WiFi calling with my G2, even an older model (not 3G) Samsung SGH-T339, has WiFi calling, and all the older model Blackberry's...doubt they'll let that good thing fly.

cnieves
cnieves like.author.displayName like.author.displayName like.author.displayName 3 Like

att is just competition with verizon. they will bring their kamikaze charge techniques to t mobile and upset a lot of people off.

Regulus
Regulus like.author.displayName 1 Like

I do not believe that this move will enhance 4g availability/quality/cost to the end consumer. AT&T is most probably primarily interested in absolute market dominance and control with basic greed following closely thereafter. U.S. consumers wiil be the ultimate victim, with products & services remaining at or below 3rd world levels.

jamie
jamie

Fewer, giant companies. How can this be bad for the customer?

fhrivers
fhrivers like.author.displayName like.author.displayName like.author.displayName like.author.displayName like.author.displayName 5 Like

That's one less carrier keeping AT&T and Verizon in check. Now we'll continue to have expensive capped data plans and seperate tethering charges.

robert.mcmillen
robert.mcmillen like.author.displayName 1 Like

Higher prices, worse network, less competition, lower customer satisfaction. I've got a year now to move off. If I had wanted to be part of AT$ I would made that bad decision years ago....

mpersic
mpersic like.author.displayName 1 Like

You've hit it! I'm going to dust off my Motorola StarTac and see if I can sign-up with AirTouch ... "YES" I know AirTouch is defunct, but AT&T service in my geographic area completes only about 1 out of every 100 call attempts anyway! [and the one call it does complete, it drops about 13.7 seconds into the call anyway!]

jhimes
jhimes like.author.displayName like.author.displayName 2 Like

requirements for the current T-Mobile customers due to the band frequency differences & how soon / long that takes. I also hope that AT&T does not drop the current T-Mobile@Home service once they fully digest T-mobile.

JCitizen
JCitizen

can make a big difference on this. Stay on top of them. My state forced Verizon to honor the good contracts we had with Alltel before they bought them out. It is sweet now!

caba2
caba2

They will sell you the handset at their cost and make you feel like you got a great deal while they hook you into another two years of price gouging.

elangomatt
elangomatt like.author.displayName 1 Like

Consolidation rarely benefits consumers. This just means even less competition in the wireless market. The only benefit we might yield from this is the 4G network, but no doubt it will cost more since there is less competition.

RockerGeek!
RockerGeek!

They aren't thinking about bringing 4G to more customers b/c they care. They're thinking about more customers b/c they care about their paychecks.

support
support like.author.displayName like.author.displayName 2 Like

Didn't the government force AT&T to split up to prevent a monopoly? Just checking.

Con_123456
Con_123456 like.author.displayName 1 Like

Commandment of the New World sounds like: monopoly every little on information about you!

JCitizen
JCitizen

on how much competition you got. Their is plenty of competition so far. So I doubt they will even hesitate at the deal. At least there is plenty of competition in my area, and I'm out in the desert! We are only 3G so far.

rob123q
rob123q

Hope it improves their reception, currently I cannot use my AT&T phone from my house or surrounding area.

ctsrajan
ctsrajan

This kind of consolidation has been long time coming in the US market. Hopefully, it benefits the consumers.

SonhadorPR
SonhadorPR like.author.displayName like.author.displayName 2 Like

It'll only benefit those rich bastards in the board!

RockerGeek!
RockerGeek!

This is creating less competition on the market. And less choices for the consumer. But this IS a consumer's market. We'll see if any customers leave for Verizon or Sprint

djsesso
djsesso like.author.displayName like.author.displayName like.author.displayName 3 Like

Kinda scary to me.

Con_123456
Con_123456

Big Brother sees you (hears, reads your emails, he knows where you are, where you work, what you buy, knows your habits, knows who are your relatives and friends and much more)! Concentrations of all information in one place is a prerequisite for strengthening Big Brother and early transition to the New World Order.