could lead to more consolidation in the U.S wireless industry, leaving
the market with just two dominant providers — and the prospect of
higher rates and fewer choices for consumers.
If approved by regulators, the newly expanded
The potential market shift could force
“This move by
Such a trend probably would drive up mobile service
rates and reduce the number of phones and tablet computers available to
wireless subscribers, he said.
deal would increase competition and lower prices, citing a government
study that said the average cell phone bill price had dropped over the
last decade, a period in which there were several large telecom mergers.
“The U.S. wireless industry is one of the most fiercely competitive markets in the world and will remain so after this deal,”
the merger would allow it to accelerate the spread of faster,
next-generation wireless service — often called 4G — to more of the
country. Because
and T-Mobile already use similar technology for their existing cellular
networks, the two would be able to more efficiently deploy the new
technology, they said.
But critics of the deal warned that cheaper options could dry up if there were just three or fewer players left in the market.
“When you have two companies control almost the
entire market, you’re almost back to reassembling the Ma Bell monopoly”
when the old
lawmakers quickly jumped on news of the deal, with Democratic senators
urging close scrutiny of the acquisition by federal regulators.
“It is absolutely essential that both the Department
of Justice and the FCC leave no stone unturned in determining what the
impact of this combination is on the American people,” Sen.
In looking at the proposal, federal antitrust and
telecommunications regulators such as the Federal Communications
Commission and the Justice Department are likely to weigh the benefits
of market and technical efficiencies achieved by the merger against the
potential loss of competition. Regulators are also likely to scrutinize
the combined market share for both Internet broadband services and
wireless telephone services.
Besides the potential for huge savings from closing overlapping retail stores and call centers,
is also hoping that absorbing T-Mobile’s national cellular network will
give it a more robust ability to route calls and data traffic around
the nation.
Nearly one-third of U.S. cell phone users have the
newer breed of Internet-connected smart phones such as Apple’s iPhone
and Motorola’s Droid. Consumers on those phones have a greater appetite
for video, music and Web surfing — data-intensive activities that are
putting a strain on cellular networks.
on its wireless network had grown 8,000 percent over the last four
years — the same four years for which it has offered the iPhone. The
heavy load on
networks has earned it a reputation as slower and less reliable than
its competitors, a reputation the company has worked hard to shed over
the last year.
The acquisition could be appealing for some T-Mobile customers, who may be able to buy the popular Apple iPhone.
T-Mobile, owned by German communications conglomerate
has long painted itself as the low-cost alternative to its competitors,
offering cheaper, less advanced phones and lower monthly rate plans.
But the low-cost image probably won’t fit with
“I think you’ll probably see that positioning fade,”
he said. “The last thing they’ll want to do is say they have a superior
network and then price it cheap.”
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