AT&T’s proposed $39 billion buyout of T-Mobile USA would create a U.S. wireless colossus, with 130 million wireless subscribers — enough to send waves across the rest of the industry from even its smallest choices in mobile operating systems, wireless standards and hardware.
That would impact some of the biggest names in technology — including Google, Microsoft, Apple, RIM, Samsung and HTC, to name a few. Not to mention Verizon Wireless, Clearwire, Sprint and other AT&T competitors. And all of us peons, a.k.a. consumers, the people who actually use wireless services.
Here’s our initial list of some of the top implications of the deal.
The future of Clearwire and WiMax
Clearwire has been struggling to find a partner to help solve its cash woes. T-Mobile was a possibility, but with the No. 4 carrier essentially off the playing field, what does that mean for Clearwire? Well, it certainly creates one less option at a time when the Kirkland broadband wireless company desperately needs a lifeline.
AT&T is also throwing its weight behind Long-Term Evolution, a competing tech standard to Clearwire’s first choice: WiMax. (It wasn’t lost on us that AT&T noted in the third paragraph of the acquisition announcement that it was planning a “significant expansion” of its 4G LTE network.)
In an ironic twist, former T-Mobile USA CEO John Stanton now runs Clearwire. Looks like Stanton has his hands full.
The proposed deal comes just a few weeks after Verizon got its own version of the iPhone. Coincidence? Maybe.
But some, including tech blogger Robert Scoble, are already speculating that the proposed deal is all about opening up a bigger consumer market for Apple’s beloved smartphone. After all, we’re pretty sure there are just a few of T-Mobile’s 34 million customers who might like to switch to an iPhone.
T-Mobile customers still will have to wait for the deal to close, which could take as long as 12 months. T-Mobile referred to the iPhone in a FAQ section of its Web site, saying it does not currently sell the device but does offer “cutting edge devices like the Samsung Galaxy S 4G and coming soon our new Sidekick 4G.”
What’s next for Sprint Nextel
Sprint and Clearwire are close partners, and the two may find themselves in a sinking ship. Glenn Fleishman, who runs the Wi-Fi Net News blog, noted on Twitter that the tie-up between AT&T and T-Mobile means “Sprint Nextel is now boned.”
You certainly don’t want to be at the back of the pack, and that may be where Sprint finds itself if the deal is approved. That may leave few options for the Dan Hesse-led company. Could this force Sprint into the arms of Verizon?
“Verizon wouldn’t be interested in the Sprint/Nextel ‘talent’ that got them to this point,” Fleishman said in a follow-up Tweet, later adding that Kansas City (where Sprint is based) would become a “wasteland.” (See Fleishman’s post on Wi-Fi Net News for his full analysis of the AT&T/T-Mobile deal.)
The acquisition will combine what are currently the only two U.S. carriers that offer Microsoft’s new mobile operating system. However, by the time the deal closes, Sprint and Verizon are expected to be on board with Windows Phone 7.
The sheer size of AT&T will make Microsoft and other mobile operating system vendors, as well as handset makers, more vulnerable to the whims of the wireless giant’s marketing and platform decisions.
It should be interesting, to say the least, to watch all these giants attempting to cozy up to the new AT&T.
Om Malik notes that the biggest losers in the deal will be mobile phone users. His logic? More choice — for phones, pricing plans, etc. — is a good thing. As the industry shrinks to three major U.S. wireless carriers, prices could rise. That’s a possibility for sure, and it’s one that federal regulators will likely explore in great detail.
But AT&T says it will use its newfound muscle to bolster its national network as a result of the deal — creating a better consumer experience. (Anyone who has experienced dropped calls on AT&T or wandered outside T-Mobile’s limited coverage area knows the pain all too well). “This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” AT&T CEO Randall Stephenson said in a statement. The pressure will be on AT&T to deliver on that promise, and regulators will be watching closely for missteps.
Chetan Sharma, a wireless analyst, notes that the acquisition represents a “big test” for federal regulators as they look to protect the interest of consumers. “If the merger goes as is, then, the concentration by top three will be at its highest in the last decade…” he says.
We love the fact that Craig McCaw, John Stanton and others helped build the wireless industry right here in our backyard. But as the mobile industry consolidates around two major carriers in Verizon and AT&T — neither of which is based here — the focus may shift elsewhere.
Deutsche Telekom has been a hands-off owner of T-Mobile USA, allowing the unit to operate somewhat autonomously from its headquarters in Bellevue. If T-Mobile fades from Seattle, that could have wide-ranging implications on everything from jobs to non-profit organizations.
AT&T said in its press release that the company will continue to have a “strong employee and operations base in the Seattle area.”
That’s good to hear, but things also can change. And we’ve seen it before. After all, the AT&T of today got its start in the wireless business when it purchased McCaw Cellular. Just imagine what the region would look like if AT&T and its new property T-Mobile were located just a few miles apart?
John Cook is co-founder of GeekWire, a tech news site in Seattle. Follow on Twitter: @geekwirenews.
[Flickr photo via Kurt Schlosser]