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Tuesday, September 6, 2011

All is not well in Cell Phone Carrier Land

There has certainly been a lot of news recently about the cell phone carrier business here in the United States.

First, we have a lawsuit filed by the Justice Department against the proposed merger of AT&T and T-Mobile. I can certainly see the reason why the Justice Department filed that suit. The proposed merger would lessen the competition between carriers which use GSM for their networks. Currently, the biggest carriers in this area are AT&T and T-Mobile. If the carriers were to merge, with perhaps some small carriers somewhere in the US, it would essentially create a monopoly. There is also the uncertainty of those who currently have a contract with T-Mobile. Would AT&T honor the terms of those contracts, or would AT&T make those customers sign on to AT&T contract terms? AT&T has honored the contracts of those companies which it has acquired in the past. However, this time, it could be different due to the amount of customers that would be affected by this merger. T-Mobile currently allows features on its plans that AT&T doesn't such as using your phone as a mobile hotspot without paying for tethering (if this is incorrect, please let me know). A feature like that could have a big impact on the performance of AT&T's (data) network. There's also arguments about quality and price. Some think that T-Mobile delivers better service than AT&T for a better price. If the merger would go through, many of those people would probably switch over to Verizon or Sprint, based on whatever is best in their area.

Second, we have news of Sprint doubling its upgrade fees. This is certainly fed by the rumor that Apple is looking to spread its iPhone to other carriers. If you are due for or eligible for a phone upgrade, I would suggest you get it before the upgrade fee gets increased on September 9. There is also news that Sprint is also set to change its early termination fee to ~$350, based on how much time you have left in your phone contract.

Today, we get news that Sprint has filed a lawsuit to stop the merger between AT&T and T-Mobile. The alleged charge of the lawsuit is that it violates Section 7 of the Clayton Act, which, in this case, deals with the potential merger of AT&T and T-Mobile. According to the press release, "If the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability to use its control over backhaul, roaming and spectrum, and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition." "With today's legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal."

From here, we can see that many parties are opposed to the merger of AT&T and T-Mobile. Sprint's lawsuit was unexpected and will definitely delay the merger if it is not stopped by the time that the issue between AT&T + T-Mobile and the Justice Department. I, for one, even though I am an AT&T customer, do not that the acquisition of T-Mobile by AT&T would help the market and it would only make the cell phone carrier market move closer to a monopoly. Rather than trying to acquire T-Mobile, perhaps the effort would be better spent trying to improve services and prices.

If you have any thoughts on these events, please let them be known via the comment box below or e-mail them to me at, and I will answer your e-mail at the end of my next article. You can also follow me on Twitter (username is @rctechgeek).

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