T-Mobile hasn’t been around long; in fact my wife has literally been with them since they came to the USA when Deutsche Telekom purchased VoiceStream in 2001~2002. In its short time, T-Mobile gained a strong showing in the wireless market by offering low rates and excellent customer service. Two things I think customers can wave goodbye to once the merger is complete.
Let me step back for a bit though. AT&T, in its current form, is one of the companies that came out of the breakup of the American Bell Telephone Company (owner of AT&T), otherwise known as Ma Bell. Fun fact, AT&T stands for American Telephone & Telegraph, who says the internet isn’t educational? Ma Bell was broken up by the federal government, in 1984, in an effort to break up the monopoly that was literally blocking out competitors from entering the telecommunication space. The resulting companies include AT&T, Verizon, and Qwest (US West). This is important, because a company who was known for antitrust practices is building a base to repeat past performance.
As I mentioned, T-Mobile offers some of the lowest prices in the wireless industry. They offer cheap data (internet, e-mail, streaming, etc.) and relatively low rates for families and high minute usage accounts. AT&T inversely offers the highest rates, considering how much is given for the price, and the price itself. I guarantee AT&T won’t offer to lower their prices when T-Mobile merges; the T-Mobile customer will have to pay the AT&T prices when their contracts are up for renewal (which I am sure AT&T will offer for a “free phone” when the changeover happens). Right now the spin is that AT&T will have economies of scale and can lower prices, but my bet is those savings will just go to the bottom line. Seriously, when was the last time you heard of a company lowering their prices because their costs were reduced?
AT&T also says the merger will result in fewer dropped calls and faster internet speeds. First off, T-Mobile doesn’t have speed issues like AT&T so that doesn’t surprise me, and second, T-Mobile really doesn’t drop that many calls like AT&T does. Maybe service will pick-up for AT&T customers due to more bandwidth, but the influx of AT&T users onto the T-Mobile bandwidth will likely decrease the service T-Mobile customers are used to. The only thing that would serve both is fewer users on each network, but we are essentially talking about the same number of users on the same size network; the sum is not greater than the parts, one plus one is still two, not three or four.
Wow this is really turning into a long post / rant isn’t it?
One thing I am personally afraid to see is the selection of phones available in the marketplace. AT&T is notorious for limiting how many phones manufacturers have in the space at any given time. This doesn’t just hurt consumers; it hurts phone manufacturers as well. I used to do analysis for a wireless manufacturer, and I can tell you that getting phones to market is actually a herculean task, one that the carriers control with an iron fist. Less carriers means less phone options…it is not like AT&T is going to say, “Hey now that we own twice the space we should make twice the phone options”. They will, likely keep their same phone line-up; maybe adding 10% to the number of devices available. This could really hurt Android (T-Mobile is a huge proponent of Android) as fewer Android devices will be in the Marketplace…and SURPRISE, AT&T is going to push their customers to iPhone, a practice they have shown time and again for three years straight now. (Hmmm come to think of it maybe this is Steve Job’s next step in world domination)
Now I have made a few strong statements today. And I think it is obvious that I don’t think this is a good idea. This will reduce the number of national carriers to three (really 2 if you look at market share). But unfortunately I believe it will go through. Why, you ask? Politics. Our country is fighting to overcome a recession. A major company, purchasing another major company is a big deal. Our politicians can point their fingers and say, “See, the economy is strong. Companies have money to invest, and are willing to spend. All is right in America.” This may seem absurd to you and me, but in a current climate where the stock market was falling due to higher oil prices, unrest in the Middle East / Africa, and a devastating disaster in Japan, the Dow rose over 200 points on word of the AT&T – T-Mobile buyout. That kind of surge isn’t ignored by our government.
AT&T will parade a list of things they are going to do to protect consumers, most of which will be mostly hollow and won’t last five years. Look at their history, not just what they did prior to 1984, but what they have done and how they have behaved in the last 10 years. In the end the sale will pass government scrutiny. Selection of plans, packages, and phones will decrease, and prices will increase. Who knows, maybe the value vacuum left by T-Mobile will be filled by Sprint, or an unknown future carrier. The market does tend to right itself, but will it do it in time? Or will the government have to step in and break apart another restrictive, controlling, monopoly?
So why write and rant about something that is beyond my control? Because, I want people to know how I see things happening, so no one can say they didn’t see it coming. And that is what I’m thinking about today.
No comments:
Post a Comment