LetsTalk.com Declares AT&T Purchase of T-Mobile Bad for Consumers and Bad for the U.S. Economy
By Joni Blecher Follow me on Twitter | Wednesday, March 23, 2011 (permalink)
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On March 20th, AT&T announced its intent to acquire T-Mobile. What does consolidating the second and fourth largest carriers in the United States into the nation's largest wireless provider mean for the U.S. economy and wireless consumers?
Here's how we see it at LetsTalk:
- Increased Subscription Costs: By eliminating T-Mobile, a carrier committed to value and choice, the deal reduces carrier pressure to price voice and data competitively at the lower end. Expect to see increases in device prices, subscription fees and service fees.
- Decreased Device Selection: Today, the two carriers combined offer close to 50 different device choices for consumers. AT&T has publicly stated that they will reduce the amount of devices offered in the combined portfolio, thereby decreasing consumer choice. In addition, it's likely that open handsets like the android-based G2 and Nexus S offered on T-Mobile will disappear from the lineup, as these types of GSM handsets have not historically been offered by AT&T.
- Aggressive Cost Cutting: Unlike the Verizon/Alltel acquisition in '08, which was about Verizon increasing its footprint into new regions, this deal is about cutting costs. AT&T claims it will improve profitability after the acquisition and expects to accomplish this goal through corporate/retail headcount reductions, retail store closures and reduced advertising.
- Significant Reduction in Headcount: When looking at corporate and retail locations combined, total headcount reduction could be upwards of fifteen thousand people. This would come at a particularly bad time during the country's economic turnaround.
In short, there are many potential negative impacts to consumers and the U.S. economy that can be caused by the acquisition.