T-Mobile Takeover by AT&T Was Inevitable

For many, the announcement on March 20 that AT&T would buy T-Mobile USA was terrible news. The smallest of the four major carriers was known for superior customer service, low rates, and for launching the Android phone. As a result, the news is full of gloom and doom stories about how T-Mobile customers will end up being the losers in this transaction when it happens.

But the fact is that T-Mobile USA has been in a slow death spiral for a couple of years now. In a time when other carriers were growing rapidly, entering new markets, flooding consumers with new phones, T-Mobile was slowly losing subscribers, it had the highest churn in the business, and it was never able to build out its coverage area. While it might have had the fastest HSPA+ network, and it might have had the best customer service, it was hobbled by that poor coverage and by a lack of marketing support from its German parent, Deutsche Telekom.

The lack of marketing support was probably due to the fact that DT has been shopping for a buyer (or acquisition) for T-Mobile for some time. There were long talks with Sprint and there were talks with other carriers, not all of them in the U.S. But ultimately, AT&T made the decision to buy. From AT&T’s viewpoint, this is a good deal. The company was facing a years-long effort to expand its network and even more years to fully move into LTE for really fast 4G communications.

By buying T-Mobile, AT&T adds more spectrum, it grows its cell network by about 30 percent, and it gets a partner with the same GSM technology. This means that as soon as the deal goes through, AT&T customers can access the T-Mobile cell sites, and T-Mobile customers get access to AT&T where they don’t already have access (there are roaming agreements already in place between the two companies).

The result is better coverage for everyone. But this also means that AT&T can dramatically shorten the otherwise painful process of growing its network and instead can focus on bringing LTE to market. It also means that the spectrum from both companies will be available for 4G expansion, meaning that AT&T will have more flexibility.

But ultimately, some move like this was bound to happen. T-Mobile couldn’t remain where it was, and a merger with Sprint would have meant years of painful conversion for customers. Either way, there would be adjustments by customers, but with the AT&T buy, at least existing T-Mobile customers can keep the phones they already have. In addition, AT&T customers can use the T-Mobile network. While the 3G and 4G frequencies aren’t the same, ultimately new devices will emerge that use data networks from both companies. There’s no question that rates will rise above what T-Mobile customers are currently paying, and some features that attract T-Mobile customers, such as Wi-Fi calling, and a liberal policy toward phone unlocking will probably vanish. But that probably would have happened eventually anyway.

While it’s sad to see T-Mobile start to fade away, especially for those, like me, who are T-Mobile customers, it should be no surprise. One way or the other, T-Mobile's days were numbered. Now, at least, we know what that number is.