AT&T-Mobile is almost dead—long live competition (kinda)

T-Mobile, the fourth-place U.S. wireless player, plays a tricky role in encouraging competition

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News broke in March 2011 that AT&T, the number two wireless carrier in the U.S., was seeking to buy T-Mobile USA for about $39 billion. Immediately, I thought of football games, the Android “app drawer,” and European phones. It’s a tricky thing, this fourth-place wireless player.

The AT&T/T-Mobile buyout looks to be nearly on ice, as AT&T and T-Mobile are finding it hard to sell around $16 billion worth of mainly T-Mobile assets to competitors to satisfy the Justice Department’s anti-trust concerns. Both sides are looking at alternatives to full-blown mergers, including agreements to share T-Mobile’s wireless spectrum, which AT&T sees as crucial to expanding its higher-speed wireless offerings. AT&T originally agreed to pay T-Mobile a $4 billion “kill fee” should the deal not go through, which might still be avoided.

All that is to say that I hope T-Mobile sticks around, and maybe even picks up a little cash for its troubles. The U.S. needs competition among the major carriers. Beyond fourth-place T-Mobile USA, there are a few small, regional players, and a few national resellers sold mainly through retail stores, without contracts. There are regulations that attempt to keep the wireless space open for those resellers at fair prices, but should the major carriers consolidate into three distinct players with a firm grasp of the higher-speed (“4G”) spectrum, it’s easy to see those resellers as continuing to serve as niche players.

Verizon and Sprint operate phones on their own CDMA channels. AT&T and T-Mobile use the more internationally popular GSM, and they use some of the same space. Anyone who’s looked into buying a European phone for use in the U.S., or vice-versa, finds that T-Mobile and AT&T share the same lower-speed “2G” or “EDGE” frequencies, but require separate phones to make use of their higher-speed “3G” and “4G” networks. AT&T’s $39 billion offer for T-Mobile was in large part a bid for its spectrum space. Funny enough, though: Verizon just picked up a big chunk of wireless spectrum, and even some new customers from a few cable companies’ failed wireless ambitions, and it’s far more likely to move through without hassle.

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