SAN FRANCISCO - Saying "we can't afford to wait," AT&T Inc.'s chief executive on Monday framed the company's planned $39 billion acquisition of T-Mobile USA in terms of benefiting the entire U.S. economy, not just AT&T.
CEO Randall Stephenson said AT&T, the No. 2 U.S. wireless carrier, would work especially closely with federal regulators to secure approval for the purchase of T-Mobile from Deutsche Telekom AG because the combined company will be critical to the nation’s telecom infrastructure.
“The economy needs this investment,” Stephenson said on a conference call to discuss the deal. T-Mobile ranks as the fourth-largest wireless carrier in the United States.
Stephenson added that the deal will make the latest wireless technology, called LTE, available to 95 percent of the U.S. population. Dallas-based AT&T has been long-criticized for performance across some of its wireless network, and Stephenson said both AT&T and T-Mobile customers would see better service upon the deal’s completion, which is set to close a year from now.
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Here’s what a completed deal could mean for customers:
• Some time after the deal is completed, T-Mobile phones with “3G” wireless broadband won’t get 3G service any more, and will need to be replaced. AT&T will be offering new phones with access to AT&T’s 3G network to these customers, but it’s not clear what the deals will be. It could take a year for AT&T to turn off T-Mobile 3G, so there will be time to adjust. AT&T will use T-Mobile’s 3G frequencies for 4G instead, for faster data speeds.
• More phone choices for T-Mobile subscribers. T-Mobile, as a much smaller carrier than AT&T, doesn’t get as many exclusives on top-line phones, and it doesn’t have the iPhone. This won’t be a big benefit to T-Mobile subscribers who don’t have contracts – if they want the iPhone today, they can sign up with AT&T or Verizon Wireless. But subscribers under contract would find it easier to upgrade to an iPhone.
• Fewer pricing plans to choose from. T-Mobile and AT&T have different offerings, some of which might disappear from the market.
• No more unlimited data plans. AT&T has stopped offering unlimited data plans in favor of plans with monthly data usage caps and overage fees. T-Mobile USA still offers “unlimited” data for smartphones for $30 per month, but slows downloads after 5 gigabytes of traffic in a month. If the deal closes, current “unlimited” subscribers would likely be grandfathered in, but AT&T would probably stop offering the plan to new subscribers.
• Better network coverage. Combining the two networks will improve performance in some areas, because there will be more towers available. However, today’s AT&T phones can’t use T-Mobile’s 3G wireless data network, and vice versa, because they run on different frequencies.
• Wider rural broadband coverage. AT&T is pledging to increase spending on the construction of a new ultrafast broadband network by $8 billion, to cover rural areas.
• The big question is whether the combination would let AT&T, Verizon and Sprint raise prices on wireless service once competition from T-Mobile disappears. AT&T points out that prices have fallen through a decade of mergers in the industry, but public-interest groups are raising concerns.
The Associated Press and MarketWatch contributed to this report.