Editorial: A T-Mobile Customer’s Thoughts on the AT&T/T-Mobile Deal

I’ve been invited by David to post my thoughts on the acquisition of T-Mobile USA by AT&T from the perspective of a T-Mobile customer. I have slightly modified this article from the original I posted on Mobile Central to include a bit more information.

As a T-Mobile customer, I’m against the acquisition by AT&T. T-Mobile has a great reputation as a value leader and offering top notch customer service. In fact, they’ve been rated the highest in customer satisfaction by J.D. Power and Associates for several years now. T-Mobile also does an excellent job maintaining their towers and making them reliable. While they don’t have the 3G footprint of AT&T, they are getting there.

I’ve done my research regarding spectrum. I know that AT&T possesses quite a bit of spectrum on their own, much more than T-Mobile. They even own enough spectrum (somewhere close to 100 MHz, I believe) to build all over the nation. But, the problem is that their spectrum isn’t harmonized (meaning that they don’t have a single frequency band that is used all over their network). T-Mobile is fortunate enough to have at least 20-30 MHz of spectrum in every market in the AWS-1 (1700 MHz UL/2100 MHz DL) band range, with an additional 10-20 MHz in the PCS (1900 MHz) band range. AT&T’s spectrum is all over the place, some 10-20 MHz here and there in Cellular (850 MHz), some 15-20 MHz here and there in PCS, about 10 MHz in most areas in US Dig Div (U.S. Digital Dividend – 700 MHz), and about 10MHz in the western half of the country on AWS-1. This actually puts AT&T in a worse situation than T-Mobile, because their licenses are scattered all over the place. Without T-Mobile, they would require tri-band LTE devices right out of the gate, because they don’t actually have a single high quality spectrum band that covers all parts of the country. However, AT&T’s overall spectrum concentration in every single market that they both participate in (and several markets that T-Mobile doesn’t yet participate in), is much higher than T-Mobile’s.

Obviously, AT&T’s spectrum on PCS and Cellular is wide enough that they can run both 2G and 3G services on the same spectrum band. That means they have more than enough room to initially build out LTE on their current spectrum holdings. Provided, of course, that AT&T is willing to decommission their older networks in order to free up spectrum.

The spectrum crunch that AT&T tends to say that they have is complete and utter nonsense. For years, AT&T held some AWS-1 spectrum and they didn’t use it at all. Why? Because they didn’t want to force themselves to offer devices that would be compatible on their only competitor’s network (T-Mobile).

As far as band frequency support for LTE, I know for a fact that ST-Ericsson has several multi-band LTE chips that support most of the frequency bands used in the United States for 3G. Qualcomm’s Gobi chips that have LTE support also do support some of the frequency bands for LTE. Multi-band chips are not an issue, since the manufacturers were prepared this time. Nokia-Siemens Networks, Ericsson, Motorola Network Solutions, Alcatel-Lucent, and Huawei are also all ready for building out towers that broadcast LTE on any of the currently used frequency bands for 3G, and of course, they support US Dig Div spectrum. AT&T will not have a problem getting multi-band LTE chips for cheap, because they are massive enough that the economies of scale will kick in very quickly. They don’t need T-Mobile for any sort of spectrum crunch alleviation.

Another thing that bothered me about the AT&T announcement was the fact that they said that T-Mobile USA had no clear plans for 4G LTE. That is simply not true. They didn’t have definitive plans, but they did have several plans described for deploying 4G LTE. One plan was that they would re-farm their PCS (1900MHz) spectrum to use with LTE after they’ve built out their HSPA+ network sufficiently enough that they can begin taking down the 2G GSM network. That was to be enacted in 2012, when they began shutting down the 2G GSM network in areas that have HSPA+ built out completely. Gradually, they would have replaced 2G with 4G LTE. Since their 2G spectrum is pretty wide in most areas, the 4G speeds would have been pretty good. The expenses would have been the biggest issue, since it would have required several billion dollars. This plan was detailed during the January investors’ conference that T-Mobile USA and its parent, Deutsche Telekom, held.

There was also another option that was seriously discussed by T-Mobile USA executives for launching 4G LTE. That was doing another network-sharing agreement, similar to the one T-Mobile USA had with Cingular for their 2G GSM network before Cingular became “the new AT&T.” T-Mobile could partner with the many rural and regional carriers across the nation to combine their PCS spectrum and build out a nationwide 4G LTE network that would have a larger footprint than any other carrier in the country. They could also partner with Sprint and work together on building out a 4G LTE network on the PCS band. Considering the culture compatibility between T-Mobile USA and Sprint-Nextel, it could work out well for the both of them. They could have even partnered with AT&T, given the compatible technologies and complementary spectrum. Unfortunately, such a partnership probably wouldn’t work out so well because they have very different corporate cultures and values.

Well, if they had a plan of action, why did Deutsche Telekom announce the sale of T-Mobile USA to AT&T? Simply because they are reducing their scope from worldwide to just Europe, and probably later into just T-Mobile Deutschland. Their primary shareholder, the German government, probably wants them to focus more on the domestic market rather than international ones. That explains why Deutsche Telekom merged T-Mobile UK with France Télécom’s Orange U.K. last year to form the new holding company “Everything Everywhere” that manages the networks and brands of both T-Mobile UK and Orange U.K. Deutsche Telekom plans on exploring ways of minimizing their direct involvement with markets outside of Germany while still maintaining some sort of presence there. Expect to see Deutsche Telekom do similar actions for other T-Mobile branches across Europe that they wholly own.

Additionally, Deutsche Telekom gave up on T-Mobile USA in 2008, after the iPhone came the Cingular, which was transitioning to become “the new AT&T” at the time. I remember reading somewhere that Deutsche Telekom sent a memo in 2008 to T-Mobile USA executives saying that they missed their chance to become a significant player in the market, and the tone of the memo suggested that Deutsche Telekom was going to be more hands-off on managing T-Mobile USA. Later that year, T-Mobile was unable to acquire any US Dig Div spectrum because their parent chose not to participate in the auction. And of course, then T-Mobile brought out the G1, the very first commercially released Android phone, and it was a great success. The next year, Verizon brought out the Motorola DROID, which completely overshadowed T-Mobile’s myTouch line that launched that same year.

So, what does this mean? It means that the only way T-Mobile USA will get the needed cash infusion to build out a 4G LTE network is if the deal is blocked. The terms of the deal between AT&T and Deutsche Telekom state that if the deal is blocked or AT&T cancels the deal, T-Mobile USA will receive $3 billion and all the AWS-1 spectrum AT&T owns but isn’t using for 4G LTE at the moment of cancellation. The cash and spectrum infusion would allow them to build out their own 4G LTE network immediately.

I’ve noticed that very few people in the news media bring up the fact that AT&T’s acquisition of T-Mobile USA would effectively create a monopoly. Why would it do that when we have two other national carriers? It is because T-Mobile USA and AT&T Mobility are the only two super-regional carriers left in the USA that use the GSM family of technologies. The two competing GSM networks have allowed for a wide variety of devices to come into the American market. This is important because most people are too stupid to realize that their devices cost way more than they are actually paying up front, and that they demand it to be cheaper and don’t care that they are signing two year contracts. If the acquisition is approved, the number of GSM devices in the market will drop considerably. As of right now (March 30, 2011), there are nearly 300 different GSM devices currently available for sale directly from T-Mobile USA and AT&T. If the acquisition is approved, you can expect that number to cut in half, at least. Of course, it wouldn’t matter all that much because there’s only one carrier to use the devices on if AT&T acquires T-Mobile. You can also expect for prices on AT&T to get much higher because AT&T doesn’t really have a competitor that competes against them so evenly and on all fronts. Verizon and Sprint don’t really count because you can’t take your devices from AT&T and use them on Verizon and Sprint, since they use CDMA2000 with EV-DO Rev. A instead of GSM and UMTS with HSPA+.

AT&T is terrible at managing their network compared to T-Mobile. And the service and support has only really begun improving late last year. It will take quite a lot of time for AT&T to catch up in terms of overall quality to the levels expected by T-Mobile customers. And AT&T will crush T-Mobile’s open culture after the acquisition is complete, in favor of AT&T’s monopolistic conservative culture.

AT&T also doesn’t really get open networks and open solutions. Their Android devices are locked down, with sideloading blocked. They are the only carrier in the world that does that, by the way. AT&T prefers nickel-and-diming customers instead of making them happy enough to continue staying with AT&T, which is why they chose femtocells instead of UMA. UMA did exist before femtocells, by the way. UMA was built into the GSM standard with the EDGE and UMTS standards. In fact, femtocells rely on a variant of UMA technology to work. If AT&T acquires T-Mobile, they’ll probably kill off the G-series of Android devices, the ones that are pure Google Experience devices. UMA will probably disappear as well. And of course, no more Even More Plus plans and unlimited data plans.

There is some good news though. If the deal were to be approved, it would take at least three years after the acquisition is complete before they could take over the network and start repurposing the AWS-1 spectrum for 4G LTE. It is even likelier that it would take five years before they have everything in order to begin migrating the AWS-1 network to LTE. So our devices wouldn’t stop working for a very long time. Additionally, AT&T does practice grandfathering when it does acquisitions. Existing T-Mobile customers will never be forced off their current plans, even when they do phone upgrades into 4G LTE. But that is a small consolation prize compared to the larger problems AT&T would cause by acquiring T-Mobile.

Given all the real facts, it is definitely shown that AT&T should not be permitted to acquire T-Mobile USA.

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  • Artofphysics

    maybe the various number of devices would go down post-merger, but compare to areas like south korea; they only have like two main service providers, yet their devices from 5 years ago could run around ours even now (phone first devices). or europe. number of models go down? probably. but i think the quality of the devices will go down. just an opinion.

    but i do like the bit about people not realizing that the phone they get (unless paying upfront; EIP!!! + Even More Plus = LOVE) is wayyy more expensive than what they pay upfront. To this day, I do not, for the life of me, know why people prefer Even More (contract) over Even More Plus (no contract). Even More Plus user FOR LIFE!

  • STL4FAIL

    You look at this merger all wrong… it’s not “OMG there’s only AT&T!!!” because you are pretending that there is not Verizon, or Sprint out there. Yes, there will be only one GSM carrier, but lets be honest, does 90% of the population even know what GSM or CDMA means, let alone the difference? I’d place everything I own on NO.

    The post points out you can’t take your phone from AT&T to Sprint or Verizon, but again lets be honest.. can the common customer NOW take their phone from AT&T to T-Mobile? Verizon to Sprint?

    No they can’t. Not without a bunch of (to the common customer) daunting technical hoops,
    jailbreaks, software hacks, etc. Simply stated, you can’t take any device purchased though any carrier and walk into their competitor’s store and activate it as is just because it is compatible with the network.

    Outside of the people who troll sites like these (and that MAY be 1% of the population) it’s about 3 things:

    1: Price
    2: Service
    3: Phone

    “What do i get for my money?”

    AT&T eating T-Mobile isn’t even going to begin to have the horrid effects that are being predicted because at the end of the day they have to compete with 2 other carriers anyway.

    • STL4FAIL

      And just in addition looking at a lot of pretty ignorant flame posts below…

      How many of you have ACTUALLY BEEN AT&T customers? Do you REALLY have experience with AT&T’s customer service, and network quality, or are you merely making a fool of yourself by echoing news stories about the iPhone 4 launch last year? “Hey, ya I remember reading about awful AT&T! Rabble Rabble Rabble!”

      I carry an AT&T phone (iPhone 4) and a T-Mobile phone (myTouch 4G) and have had dual service for about 5 years now. I can honestly say in that time I have a handful of dropped calls on BOTH networks, and very pleasant experiences with both customer service department, but certainly more awful ones with T-Mobile and reps who seem more and more unable to do anything but “apologize for the inconvenience/misunderstanding” and read a script.

      In fact, the only awful part of AT&T’s customer service I have experienced in a very long time is that piece of garbage voice recognition that answers the phone. Get past that and everything is fine.

      • Richardthegrape

        At&t fan boy^^

        • STL4FAIL

          It’s sad in the days of message board trolls, nobody can have a differing opinion than the banner at the top of the site, lest they be called a “fanboy,” the the most over-used go-to snarky cut-down of the internet age…

          but i digress…

          Actually, I am part owner of a T-Mobile Authorized dealer, dating back to 1997 as Aerial in the Kansas City market. Several years ago, I became hands-off so i could focus on my passion, which isn’t cell phones, and the AT&T line is provided to me by my employer.

          Considering I put food on my table for 9 years spending 10 hours a day in my store 6 days a week before stepping away, and continue to collect checks from the magenta bank and trust every month, I’d say you might actually call me a T-Mobile fanboy.

          Though I could be biased given my contract gives me residuals (which i will not discuss) should I lose my store before the expiration, which by the way just so happens to be more than 2 years from now.

          So, ya… either way I win, and therefore I can look at it objectively. This is not the end of the world and the sky is not falling, and you were already losing Flex Pay, so get over it.

          $20 says Richardthegrape has to Wikipedia Aerial Communications.

        • STL4FAIL

          Oh and before you snarkily ask why I have to call customer service, let me tell you… I’ve had 5 Territory Reps in the last 7 years… they used to be informative and helpful, now they are just corporate mouth-breathers who deliver posters and brochures. The day the merger was announced… all of my contacts in the corporate office in Lenexa just happened to be “out of the office.”

        • Ken

          I’m not for the Deal but if you are an AT&T customer, I can see that this is a big win for them.

      • Susan

        YES, I have been an AT&T customer! Network quality is pretty much THE SAME. Although, I paid $25 MORE a month for it at AT&T. My voice mail was only saved for two weeks at a time on AT&T, the customer service line was only open from 9-6pm on AT&T and RUDE customer service at their stores (or lack of enough people. I frequently left the stores because no one waited on me). Their phone-in support was pretty much “Leave if you are unhappy” attitude. Everyone wants the Iphone so bad they feel they don’t need customer service.

        Look, AT&T gets everything out of this deal. MORE voice spectrum (and density) in the 1900mhz band from T-mobile (they also get more towers with the AWS frequencies/bands running on them now). They de-activate the Tmobile 3G band on the AWS spectrum/band to build out AT&T’s new LTE network (AT&T doesn’t have anymore bandwidth for the LTE network). And AT&T execs already said that is what they want to do with the T-mobile AWS bands.

        This deal leaves really on TWO HUGE companies. Sprint will become pretty much MetroPCS (a 3rd wheel against giants). It will have VERY limited access to new phone and no spectrum to change over to LTE. They also have limited cash. Verizon would have to end up buying them.

        T-mobile customers get nothing out of the deal! What access to the Iphone? If we wanted that we would have signed up with AT&T before??!! A 30% higher bill with AT&T? No VOIP or WiFI calling (AT&T has never activated this feature in most Blackberries or Androids)? Fewer customer service hours? Throttled data plans? etc….

        • Khaos58

          Thank you! That comes from you alot because i had AT&T and Tmobile is better!!

      • Khaos58

        Say what you want but AT&T aint worth it! With twenty bucks i can get unlimited Android Internet UNLIMITED!! And tell me what can twenty dollars get you in AT&T HUH HUH HUH?!

    • Mikey

      Most analyst have already said that Sprint will not be able to compete with Verizon and the new AT&T. It will have no access to new phone and a bunch of other issues.

      We will end up with two HUGE EXPENSIVE phone companies. It creates a complete class system (even more than before).

      I don’t care about only one GSM carrier. I care about my monthly bill and then service. AT&T fails at both of those: It costs more and it has poor customer service.

  • http://twitter.com/drakeheth Drake

    Ok i am happy that this is going through so maybe i will actually be able to make a call on at&t. but this is already done but now AT&T wants Sprints lineup[companies]. and sprint wants to stay out but the point is, they dont have any coverage.

  • http://twitter.com/ts0cha0tik Tre

    I think that this deal is horrible…
    T-Mobile has the best deals and customer service and AT&T has the worst I have ever seen. Many people have switched from AT&T to go to T-Mobile in order to have better customer service. As far as speeds go, T-Mobile owns in this department where I live (Pinellas Park, Florida, USA). Now for the phones… T-Mobile has the best Android phones on the market (Well Sprint does have the Evo 4G and AT&T has the Artix 4G with the lack of real 4G here in PPark, FL) and none of these phones have any “Lock Down” on the avoiding users to install unapproved market apps or custom apps (Such as the Amazon AppStore) which AT&T has blocked on every android phone they have. I believe the following 4 things will make T-Mobile customers very unhappy… Plan Prices, Lack of Unlimited Data Plan, Bad Customer Service, & Lack of true freedom on their android phone.

  • Misspiggy

    Rumor has it that T-Mobile Carly has a very influential god mother. She seems to think that Carly should keep her job at Magenta and AT&T blue should stay away. Pink represents girls and blue represents boys. If NFL players can wear pink maybe T-Mobile should just back out and take the $3 billion and spectrum.

    Hell hath no fury for a woman scorn!

  • J-MAC

    I don’t like how at&t dressed our T-Mobile lady for the commercial after the merger! Just plain ugly dress

  • Dawnmidnight1

    when can we do an early term since there gonna combine?

  • Terry

    wouldn’t it be interesting if it gets blocked and DT sells to Google instead? paging Larry Page! save us! I will drop my privacy concerns to have a gsm phone that’s unlocked and not AT&T. I like getting sim chips in foreign countries; AT&T lied to me and claimed it was impossible. Magenta pleasantly unlocks. But I am still gonna get the Sidekick and hope for deal block. Great article!

    • BigMixxx

      Google would be nice, but I just don’t see it. That is too much money on the table and the long term investment would be shocking to the overall value of the company. I believe T mobile may turn around and look sprint’s way or rename itself and become a publicly traded company, at mimimum strumming up enough cash and willing to take on debt so that nothing like this would happen.
      They may then buy Metro for 8 to 12 billion and eat up all of that LTE deployment they’ve put in pace. that would put them on the tails of sprint and tump those guys completely over… At least this is what I would do to keep myself solvent for 10 years….

  • Bach from Kansas

    Im going back to Verizon, I left ATT because of they lousy service I even return the iphone, now I have to go to Verizon since att buy Tmobile, I don’t like att