Consolidation in the Cellular World
On Sunday AT&T announced that it had reached an
agreement to buy T-Mobile USA from Deutsche Telekom for $39 billion. If the deal goes through, then only three
major players would remain in the U.S. cellular industry: AT&T, Verizon and Sprint Nextel. Critics have attacked the proposed deal,
saying that it will lead to higher prices.
Their reasoning is that even if AT&T honors existing T-Mobile
contracts, those T-Mobile customers may have to pay increased rates when their
contracts expire. However, a recent
report created by the federal Government Accountability Office cited a 50
percent reduction in cellular subscription costs from 1999 to 2009, a time
period during which the industry was consolidated. The major loser in this game of corporate
monopoly is probably going to be Sprint Nextel,. Verizon and the potentially new AT&T have
230.3 million customers in the U.S.,
while Sprint has just under 50 million.