Finance

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.  

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