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Rethink Possible: AT&T Acquisition of T-Mobile

http://www.informationweek.com/news/mobility/business/231400260

Whether you’re into business or technology, you’ve probably heard that the telecommunications mega-conglomerate AT&T will acquire the wireless service provider T-Mobile for a whopping $39 billion. Even though the merger is still under scrutiny by the FCC, if the acquisition were to be successful, a major player would vanish from the wireless service industry decreasing the number of service providers from four to three. This is a game changing move by AT&T that will decrease consumer freedom and increase the cost of mobile communications.

How does this merger relate to networks? To begin, AT&T and T-Mobile are networking companies that connect people with their mobile communication services. At the structural level, the acquisition can be simply viewed as two separate networks (AT&T and T-Mobile) combining into a larger integrated one. Using Networks terminology, two massive sets of nodes (cell towers and humans) and edges (communications between nodes, i.e. signals to and from cell towers and people) are connected into one gigantic component. On a side note, it is clearly more efficient for researchers to conduct six degrees of separation experiments over one network than two (kidding). However, there is much more going on here and the interactions at the behavioral level must be analyzed. There are two questions to be answered. How does this merger benefit AT&T and how does it affect consumers?

It just so happens that T-Mobile is the most affordable alternative to Verizon, AT&T, and Sprint. With T-Mobile out of the picture, “customers would have fewer options in the marketplace, reducing carriers’ incentive to offer competitive pricing plans.” This would mean that AT&T and Verizon would have a duopoly in the wireless industry and the new ability to create higher pricing standards to increase their profit margins. With the addition of the T-Mobile cell towers, AT&T will finally rival Verizon for the best nationwide service coverage.

While this merger seems to benefit AT&T, I believe consumers will take the hit. Existing T-Mobile customers (including myself) will be required to forfeit their affordable T-Mobile phone plans in return for more expensive plans with similar features. Overall, it is likely that AT&T will increase service prices to offset the $39 billion they dropped on T-Mobile. Even with a price hike they are not likely to lose customers as the only other options (Verizon, Sprint) are likely to be just as expensive. For many people, technology is so integrated into everyday life that not having wireless service is not an option and I highly doubt people would move to Canada just to get cheaper wireless service. When “AT&T and Verizon rule 82% of the U.S. wireless market,” customers will have no other option but to pay an arm and a leg for wireless service. The only foreseeable benefit for consumers is better data coverage resulting from the combination of the AT&T and T-Mobile towers.

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