AT&T's T-Mobile acquisition may benefit iPhone users

21.03.2011

While there are plenty of potential benefits to the deal between AT&T and T-Mobile, that doesn't mean it doesn't have its share of drawbacks. Despite the insistence by AT&T and T-Mobile leadership that the acquisition will not harm competition in the wireless carrier market, it does reduce the national field to three major players: AT&T, Verizon, and Sprint.

T-Mobile had long competed with the larger carriers by undercutting them on price and providing features that the others wouldn't offer. NPD's Rubin noted that the carrier was positioned as a "value network" that didn't necessarily appeal to iPhone or gadget enthusiasts. With T-Mobile gone, that role will presumably be filled by smaller carriers and regional operators--though they won't necessarily have the same clout.

Sprint Nextel, which will be the smallest of the major carriers if the deal goes through, may find itself with the short end of the stick, unable to compete with the larger carriers. A  (paid account required) cited concerns that Sprint would quickly find itself unable to compete with the behemoths of Verizon and AT&T. The merger is a particular blow to the country's third-largest network, as  reports that Sprint itself may have been eyeing an acquisition of T-Mobile. Ross Rubin of the NPD Group notes that, post merger, Sprint will also be the only major network not selling the iPhone.

Approval of the deal might also trigger a sort of arms race between Verizon and AT&T. That could make Sprint a tempting target for a Verizon acquisition since, just as AT&T and T-Mobile both have HSPA-based networks, Sprint and Verizon both use the same CDMA wireless technology. Such a move could reduce competition in the wireless carrier market even further.

And if competition in the wireless carrier market dwindles, it's consumers that will find themselves on the losing end of the deal. To date, the battle between Verizon and AT&T for consumers has been fierce. For example, when Verizon announced , it did so ; AT&T, meanwhile, had already discarded its own unlimited offering . Verizon also boasted  for the iPhone that one-upped AT&T's . Undaunted, AT&T retaliated with within weeks.