AT&T, T-Mobile Deal: What Could It Mean for Consumers?

March 21, 2011— -- The mega merger between telecom giant AT&T and its smaller rival T-Mobile may mean big bucks for corporate America, but what about cell-phone-carrying Americans -- and, more importantly, their wallets?

AT&T announced Sunday that it would buy T-Mobile USA from Deutsche Telekom AG in $39 billion deal that would make it the biggest cellphone company in the country. The news appeared to satisfy Wall Street, which saw stocks rally Monday morning.

Assuming the deal receives regulatory approval (which is not necessarily a foregone conclusion), AT&T said it would be able to bring a high-speed 4G connection to 95 percent of the U.S. population.

But analysts say that though the merger would expand nationwide 3G and 4G network coverage for cellphone users in the U.S., the reduced competition would mean fewer phone options and pricing plans over all.

While the two companies will have to work out some technical differences in their telecom marriage, analysts said that the combination of the two networks would likely provide a strong nationwide network.

"Merging the two networks means that you're going to have a nationwide 3G and 4G network that's really able to serve almost all Americans," said Sascha Segan, lead analyst for mobile at PCMag.com. Rural T-Mobile residents could benefit from AT&T's network, and city-dwellers (yes, even those with iPhones) could get a boost from T-Mobile, he said.

But in a blog post written today, Consumer Reports' Paul Reynolds said the two carriers' data networks are "literally on different wavelengths, which might pose compatibility problems." The smartphones for the different carriers run on different parts of the wireless spectrum, he pointed out.

An AT&T-T-Mobile deal also likely means the end of T-Mobile's lower prices and friendly service, analysts said.

In an ideal world, a merger combines the best of both companies, but Segan said, "Usually what happens is the larger carrier eats the smaller carrier."