AT&T's Plan To Buy T-Mobile, Hints Of Ma Bell?

Originally published on March 25, 2011 8:34 am
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LINDA WERTHEIMER, host:

One of the biggest mobile phones companies in the country, AT&T, announced plans this week to buy a major rival: T-Mobile. If the deal goes through, AT&T would dominate telecommunications in the U.S. It looks like we're headed back to the future, or towards the past, to the days when Ma Bell had a monopoly over telecommunications.

To talk more about this, we called Rich Jaroslovsky. He's the technology columnist for Bloomberg News.

Thank you for joining us. Good morning.

Mr. RICH JAROSLOVSKY (Technology columnist, Bloomberg News): Thank you.

WERTHEIMER: A lot has changed since the days of Ma Bell - obviously, the Internet. But are we headed towards a similar sort of monopoly, or maybe a duopoly, if AT&T and Verizon are the only big players left in this industry?

Mr. JAROSLOVSKY: Well, that certainly is the concern. The two of them together, if the T-Mobile deal goes through, will have a huge percentage of wireless traffic in the United States. And, of course, wireless is where all the growth is coming from. So it'll only become more pronounced over time.

WERTHEIMER: Well, now, obviously, AT&T must love the idea of bigness. But there's also been a lot of talk about spectrum, or lack of spectrum, as being a main motivation for AT&T wanting T-Mobile.

Mr. JAROSLOVSKY: Well, spectrum bandwidth is a limited commodity, and AT&T -particularly since the launch of the iPhone - has had real problems in keeping up with the demand for its wireless services. By acquiring T-Mobile, they're acquiring T-Mobile's chunk of spectrum, which they can use not only to serve existing T-Mobile customers, but also to hopefully serve better the AT&T customers, who - many of whom complained about service.

WERTHEIMER: Do you think this merger can be sold politically? Will regulators buy into it?

Mr. JAROSLOVSKY: Well, that's the big question. The government could choose to challenge the merger, try and block it altogether. Or they could seek to impose conditions on the merger that might require the merged AT&T-T-Mobile combination to offload some resources, some subscribers, some bandwidth to competitors.

WERTHEIMER: Do you think that it is going to be possible - if this goes through - in that kind of environment, to see a way that little guys like Boost or Metro Cricket, Virgin Mobile can become viable competitors, maybe even grow into big guys?

Mr. JAROSLOVSKY: Well, for a lot of those little companies, the question is whether they really want to. They have made businesses - in some cases, quite nice businesses by going after the customers who pay in cash, maybe don't have a checking account or a credit card. And so the real question right now, I think, is: What happens to Sprint?

WERTHEIMER: The sort of almost-big-enough-but-not-quite.

Mr. JAROSLOVSKY: Yeah. They are - that's exactly the situation Sprint finds itself in.

WERTHEIMER: Well, let's make this a little more personal. What do you think is going to happen to monthly phone and Internet bills?

Mr. JAROSLOVSKY: Well, by taking out T-Mobile, you're taking out the major carrier that tends to have the lowest prices, the plans that appeal to maybe younger people or people who can't afford a multi-hundred-dollar wireless bill. You know, it's possible that one condition of the merger may be that AT&T commits to continue to serve those people. But you've got major capital investments and new networks coming, and the wireless carriers are all going to want to monetize those investments. And so I would say that if this deal goes through, the likeliest scenario is that one way or the other, we'll be paying more for our wireless service.

WERTHEIMER: Rich Jaroslovsky is the technology columnist for Bloomberg News.

Thank you very much.

Mr. JAROSLOVSKY: Thank you. Transcript provided by NPR, Copyright NPR.