AT&T Files for T-Mobile Merger

Posted by Sam Churchill on

AT&T officially filed to buy the fourth-place wireless carrier T-Mobile for $39 billion, with federal regulators Thursday (pdf).

AT&T says the merger fits in with the FCC’s national broadband plan, will create new jobs and benefit citizens with better mobile coverage. According to the filing, these benefits include:

  • Repurposing of Redundant Control Channels. The transaction will enable the combined company to eliminate redundant control channels and promptly free up 4.8 to 10 MHz of extra spectrum, depending on the market.
  • Channel Pooling. This transaction will enable the two networks to group their respective GSM spectrum channels into larger pools. This efficiency alone is expected to increase GSM capacity by as much as 15 percent in some areas.
  • Utilization Efficiencies. For example, if AT&T’s GSM network is congested in a market, while T-Mobile USA’s is underutilized, the combined company could use spectrum in the underutilized network to relieve that congestion.
  • Broader deployment of LTE. Over time, the transaction will enable the combined company to transition T-Mobile USA’s HSPA services off of its AWS spectrum in many markets and devote that spectrum to the deployment of LTE services that are 30 to 40 percent more spectrally efficient. T-Mobile USA’s AWS spectrum covers additional people in areas where AT&T lacks sufficient 700 MHz or AWS spectrum.

AT&T concludes:

In short, this transaction is the most pro-consumer solution to the critical capacity challenges facing these two companies. It is also the most pro-innovation and pro-investment solution for America.

But critics doubt the AT&T/T-Mobile merge would do little else than eliminate a competitor.

Bottom line: AT&T has been sitting on more than $12 Billion in spectrum for years. T-Mobile is using almost all of theirs. LTE on AWS (at 1.7/2.1GHz) also has about one third the range as LTE on 700 Mhz.

The spectrum advantage seems marginal.

If AT&T truly wanted to improve service, all they have to do is utilize their unused 700MHz and AWS spectrum. That’s over 32Mhz – a 50% improvement over their current 59MHz utilization. It wouldn’t cost them a dime.

Bottom line: For less than $4 billion, AT&T could go from 59MHz of utilized spectrum to over 150 MHz (91 MHz + 40Mhz at 2.6Ghz + 20 Mhz at 1.6GHz). That’s greenfield spectrum for LTE.

AT&T’s shareholders are spending $39 billion of their own money simply to eliminate a competitor. Since demand for spectrum is growing, it seems like a dumb idea.

Related stories on DailyWireless include; Combining AWS and 700 MHz: Why?, AT&T Gets Heat on MediaFLO Spectrum, U.S. Wireless Growth, T-Mobile’s Secret Sauce: 2x10MHz, T-Mobile’s Secret Sauce: 2x10MHz, FCC Finalizes Rules on 700MHz: Limited Open Access, No Wholesale Requirement, Qualcomm Buys Flarion, Joint Commecial/Muni Proposed for 700Mhz, AT&T’s WiFi TV, Hiwire Moves on Mobile TV, Mobile TV War at NAB, Small Ops Squeezed Out of 700MHz?, HiWire: 24 Mobile TV Channels, Rural Broadband Gets A Plan, Verizon Makes its Move for Universal Service Fund, The Smartest Guy in the Room, 700 MHz On The Line?, 700 Mhz Worth $28B, 4G Auctions, RUS Funding for 700 MHz, The 700 Mhz Club, Channel 54: Where are You?,

Posted by Sam Churchill on Friday, April 22nd, 2011 at 8:47 am .

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