Great news bad news for customers as AT&T bids to purchase T-mobile

In a deal valued at $39 billion, AT&T has made a bid to buy T-mobile. This deal must be authorized by the Department of Justice and Federal Communication Commission, which may prove to be a challenge. The merger could help consumers in under-served areas. Most customers, however, would end up paying more for the exact same service. Source for this article – Good news bad news for consumers as AT&T bids to buy T-mobile by MoneyBlogNewz.

Merging T-mobile and AT&T

Right now, T-Mobile is pretty popular in the U.S. It is the fourth largest wireless provider. Owned by Deutsche Telekom AG, T-mobile was entertaining offers from both AT&T and Sprint-Nextel. AT&T has offered $39 billion in cash and stock to purchase and merge with T-mobile. Combined, the two cellular phone businesses would have about 130 million customers, more than Verizon Wireless. The merger cannot just happen. First the Federal Communications Commission and Department of Justice has to approve it. It isn't allowed for the business to be a monopoly. That is what the DOJ is for. The FCC must certify the AT&T / T-mobile merger wouldn’t violate communications law. These regulatory approvals could take a year or more.

May be good to have an AT&T merger

Consumers might face lots of good things with the AT&T/T-Mobile merger. Extended service may have to be provided to more areas with the new business. There would be less of a strain. You will find only so many wireless networks to go around. More high speed wireless broadband would be there. It could mean more supply. Expanded service for any wireless customers would be available also.

Not everybody will be better off with the AT&T merger

The short term loan of customers will provide much of the increased income of $3 billion a year, which is the expected increase. About 75 percent of U.S. wireless consumers would be served with this AT&T and Verizon. Wireless services would go up with this duopoly of services. AT&T's idea of limiting wireless data and charging higher costs would most likely take place with the change.

More and more money being put into wireless service

Outside the proposed merger of AT&T and T-mobile, the cost of wireless service is likely to continue increasing. Taxes, just like the federal government taxes, are charged on cell phone services by cities, states and municipalities. The tax on mobile phone service is about where the cigarette and alcohol tax is for most. On average, a 16 percent tax is how it works in the nation. It’s a regressive tax. That means the very same service costs a higher percentage of income for the poor than the rich. A three to five percent tax is on landline telephone service.

Citations

Bloomberg

bloomberg.com/news/2011-03-20/at-t-agrees-to-buy-deutsche-telekom-s-t-mobile-usa-unit-for-39-billion.html

KSE Focus

ksefocus.com/wordpress-content/uploads/2011/02/2010-Tax-Study-Final-Tax-Notes-PDF.pdf