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Greg’s bite: AT&T gobbles up T-Mobile

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By Greg Mills

The only constant in the cell phone market is that amazing changes come quickly. Remember that cute dark headed girl in the red and white striped dress (Carly Foulkes) that lampoons AT&T in T-Mobile commercials? I guess she really got to them, so AT&T spent US$39 billion in cash and AT&T stock to buy out T-Mobile and get her off the air. 

The move makes sense, as T-Mobile and AT&T use the same GSM format and that makes their cell towers and backbone compatible with little effort.

T-Mobile, the fourth in size in the USA if merged into AT&T, makes AT&T larger than Verizon, formerly the largest cell phone company in the US. Sprint remains a distant #3. Soon former T-Mobile customers can buy and use iPhones with their existing T-Mobile accounts. This is assuming AT&T can get the government to allow the merger. Some experts think AT&T may be quite disappointed as network monopoly issues will certainly make merger approval difficult to obtain. 

The move is good if you have been experiencing a lot of dropped calls on AT&T as the additional bandwidth and frequencies owned by T-Mobile will soon support AT&T phones. I never did get paid by the advertising arm of AT&T for my original slogan, “AT&T, no bars in more places.” Now perhaps in outlying areas where AT&T was weak, the additional infrastructure that was T-Mobile will help them serve existing customers with better service and capture a lot of the business T-Mobile had built. One always can hope for fewer dropped calls.  

What is really behind the merger is likely the expensive move to 4G technology that will become the big thing this year and next year. Speed and bandwidth are both the promise and the challenge all the cell companies are facing. The unannounced Apple iPhone 5 will certainly have 4G radios in it.  

T-Mobile was advertising sort of a poor man’s 4G by using 3G technology to ramp up speeds to near 4G standards.  T&T is also working on speeding up both the existing AT&T 3G and newer 4G networks. Improvements to existing infrastructure are cheaper than buying and installing all new towers and transmitters. If you can double the speed of your bandwidth, you can double the traffic you have on your system without adding towers and a lot of new equipment. To some extent, the software speed ramps are maxed out but incremental improvements are still being made in 3G technology. 

The downside, other than putting a very cute young woman out of work, is the reduction in competition. AT&T really needed to get kicked in the shins for slow speeds and poor service.  Reducing the number of players in the cell phone industry to three won’t help keep your cell phone bills down.   

Sprint (one third the size of AT&T) has been working through its nearly bankrupt subsidiary, Clear, to offer 4G technology. I tested a Clear hot spot device and found that the network was very limited and not worth the cost of subscribing as it also required a Sprint account to fill in with 3G when 4G wasn’t available. The cost of building out a new 4G network is very high and that has Clear desperate for capital. You can’t sell a lame 4G network, and you can’t build one without enough customers and the cash flow they bring to the table.

However, as I mentioned in a prior article, the prospect of reselling unused bandwidth of all the carriers by the likes of Apple could allow new players in the cell phone business. New players who have never built the first tower. All the cell phone companies have wasted capacity that they would like to sell.

Perhaps Apple comes along and agrees to buy a considerable amount of excess capacity for a low bulk price and then resells service to the iPhone faithful, at a profit. With universal iPhones that will run on any cell phone system, all this begins to gel technically. Ironically, the prospect of companies like Apple getting into reselling cell service might mitigate regulatory concerns about the AT&T merger with T-Mobile.

On another note, there is an article floating around the net telling people to get a W-iFi only iPad 2 as with tethering with an iPhone you can get GPS mapping. While this is true, tethering costs $20 a month in addition to normal iPhone plans and will likely also cost something for bandwidth down the line.  

The reality is that juggling an iPhone and iPad at the same time to save a few buck at the time you buy iPad makes no sense to me at all.  I would rather pay $30 a month for iPad cell network service and have a stand-alone device. The iPad rocks, so why hobble it with a lame tethering situation for $10 a month?

That’s Greg’s Bite for today.

(Greg Mills is currently a graphic and Faux Wall Artist in Kansas City. Formerly a new product R&D man for the paint sundry market, he holds 11 US patents. Greg is an Extra Class Ham Radio Operator, AB6SF, iOS developer and web site designer. He’s also working on a solar energy startup using a patent pending process for turning waste dual pane glass window units into thermal solar panels used to heat water see: www.CottageIndustySolar.com Married, with one daughter, Greg writes for intellectual property web sites and on Mac/Tech related issues. See Greg’s art web site at http://www.gregmills.info He can be emailed at gregmills@mac.com)

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