AT&T To Buy T-Mobile

The New York Times reports:

AT&T announced on Sunday that it had agreed to buy T-Mobile USA from Deutsche Telekom for $39 billion, in a deal that would create the largest carrier in the nation and promised to reshape the industry.

The transaction — one of the largest since the onset of the financial crisis — is expected to start a fierce battle in Washington as regulators scrutinize the impact of the deal on competition and consumers. The deal would leave just three major cellular companies in the country: AT&T, Verizon and the much smaller Sprint Nextel.

Some critics denounced the merger within hours of its announcement, saying it would most likely lead to higher prices. T-Mobile had offered some of the lowest rates in the country, keeping pressure on competitors. While AT&T is expected to honor current contracts, T-Mobile customers may have to pay higher rates once those contracts expire.

Still, AT&T pointed on Sunday to a recent report from the federal Government Accountability Office that said cellular subscription costs fell 50 percent from 1999 and 2009, a period in which the industry has consolidated.

“Consumers have borne the brunt of the increasingly concentrated market for mobile phone service,” Senator Herb Kohl, the Wisconsin Democrat who heads the subcommittee on antitrust, competition policy and consumers rights, said in a statement. “The explosion of cellphone usage — especially smartphones — makes competition in this market more important than ever as a check on prices, consumer choice and service.”

AT&T customers, though, could benefit in one notable area: service. Both AT&T and T-Mobile operate on the same technology, known as GSM, so the combination should provide better coverage. That has been a sore point for AT&T, which has been ridiculed over dropped calls and slow data services, especially on Apple’s iPhone.

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