AT&T and T-Mobile USA merger widens gulf among carriers

It just got a little roomier at the top. The once neck-and-neck battle for dominance in the wireless market changed drastically Sunday with a deal that would bulk up the largest carrier in the country.

AT&T Inc.‘s announced $39 billion acquisition of T-Mobile USA put the wireless world on notice ahead of Tuesday’s the International CTIA Wireless 2011 conference. If the deal is approved by regulators, the combined company would potentially serve some 130 million wireless customers. AT&T serves 96 million wireless customers and T-Mobile USA has 34 million customers.

The acquisition would give AT&T a huge jump in numbers on its closest rival Verizon Wireless and its 93.2 million customers.

The deal also leaves Sprint Nextel out in the cold after rumors early this month of talks to merge with T-Mobile USA. Sprint Nextel had some 50 million customers at the close of 2010.

Regulators have yet to sink their teeth into the AT&T and T-Mobile USA deal. Consolidation often raises concerns of higher rates and fewer options for consumers. T-Mobile USA had been kicking AT&T in the shins lately with a marketing campaign that derides its network service.

According to AT&T CEO Randall Stephenson, the acquisition will combine comparable technology and help his company better meet the increasing spectrum demands of data hungry public. In a statement regarding the acquisition, AT&T warned of “spectrum exhaust” in key markets as customers gobble up bandwidth with smart phones, tablets and other mobile devices. Rolling up T-Mobile USA will help AT&T meet some spectrum needs, Stephenson said in his statement.

The long term solution to our mobile data addiction will require regulatory input according to AT&T. The company said additional spectrum for mobile broadband must be made available for the entire industry to satisfy rapidly growing demand.

AT&T is positioning itself to be the undisputed largest wireless provider in the country. However the company will have to prove this deal translates into a better customer experience in an increasingly congested wireless network.

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About Joao-Pierre S. Ruth
New York tech correspondent for Xconomy, tech writer for Investor Uprising, and aspiring urban fantasy writer. I also make brownies and crème brulee.

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