What happens now that the AT&T-T-Mobile deal is dead?
The death of the deal between AT&T and T-Mobile leaves the latter, smaller company in a precarious situation. Here, Randall Stephenson, chief executive officer and president of AT&T, exits the news conference where the deal was originally announced on March 21, 2011.
The news of the death of the proposed wireless mega-deal should not have surprised anyone. After all, AT&T needed the approval of both the Department of Justice and the Federal Communications Commission for this takeover to happen and both of those bodies were going to great lengths to make sure the deal never happened. In recent weeks, there had been some talk of AT&T trying to sell off some assets in order to sell the idea that it wouldn't hurt competition in the wireless marketplace but yesterday the company just threw up its hands and decided to walk away.
AT&T will have to write a $4 billion check to T-Mobile, a lot less than the $39 billion the deal was expected to net T-Mobile USA and its parent company Deutsche Telekom. And now T-Mobile is in a bit of a pickle. Deutsche Telekom has already stated that it wouldn't be able to hold on to the company in the long term. It hoped to be bought out by AT&T but regardless, T-Mobile would be cut loose because it just wasn't bringing in the money.
So now what? "Without the AT&T merger, it's not clear that T-Mobile is going to make it," says Susan Crawford of Cardozo Law School. "They may become a company that focuses on prepaid wireless services, goes sort of downmarket to get access to cheaper customers and sell them data in local markets. They might also find a way to try to merge with Sprint, although that seems risky given all concern the Department of Justice had about the AT&T deal. Or they might just spin it off and let cable run T-Mobile."
As for the average T-Mobile customer, it means that the product is depreciating. "Well, the T-Mobile asset is deteriorating," says Crawford, "and it's a terrible market for them. AT&T and Verizon Wireless are growing from strength to strength, gaining customers, and T-Mobile isn't able to do new things. I think T-Mobile will do its best to give customers good service, that's always been their comparative advantage, but I think that it's unlikely you'll be seeing most exciting handsets coming from T-Mobile or the best network coverage."
So T-Mobile's future looks bleak and that means fewer choices for you next time you shop for a cell phone plan. "In a sense, this deal falling apart just sheds light on the fact that we had a pretty concentrated market for wireless access already," Crawford says. "These two giants, AT&T and Verizon were essentially your only choice for the best nationwide coverage, and their plans are pretty much in lock step. They're really not competing with each other; they've divided up markets, so it doesn't look good for consumers in the United States. "
Also in this program, if you want to write a hit song, you'd be well advised to seek assistance from nerds. A team of British researchers have developed an algorithm for determining which songs are likely to be chart-toppers. If you don't know who Nicki Minaj is, math says you will soon.
Here's the Minaj song that it says will be huge. Look out, there are swears.