Regulators considering approval of $39 billion AT&T deal

AT&T has opted to make an offer to purchase T-mobile. The merger would have to go through multiple approvals before starting. The Department of Justice and Federal Communication Commission would both have a say. Most consumers would partially benefit and partially be harmed by this merger. Article resource – Good news bad news for consumers as AT&T bids to buy T-mobile by MoneyBlogNewz.

What to anticipate with an AT&T/ T-Mobile company

Right now, T-Mobile is pretty popular in the United States It’s the fourth largest wireless provider. Deutsche Telekom AG owns T-Mobile. Both AT&T and Sprint-Nextel gave offers to T-Mobile. In order the purchase and merge with T-Mobile, AT&T is willing to put up $39 billion in money and stock. If the merger happened, the businesses would be bigger than Verizon Wireless. They would have over 130 million customers. The merger can't just happen. First the Federal Communications Commission and Department of Justice has to approve it. The DOJ must certify that the new business isn’t a monopoly. The FCC must certify that the AT&T / T-mobile merger wouldn’t violate communications law. These regulatory approvals could take a year or more.

Why the AT&T merger is good for your wallet

The AT&T/T-Mobile merger can be good. Consumers could benefit. Regulatory agencies will likely require the new, merged business provide extended service to underserved areas. There would be less of a strain. There are only so many wireless networks to go around. High-speed wireless broadband would become more readily accessible. Expanded service for any wireless customers would be available also.

Customers that might not benefit from the AT&T merger

The proposed merger is expected to increase income by $3 billion per year, most of which will come from the short term loans of customers. Combined, the new AT&T and Verizon would serve 75 percent of wireless consumers in the United States. The services together would be a duopoly. That would mean wireless service prices would increase. The combined company would likely follow AT&T’s lead in limiting wireless data and charging higher costs for overages.

Wireless service costing more and more

Wireless service costs might only go up from here, without contemplating the AT&T and T-Mobile merger. Taxes, just like the federal government taxes, are charged on cellular phone services by cities, states and municipalities. A lot of people end up paying a tax on mobile phone service that is fairly high. It’s about the same as cigarette and alcohol tax. Nationwide, the average tax is 16 percent. More income is paid, percentage wise, by a lower income individual than others for the very same service as the tax is regressive. 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