Will Consumers Benefit From The AT&T - TMobile Merger?

The number one question that everybody is trying to figure out is what will happen to competition?  This is going to be a massive integration that is going to take at least 12 months, if not more to workout.  That's if the deal gets approved.  Immediately, probably not much will change.  Sooner, rather than later, T-Mobile customers that have been wanting to purchase an iPhone, will have their chance.  This will make some T-Mobile subscribers very happy in the beginning.  As the two companies merge, there will likely be some disappointment when the billing systems are integrated and contract prices start changing.  Some customers will see their monthly bill increase while others will see their bill decrease.

Why would AT&;T want T-Mobile?  This is actually a very smart move.  The cell phone industry is probably the most competitive industry on the planet.  Margins are thinner than an HTC Inspire.  Also, network operators must absorb most of the cost of the cell phone.  The real price of a smart phone averages around $499.00.  Almost nobody pays the retail price because they are getting a discount for signing a 2-year contract.  That difference is absorbed by the network provider and/or the retailer.  That's why they have a penalty for canceling early.  With no ability to profit from the phones themselves, and razor thin margins on calling plans, the only way to make money is on growing revenue from services.  In order to do that you need to grow your subscriber base.  Most of the giants are already saturated which means the fastest way to add millions of subscribers to your network is to acquire a network with a large subscriber base.  Having come out of one of the worst recessions in a lifetime, AT&T was able to pick up a company like T-Mobile at a good price. 

Will this stifle competition?  Probably not.  Most major markets will still have at least five competitors:  AT&T, Verizon, Sprint, MetroPCS and StraightTalk. As long as their are choices, competition will keep prices in check. Ultimately, the consumer will determine the future of the industry.  You can be sure that cell phone providers will be working very hard to not only win your business, but to keep your business.