Good news not so good news for consumers as AT&T bids to purchase T-mobile

In a deal valued at $39 billion, AT&T has made a bid to buy T-mobile. This deal must be approved by the Department of Justice and Federal Communication Commission, which may prove to be a challenge. If authorized, this deal would prove to be both good and bad news for most consumers.

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

Right now, T-Mobile is pretty popular in the U.S. It is the fourth largest wireless provider. Owned by Deutsche Telekom AG, T-mobile was entertaining offers from both AT&T and Sprint-Nextel. In order the buy and merge with T-Mobile, AT&T is willing to put up $39 billion in money and stock. Combined, the two cellular phone companies would have about 130 million consumers, more than Verizon Wireless. The merger cannot just take place. First the Federal Communications Commission and Department of Justice has to approve it. The new business can't be a monopoly, which the DOJ would certify. Communication laws cannot be broken with the AT&T/ T-Mobile merger either, which the FCC would look at. It could take over a year to get the approval needed.

Might be good to have an AT&T merger

If the AT&T / T-mobile merger are eventually authorized, you will find some definite upsides for customers. Regulatory agencies will likely require that the new, merged business provide extended service to underserved areas. The merger may also reduce the strain on the spectrum of accessible wireless networks. High-speed wireless broadband would become more readily available. In short, the new business would be able to provide expanded service to wireless consumers.

How the AT&T merger could hurt your wallet

The short term personal loan of customers will provide the majority of the increased income of $3 billion a year, which is the anticipated increase. Combined, the new AT&T and Verizon would serve 75 percent of wireless consumers in the United States. Wireless services would go up with this duopoly of services. The combined company would likely follow AT&T’s lead in limiting wireless data and charging higher prices for overages.

The cost of wireless service can only go up

Outside the proposed merger of AT&T and T-mobile, the cost of wireless service is likely to continue increasing. Several states, municipalities and cities charge additional mobile phone service taxes. The federal government already does this though. The tax on mobile phone service is about where the cigarette and alcohol tax is for most. In the nation, there is a 16 percent tax. This is the average. This tax is regressive — individuals with lower income end up paying a higher percentage of their income for the same service, at times with no credit check payday loans. Landline telephone service, on the other hand, averages a three to five percent tax.

Information from

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