Since 2007 AT&T’s mobile data volumes have increased an astonishing 8000% – more than any other wireless provider. In addition to adding thousands of cell sites, purchasing spectrum in the open market, and a number of other measures, AT&T acquired T-Mobile USA in a heavily debated $39 billion cash and stock deal earlier this year in order to keep up with the astronomical demand on its mobile networks.
The FCC filing that sought permission for AT&T to purchase T-Mobile USA from Deutsche Telekom reported, “The network synergies of this transaction will free up new capacity – the functional equivalent of new spectrum – in the many urban, suburban, and rural wireless markets where escalating broadband usage is fast consuming existing capacity.”
AT&T defended the merger, stating reporting that if the capacity constraints for both AT&T and T-Mobile USA are left “unaddressed, [it] would translate into more dropped and blocked calls, slower speeds, and access to fewer and less advanced applications.” In addition, the acquisition enables AT&T to deploy fourth-generation LTE mobile services to approximately 55 million people – roughly 97% of Americans.
Great news! The multi-billion dollar merger will strengthen AT&T’s position in the small and medium-sized business market. According to AMI-Partners, (which specializes in Internet, IT, telecom, and business services strategy, venture capital and market intelligence) T-Mobile will help AT&T – specifically among businesses in particular vertical industries, such as construction, and companies that employ less than 10 staff members.
Those who opposed the merger believe that it will create a dualopoly in the mobile operators market. According to AMI-Partners, AT&T and Verizon Wireless currently control three out of four customers in the SMB market. Prior to the merger, AT&T had control over 28% of the market, T-Mobile controlled 8%, and Verizon Wireless came in with the largest share at 32%.
AMI-Partner’s manager of SMB Cloud Services, Brian Galgay, says the acquisition “creates differentiated SMB sales for AT&T and has an enormous upside potential… Compared to AT&T or Verizon, these T-Mobile SMB customers reported greater interest in adopting hosted services from a service provider, as well as indicating greater interest in purchasing multiple, adjacent SaaS applications.”
Galgay explained that what initially attracted significant sectors of the SMB market to AT&T were the specialized mobile workers and early adopters of technology that benefited from iPhone technology. Annually, AT&T and Verizon Wireless SMB customers spend around the same amount; however, AT&T SMB customers are said to be more “IT-savvy, focusing more budget on newer technologies beyond smartphones, such as … tablets.”