gdgt

1. It makes sense for T-Mobile. Deutsche Telekom has been trying to unload T-Mobile USA for a while now, and it was probably just a matter of time until they found a buyer. I don't think they're interested in being the the fourth biggest player in any market. Despite rebadging HSPA+ as 4G and calling itself "America's Largest 4G Network", T-Mobile doesn't actually have any plans to deploy LTE -- they simply don't own the spectrum for it -- and so was going to hit a wall sooner or later. With subscriber growth
down and average revenue per user way below that of AT&T and Verizon, DT had to decide whether it wanted to cut its losses or find billions and billions of dollars to invest in building a true 4G network to stay competitive. Seems like an easy call, all things considered.

2. It makes sense for AT&T, too. Once again AT&T gets to call itself the largest carrier in America, and presumably they'll try and leverage that combined customer base to get better deals (i.e. lower prices and more exclusives) out of handset makers. Plus, even though AT&T and T-Mobile's HSPA networks operate on different bands, it'll still be easier to combine the two networks than it would have been to pair up Sprint's CDMA/WiMAX network with T-Mobile (though Sprint has made it clear that it could transition to LTE if need be), and AT&T will be able to combine T-Mobile's spectrum with its own as it builds outs its LTE network. In the meantime, AT&T gets an immediate boost where they need it most right now -- coverage -- and adding all of T-Mobile's towers lets them expand their network much more quickly than they would have been able to otherwise.

3. It won't be good for consumers, at least for the most part. I've been a T-Mobile subscriber for a few years now, and have generally liked both the pricing (which is just about the best of the Big Four, I pay about $63 per month for voice + text + unlimited data), the coverage (which is good where I live), and how it easy it was to get a service plan without a contract (I haven't been under contract with anyone for almost eight years now). Once this deal closes I don't expect to continue to pay as little as I have been, or to keep my unlimited data plan, and I suspect AT&T (and Verizon!) will be happy to see a low-priced competitor out of the market and will find it easier to raise or maintain prices.

4. The merger will also result in fewer handsets hitting the US market. Since almost all phones in the US are sold subsidized through a carrier that effectively means less consumer choice in terms of phones (though of course if people were willing to suck it up and buy unsubsidized that wouldn't be the case). The carriers like exclusives, so for the most part they've done a good job of getting handset makers to do phones just for them, and that's meant that each carrier has a nearly-exclusive line-up of phones. It's possible that the combined company will offer a wider selection, at least initially, but I'd guess that they'll end up offering just about the same number of handsets as AT&T does now.

5. The one bright side is that after the merger AT&T and T-Mobile subscribers should see improved service. Combining T-Mobile's network with AT&T's network will enhance coverage and reliability, and presumably we'll see fewer dropped calls.

6. Most handset makers won't like this. Remember that in the US the handset makers' real customers are the carriers, not us, and seeing the market go from four big players to three won't help them. As I mentioned above, a combined AT&T/T-Mobile will have be able to command a huge amount of purchasing power, and I have no doubt that they'll wield that power to extract the absolute best deals from the likes of HTC, Samsung, Motorola, LG, HP, etc. The one manufacturer that might actually gain is Apple, which gets to sell the iPhone to 33 million or so T-Mobile subscribers without having to negotiate with another carrier or risk alienating one of its existing carrier partners.

6. This is definitely not good for Sprint. After a few rough years it looks like things have stabilized and Sprint has finally stemmed the bleeding, but they didn't have the scale of Verizon or AT&T before this deal and facing a combined AT&T and T-Mobile won't make things any easier. Getting exclusives on hot phones will be harder, since most handset makers can get larger volume guarantees from Verizon and AT&T, and devices are what tend to drive new sign-ups. On the other hand, having T-Mobile out of the picture would make it easier to for Sprint to position itself as a low-cost alternative to the big guys. My bet is that Sprint gets bought soon, probably by Comcast, though Time Warner is another possibility.

7. Nothing is going to change for awhile. The deal is expected to take about a year to close, and is subject to regulatory approval, so we'll be well into 2012 before we see any material developments, good or bad. Getting regulatory approval is not a slam-dunk, but my guess is that the FCC and FTC will sign off, though they might extract some concessions first.

8. T-Mobile will have to kill all those ads attacking AT&T's service.