AT&T T-Mobile merger faces few technical hurdles

Jessica Scarpati
01 Apr 2011
No major mobile carrier in the United States has a purebred network. They're all mutts, cross-bred with different cellular technologies, backhaul networks, billing systems and vendor hardware after years of various mergers and acquisitions (M&A).
When wireless carriers merge networks that have little in common -- such as Nextel's iDEN network and Sprint's EV-DO network -- integration can be challenging and drawn out. But the proposed merger between AT&T and T-Mobile USA's wireless networks could be much more painless from a technical perspective -- overcoming the regulatory hurdles will be thornier -- thanks to the common technology heritage between the two carriers. AT&T's wealth of experience with M&As will also come in handy during the network integration process.
"If there's any [service provider] that's an expert at migrating or integrating other [telecom networks] into their existing technologies, it's AT&T," said Bill Rubino, principal analyst of The Connected Analysis Group, an independent wireless research and consultancy firm based in Orlando. "There will be some challenges and things they're going to have to take a look at to make sure whatever differences [in the network] T-Mobile currently has will be common to what AT&T has ... but [AT&T is] really good at doing this."
AT&T announced its intention to buy T-Mobile from Deutsche Telekom for $39 billion on March 20, the eve of the CTIA Wireless trade show in Orlando. The news silenced rumors that Sprint Nextel Corp. would buy T-Mobile, a deal that reportedly fell apart because Sprint lowballed its offer.
Because both AT&T and T-Mobile based their 2G and 3G networks on the same technologies -- Global System for Mobile communication (GSM)and High Speed Packet Access (HSPA), respectively -- network integration should be relatively easy for AT&T. Sprint, on the other hand, has based its 2G and 3G networks on an incompatible technology path: Code-Division Multiple Access (CDMA).
AT&T, which has been dogged for years by complaints about its poor voice and data coverage, sees those compatibilities as an opportunity to quickly and cost-effectively expand its coverage, said John Stankey, president and CEO of AT&T Business Solutions, on a recent conference call with investors.
The merged network will have 20% to 40% more capacity in many densely-populated metro areas, Stankey said. Acquiring that capacity as opposed to building it out would free AT&T from "extended local permitting processes or disruptions from new site construction," he said.


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