Recently, representatives from AT&T have annouced that the company will aquire T-Mobile for 39 billion dollars. Just 30 years after the company had been broken up by the government because of their monopoly, AT&T is at it again, slowly taking over the cell phone market once again. Suspected to go through sometime next year, the purchasing of T-Mobile will give AT&T much more power economically. It can be expected that AT&T will infact charge lower monthly rates and offer more affordable plans due to the enormous quantity of servives combined with their large customer platform. Also, one of the main reasons behind this transaction, is that AT&T wants to come off as the larger, more powerfull, and more affortable phone service provider; demonstrating that this buy wasn't just for the money, it was for the reputation. In result, this transaction should make other service providers such as Spring and Verizon lower their rates for serives in response. In conclusion, these are merely predictions based on economic principles. In the end, the only way to find out what the future of phone prices will be is to just wait and see what happens.
-Cameron Casey, Andrew Velvin, Will Noble
If anything, AT&T will charge more since they believe that people will actually pay since they're going to achieve more towers concluding in more coverage. AT&T's reputation will be boosted in this situation since they're gaining so many more customers. With more towers and a larger 4G network, AT&T should remain in the top spot for quite some time. Sprint and Verizon will lower their prices, but only to keep their customers staying with them.
ReplyDeleteI have to disagree with your stating that this buy was for reputation. AT&T was looking to make more money by purchasing this carrier because they in turn will be taking on the customers that T-Mobile once had.The buy was not for reputation, AT&T already has the reputation because of their sell of the iPhone there's no power struggle going on with this move. It's simply for economical gain. This will simply drive prices up for the monthly plans instead of lowering them because customers dont really have a choice as to which wireless carrier they will be with. This gives the big three in AT&T Verizon and Sprint, freedom to charge whatever they wish to charge for their monthly plans.
ReplyDeleteDo you think it's possible that AT&T could take this opportunity to actually raise their prices? T-mobile currently has the lowest prices of the four major carriers; if you take them out, the price margin between the remaining three will be very slim and AT&T will take advantage of the virtual monopoly.
ReplyDeleteDo you think that the government will step in and not allow the two companies to merge? Allowing the two to merge would make at&t the strongest wireless carrier enabling them to raise and drop there prices as they please. Verizon would be the second biggest company and taking Sprint out of the picture because of them only having 49.9 million people compared to Verizon who has 102 million and At&t who will have around 130 million if the two merge.
ReplyDeleteOkay, one of the common statements in each of your comments was that AT&T will indeed raise prices instead of lowering them. I do believe that this could happen, however, if AT&T raised their prices too high, customers would be more likely to switch to another network.
ReplyDeleteAlyssa, of course AT&T did not announce they would buy T-Mobile solely because they want a reputation gain. However, my group and I concur that reputation definately played some role in this. Customers do want a larger, more reliable network, and that is the message that AT&T is conveying when they will purchase T-Mobile.
Dan, I believe AT&T could take this opportunity to raise prices, but I do not think they will, simply because this would cause customers to be more tentative and less loyal to their network.
Tyler, the government will probasbly not intervene with this purchase. AT&T and T-Mobile are not merging, rather AT&T is taking full control of T-Mobile through the transaction of 39 billion dollars. The government could intervene if they wanted to. This purchase does make AT&T the strongest carrier, but they do not have a complete monopoly. Thus, I doubt the government will break them up again. Thank you for all your comments!
I agree that the purchase of T-mobile will increase AT&T's reputation and make it a bigger company. AT&t will be able to have their customers, along with T-mobile's customers. This gives AT&T more power against all other phone companies. However, instead of AT&T lowering their prices and plans, they should be able to increase their prices because most people depend on AT&T with the addition of T-mobile's customers. They should not raise them too high because this will most likely cause customers to switch to a phone company that isn't as much. It was a good choice made by AT&T that is not only helping them with money but also making them more known and more popular. They do already have a big reputation due to them carrying the iPhone, but other phone companies have phones that AT&T does not. So allowing T-mobile to merge with them is making AT&T more reliable and trusted by many customers. With AT&T becoming more big and popular, I agree that it will make other networks lower their prices so they can get more business by attracting customers with decreasing prices and better, less expensive plans. The merge of the T-mobile and AT&T is not only a good addition to these two networks but it could also make other networks less expensive.
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