T-Mobile, MetroPCS unite to battle larger rivals

Associated Press Modified: October 3, 2012 at 9:16 pm •  Published: October 3, 2012

U.S. Rep. Anna G. Eshoo, the ranking Democrat on the House subcommittee on communications and technology, said there's a big need for a "strong national competitor" in the wireless marketplace when two companies — Verizon Wireless and AT&T — dominate the space.

"The proposed merger of T-Mobile and MetroPCS has the right ingredients to provide consumers with a viable alternative for wireless voice and data service," she said. "I hope the FCC and the Department of Justice will conduct a thorough, but swift review of the transaction's merits."

Even if not stalled by regulatory hurdles, a linkup would be nonetheless be complicated by the fact that MetroPCS and T-Mobile use different network technologies. That means MetroPCS phones would not work on T-Mobile USA's network, and vice versa. However, both companies are deploying the same fourth-generation, or 4G, technology, so they're on a path to harmonizing their networks.

Obermann said the new company will have the "resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network."

Neither T-Mobile nor MetroPCS carry Apple Inc.'s iPhone, though it's possible to use an iPhone on T-Mobile's network at slower speeds. It's unclear whether the combined company will. AT&T, Verizon and Sprint all do.

As for cellphone bills? MetroPCS customers, who now get low-cost, contract-free plans, might be pressured to sign up for two-year service agreements, which are more lucrative for cellphone companies. But T-Mobile also offers contract-free plans already, so MetroPCS customers wanting to stick with such plans should have more options, Golvin said.

Bergmayer from Public Knowledge, meanwhile, said the new company "could offer a really compelling product" for low-income people looking for a better value." That said, he's concerned that MetroPCS customers may be forced to buy new phones.

"(And) we don't want to see them forced off their existing price plans. So I really hope that as they move forward on this transaction they find a way to make sure that there's minimal disruption to existing customers," he said.

Germany's stock market was closed Wednesday because of a national holiday. But the prospect of seeing Deutsche Telekom finding a solution for its struggling U.S. business sent the stock higher Tuesday after both companies had confirmed their talks.

Shares of Dallas-based MetroPCS fell $1.33, or 9.8 percent, to close at $12.24 Wednesday. It had shot up 17.8 percent on Tuesday to close at $13.57.

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Baetz reported from Berlin. Ortutay is an AP Technology Writer. AP Television Producer Mathew Friedman in Washington contributed to this story.