T-Mobile has always been a comical underdog in the US. Their coverage 5 years ago when I came to the US was laughable at best and their device portfolio was pretty poor in comparison to AT&T and Verizon. T-Mobile has grown considerably to a good 34 million userbase, they were the first to introduce an Android device, taking a gamble that AT&T and Verizon weren't willing to take from their comfortable thrones and were the first to bring 4G stateside. Still, they never really took off.
Now AT&T is buying them off Deutsche Telekom for a cool $39 billion and it may change device manufacturer's ability to produce as wide a spectrum of phones as they have now, not to speak of lowering competition for plan pricing and options. The deal is still pending regulatory approval, as this would give the new AT&T a 43% market share, leaving Verizon with 34% and the rest to Sprint and small local providers. Read past the break for a look at why this decision is important to Android, not only in the US but your respective countries as well.
From what we can gather now, Deutsche Telekom, T-Mobile's parent company, is getting $25 billion in cash and an 8% stake in the new AT&T which should give them some control over the way the integration goes along. There isn't a question about the fact that a good number of the 36,000 employees at T-Mobile might soon be looking for employment somewhere else, but there is a question about whether this will improve the mobile landscape or not.
After T-Mobile released the T1 late 2008, it took Verizon a whole year (almost to the day) to release the Motorola Droid, still the most used Android device to date. AT&T followed suite some 4 months later, in early 2010. This alone proves that the big operators had little interest in joining this game and left T-Mobile to take the dive and test consumer interest in the Android platform. AT&T was the only provider to sell the iPhone in the US, which made them ignore many of the major trends in favor of offering incentives for people to get the iPhone. Today, there is an avid battle between the 4 major networks in the US to bring ever better Android devices to the market, sometimes at the expense of actually completing software testing or with some hardware flaws. If AT&T takes the lead, Verizon may well put up a bid on Sprint, making it a 2-horse race, and eliminating at least half of the product offering and R&D of the major manufacturers. Silly as it is, most hot Android devices launch stateside first, since there's a much bigger market and fewer network providers means lower deployment cost and economies of scale.
In theory, the acquisiton would provide AT&T with added infrastructure that should make it more reliable, but neither them nor T-Mobile have a history of that. In late 2009, about 5% of T-Mobile customers lost calling and data capabilities and for people that had Sidekicks, it also meant losing all the data on their phones. AT&T also has a history of dropping calls (so much so that the Verizon iPhone ad ends with a Verizon rep saying "I can hear you now"). AT&T would have to bind the existing customers into their system while linking the existing infrastructure of T-Mobile to make use of it, and all of this should happen seamlessly, without wiping data off half of their devices.
All in all, the deal is set cause at least some controversy and if it goes through, fewer device models will come out, giving manufacturers less space to test certain features or produce a huge line of devices targeted at various user classes. While carriers abroad will still have the same power to contract manufacturers to produce the devices they want for them, it may lower the number of handsets there too, for the sake of economies of scale and a more unified portfolio. We'll have to see how things go, but it'll be interesting what regulators in the US have to say about the deal and whether Verizon will make a move too.
If you have ideas or opinions about how this may change the Android landscape, don't hesitate to post them in the comments section.