AT&T and T-Mobile Probably Unimportant

The web is full of discussion of AT&T’s agreed deal to buy T-Mobile: http://blogs.wsj.com/digits/2011/03/21/will-t-mobile-get-the-iphone-and-other-pressing-questions/

The companies are suggesting that combining their networks will ensure better coverage, and that increased scale will enable them to roll-out 4G service more rapidly. Skeptics are more inclined to worry about reduction in consumer choice leading to lowered service quality and higher prices especially in the form of data-metering (pay-by-the-megabyte). Meanwhile, it is unknown if regulators will approve the deal, though AT&T are either confident or doing a good imitation of being confident.

For startups, the main thing to remember about deals between large well-established companies is that they rarely change the landscape enough to make a difference – not when compared with the startup’s ability to drive its own strategy, its own appeal to customers, and the quality of of its own execution.

In this particular case, there may indeed be some marginal increase in AT&T’s pricing power, making metered-data more prevalent. Service providers won’t be able to position 4G as useful without providing significant data allowances, so there is a limit to how aggressive they can end up being with data metering in practice. And Verizon in any case provides the primary competition to AT&T. Nonetheless, startups that are relying on unlimited cellular bandwidth “for free” – perhaps in some form of cellular video service – should beware; but that was already given the case, given the industry interest in metering.

For almost all startups, “Keep Calm and Carry On” is the appropriate response to the AT&T+T-Mobile combination.

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