Less than a year after T-Mobile failed bid to merge with AT&T, the wireless carrier has announced that it’s now trying to combine with MetroPCS. The move is controversial, especially because the wireless market is notoriously uncompetitive — and because Metro PCS has previously charged its users more for its different services, a direct challenge to the FCC’s net neutrality rules.
The move, however, is being explained by the companies as one that will help two “weaker” telecom companies in its competition agains the big boys: AT&T and Verizon.
More from the Los Angeles Times:
Under the terms of the agreement, MetroPCS shareholders will receive $1.5 billion in cash and 26% ownership in the company, which will have the T-Mobile name. Deutsche Telekom AG, the Germany company that owns T-Mobile, will receive a 74% stake.
In a teleconference call with media Wednesday, Rene Obermann, chief executive of Deutsche Telekom, said the merger “means we are here to compete, we are here to unlock value and we are here to win. This deal has the potential to be a game changer.”
Already, the move is drawing criticism from consumer advocates.
“Wireless consumers have long suffered in an uncompetitive market,” said Matt Wood, policy director at Free Press. “We need stronger competitors to push back against the AT&T-Verizon juggernaut, ones that will force these carriers to compete on price and service quality. But consolidation at the bottom between a regional prepaid carrier and the last-place national carrier is not going to fix all of the problems in our wireless market. The FCC is going to have to formulate bold public policies to bring consumers the relief they need.”
I’ve reported before on why all this maneuvering in the telecom industry matters for consumers of color. First, black and Latino consumers are the fastest adopters of smartphones in the United States, but are often left as prey to the companies whose profits they’re helping to drive.
There are 234 million cell phone subscribers in the United States, 45.5 million of whom own smartphones. By the end of 2011, the consumer electronics industry is expected to bring in more than $190 billion. The industry’s trade group, Consumer Electronics Association, noted in June that smartphone sales are the market’s primary driver. They’re expected to bring in more than $23 billion in industry revenue this year.
A remarkable share of that revenue is coming from people of color, who are adopting smartphones at faster rates than white consumers and are doing far more with them. Research shows people of color are more likely to surf the Internet, send and receive messages, engage social media and produce or publish media on their phones. The reason for that, many say, is simple: It’s the most affordable way to get onto the information superhighway. A couple hundred dollars for an Android and a data plan is much less than $1,000 for a laptop computer and broadband connection.
…mobile wireless is quickly taking shape as a second Internet, one in which people of color and users with little income are entirely dependent upon cell phone companies for access. That Internet is unregulated. Companies are free to do as they please with customers—they can control what users see, do and say online. And as the country grows more dependent on high speed Internet, the handful of companies who own its mobile version are steadily working to consolidate their power. Whether and how policy makers allow that to happen may determine who gets a voice in our 21st century economy, and who’s left as its prey.
Stay tuned for more from Colorlines.com.