Marty
10-26-2004, 11:18 AM
Cellular Merger To Alter Service For Millions
AT&T Wireless-Cingular Deal Gains Key Regulatory Approval; Impact on Coverage, Pricing
By JESSE DRUCKER and ANNE MARIE SQUEO
WALL STREET JOURNAL
October 26, 2004
The largest merger ever in the U.S. wireless industry, the combination of Cingular Wireless Inc. and AT&T Wireless Services Inc., won the first of two key regulatory approvals.
The $41 billion merger was approved by the U.S. Justice Department yesterday. After approval by the Federal Communications Commission, the deal could be closed as soon as today.
The deal will result in the nation's largest cellphone operator with roughly 47 million customers nationwide. Customers of AT&T Wireless, which has been plagued with network problems during the past year, should see an improvement in coverage as a result of the merger. Cingular customers, in turn, could get wireless access to the Web at higher speeds.
But that doesn't mean the deal will immediately benefit customers. Cingular customers in key markets including New York City and California could actually see worse coverage, at least in the short term. Some consumer groups also contend it could mean higher prices in some regions where Cingular's corporate parents, SBC Communications Inc. and BellSouth Corp., dominate local telephone service.
For AT&T Wireless customers, the most immediate question is what happens to their calling plans. Cingular says all existing AT&T Wireless customers will get to keep their current plans for as long as they remain customers. AT&T Wireless customers could soon switch to Cingular's "Rollover" option, which lets callers roll unused minutes over to the next month. (So if you're paying for 600 minutes a month, but you've only used 500 in a given month, that means you'll have 700 the following month.) Cingular will start letting AT&T Wireless customers switch to a Rollover plan after Nov. 15.
But for AT&T Wireless customers, switching plans will involve getting new phones from Cingular that uses their network technology called GSM, or Global System for Mobile Communications. That means callers living in an area relying on AT&T Wireless's older TDMA, or Time Division Multiple Access, network, could have trouble getting a decent signal. That is because most new GSM phones won't work on the older network. (Both carriers currently use a mix of both technologies, but in some parts of the country, the most reliable coverage of the two is still on AT&T Wireless's older network.)
Also, AT&T Wireless customers relying on TDMA service could have trouble replacing their old phones. In its efforts to move as many customers as possible to GSM technology -- 68% of its customers have GSM phones -- Cingular now sells virtually no TDMA phones. So, depending on where you live, you may have to choose between a new phone and decent coverage. Even AT&T Wireless customers with GSM phones will be required to get new phones if they switch to Cingular plans.
Consumer groups say the merger could result in higher prices for subscribers in some markets. According to Consumers Union and the Consumer Federation of America, two advocacy groups, that is because Cingular has no incentive to compete with its two parents, BellSouth and SBC, in dozens of big markets around the country.
A Cingular spokesman says that price competition will remain "intense." Both Cingular and AT&T Wireless have been offering aggressive pricing plans to customers, moves that have been partially responsible for the two carriers' poor financial performances of late. And AT&T Wireless has been slashing prices in a largely unsuccessful effort to cut down on customer defections, which are now the industry's highest.
Consumer advocates caution subscribers to check their bills carefully. The eventual convergence of billing systems could lead to problems. Plus, the eventual likely layoff of thousands of employees at the new company -- although not until next year -- could also mean long customer-service wait times for consumers, says Janee Briesemeister, a senior policy analyst at Consumers Union.
Cingular spokesman Clay Owen said the carrier has hired about 4,000 temporary customer-service representatives to help with an expected rise in calls. He said the carrier is still evaluating its personnel plans. "The math is just not there to say we're going to have massive layoffs in that area," he says.
Service could improve in some ways for Cingular's subscribers. Until recently, neither carrier let its customers roam onto the other's network in several big markets where it already offered coverage. That changed earlier this year, when both carriers allowed so-called home-on-home roaming in several markets, such as Chicago, Boston and Philadelphia. But Cingular will immediately expand that to all markets where the two overlap -- such as Dallas and Atlanta -- so both AT&T Wireless and Cingular customers may not experience as many dead zones due to uneven coverage from one of the carriers in their home markets.
There are some other positives: Cingular customers will be able to take advantage of AT&T Wireless's higher-speed EDGE data network, which offers wireless Internet access at speeds comparable to a fast dial-up connection.
The Justice Department approved Cingular's acquisition of AT&T Wireless with some conditions yesterday, mainly the divestiture of network spectrum or customers in 13 geographic, largely rural markets, including in Connecticut, Kentucky, Oklahoma and Texas. Of the 13 overlapping markets, spectrum divestitures in three markets -- Detroit, Knoxville, Tenn., and Dallas-Fort Worth -- are related to broadband-data services rather than wireless voice.
The FCC, expected to announce its consent decree with Cingular and AT&T Wireless soon, likely will go further than Justice Department antitrust officials, seeking divestitures of operating units in 16 markets, as well as requiring the sale of spectrum in 44 counties across the U.S. and unwinding Cingular's relationship with T-Mobile USA Inc. in California, Nevada and New York City, among other things, according to people familiar with the FCC's review. Though it isn't required by law, federal regulators are likely to require Cingular to notify customers affected by the divestitures by mail of their options.
As part of its deal with the FCC, Cingular has agreed not to bid on spectrum licenses in an upcoming license auction in cities where it already has a lot of spectrum, according to a letter by Cingular submitted to the FCC on Friday.
After the acquisition, Cingular will be operating its own network for the first time in several big markets, including Phoenix, Denver, Minneapolis and Pittsburgh. Cingular customers already receive service in those cities through roaming agreements with AT&T Wireless and T-Mobile USA, a unit of Deutsche Telekom AG, either through a national plan that doesn't have roaming charges, or per-minute fees. Now, Cingular will operate stores for the first time in those cities.
Cingular will also be required by federal antitrust regulators to sell the contracts of several hundred thousand AT&T Wireless customers, in parts of Connecticut, Kentucky, Texas and Oklahoma, to other carriers. If you are one of those subscribers, you will likely get a flier in the mail letting you know that you will soon become a customer of whichever carrier purchases your contract from Cingular, which could mean getting a new phone. (A big advertising blitz is expected to start almost immediately, letting AT&T Wireless customers know they now belong to Cingular.)
Cingular customers in two big markets -- California and New York City -- could also face network problems as a result of the merger. They will start getting their service over AT&T Wireless' GSM network because Cingular is ending arrangements with T-Mobile that provided its customers with service in those places. That could be a potential problem, since AT&T Wireless' newer network has generated heated complaints from customers. Cingular says this won't be an issue because it will still have an arrangement to use T-Mobile's network for up to four years in those locations.
Write to Jesse Drucker at jesse.drucker@wsj.com
URL for this article:
http://online.wsj.com/article/0,,SB1098731...3254889,00.html (http://online.wsj.com/article/0,,SB109873151893254889,00.html)
SERVICE CHANGES
Here's what customers of the merged company can expect:
• Cingular customers could get high-speed Web access.
• AT&T Wireless customers get new Rollover minutes.
• Some Cingular customers could see worse service.
AT&T Wireless-Cingular Deal Gains Key Regulatory Approval; Impact on Coverage, Pricing
By JESSE DRUCKER and ANNE MARIE SQUEO
WALL STREET JOURNAL
October 26, 2004
The largest merger ever in the U.S. wireless industry, the combination of Cingular Wireless Inc. and AT&T Wireless Services Inc., won the first of two key regulatory approvals.
The $41 billion merger was approved by the U.S. Justice Department yesterday. After approval by the Federal Communications Commission, the deal could be closed as soon as today.
The deal will result in the nation's largest cellphone operator with roughly 47 million customers nationwide. Customers of AT&T Wireless, which has been plagued with network problems during the past year, should see an improvement in coverage as a result of the merger. Cingular customers, in turn, could get wireless access to the Web at higher speeds.
But that doesn't mean the deal will immediately benefit customers. Cingular customers in key markets including New York City and California could actually see worse coverage, at least in the short term. Some consumer groups also contend it could mean higher prices in some regions where Cingular's corporate parents, SBC Communications Inc. and BellSouth Corp., dominate local telephone service.
For AT&T Wireless customers, the most immediate question is what happens to their calling plans. Cingular says all existing AT&T Wireless customers will get to keep their current plans for as long as they remain customers. AT&T Wireless customers could soon switch to Cingular's "Rollover" option, which lets callers roll unused minutes over to the next month. (So if you're paying for 600 minutes a month, but you've only used 500 in a given month, that means you'll have 700 the following month.) Cingular will start letting AT&T Wireless customers switch to a Rollover plan after Nov. 15.
But for AT&T Wireless customers, switching plans will involve getting new phones from Cingular that uses their network technology called GSM, or Global System for Mobile Communications. That means callers living in an area relying on AT&T Wireless's older TDMA, or Time Division Multiple Access, network, could have trouble getting a decent signal. That is because most new GSM phones won't work on the older network. (Both carriers currently use a mix of both technologies, but in some parts of the country, the most reliable coverage of the two is still on AT&T Wireless's older network.)
Also, AT&T Wireless customers relying on TDMA service could have trouble replacing their old phones. In its efforts to move as many customers as possible to GSM technology -- 68% of its customers have GSM phones -- Cingular now sells virtually no TDMA phones. So, depending on where you live, you may have to choose between a new phone and decent coverage. Even AT&T Wireless customers with GSM phones will be required to get new phones if they switch to Cingular plans.
Consumer groups say the merger could result in higher prices for subscribers in some markets. According to Consumers Union and the Consumer Federation of America, two advocacy groups, that is because Cingular has no incentive to compete with its two parents, BellSouth and SBC, in dozens of big markets around the country.
A Cingular spokesman says that price competition will remain "intense." Both Cingular and AT&T Wireless have been offering aggressive pricing plans to customers, moves that have been partially responsible for the two carriers' poor financial performances of late. And AT&T Wireless has been slashing prices in a largely unsuccessful effort to cut down on customer defections, which are now the industry's highest.
Consumer advocates caution subscribers to check their bills carefully. The eventual convergence of billing systems could lead to problems. Plus, the eventual likely layoff of thousands of employees at the new company -- although not until next year -- could also mean long customer-service wait times for consumers, says Janee Briesemeister, a senior policy analyst at Consumers Union.
Cingular spokesman Clay Owen said the carrier has hired about 4,000 temporary customer-service representatives to help with an expected rise in calls. He said the carrier is still evaluating its personnel plans. "The math is just not there to say we're going to have massive layoffs in that area," he says.
Service could improve in some ways for Cingular's subscribers. Until recently, neither carrier let its customers roam onto the other's network in several big markets where it already offered coverage. That changed earlier this year, when both carriers allowed so-called home-on-home roaming in several markets, such as Chicago, Boston and Philadelphia. But Cingular will immediately expand that to all markets where the two overlap -- such as Dallas and Atlanta -- so both AT&T Wireless and Cingular customers may not experience as many dead zones due to uneven coverage from one of the carriers in their home markets.
There are some other positives: Cingular customers will be able to take advantage of AT&T Wireless's higher-speed EDGE data network, which offers wireless Internet access at speeds comparable to a fast dial-up connection.
The Justice Department approved Cingular's acquisition of AT&T Wireless with some conditions yesterday, mainly the divestiture of network spectrum or customers in 13 geographic, largely rural markets, including in Connecticut, Kentucky, Oklahoma and Texas. Of the 13 overlapping markets, spectrum divestitures in three markets -- Detroit, Knoxville, Tenn., and Dallas-Fort Worth -- are related to broadband-data services rather than wireless voice.
The FCC, expected to announce its consent decree with Cingular and AT&T Wireless soon, likely will go further than Justice Department antitrust officials, seeking divestitures of operating units in 16 markets, as well as requiring the sale of spectrum in 44 counties across the U.S. and unwinding Cingular's relationship with T-Mobile USA Inc. in California, Nevada and New York City, among other things, according to people familiar with the FCC's review. Though it isn't required by law, federal regulators are likely to require Cingular to notify customers affected by the divestitures by mail of their options.
As part of its deal with the FCC, Cingular has agreed not to bid on spectrum licenses in an upcoming license auction in cities where it already has a lot of spectrum, according to a letter by Cingular submitted to the FCC on Friday.
After the acquisition, Cingular will be operating its own network for the first time in several big markets, including Phoenix, Denver, Minneapolis and Pittsburgh. Cingular customers already receive service in those cities through roaming agreements with AT&T Wireless and T-Mobile USA, a unit of Deutsche Telekom AG, either through a national plan that doesn't have roaming charges, or per-minute fees. Now, Cingular will operate stores for the first time in those cities.
Cingular will also be required by federal antitrust regulators to sell the contracts of several hundred thousand AT&T Wireless customers, in parts of Connecticut, Kentucky, Texas and Oklahoma, to other carriers. If you are one of those subscribers, you will likely get a flier in the mail letting you know that you will soon become a customer of whichever carrier purchases your contract from Cingular, which could mean getting a new phone. (A big advertising blitz is expected to start almost immediately, letting AT&T Wireless customers know they now belong to Cingular.)
Cingular customers in two big markets -- California and New York City -- could also face network problems as a result of the merger. They will start getting their service over AT&T Wireless' GSM network because Cingular is ending arrangements with T-Mobile that provided its customers with service in those places. That could be a potential problem, since AT&T Wireless' newer network has generated heated complaints from customers. Cingular says this won't be an issue because it will still have an arrangement to use T-Mobile's network for up to four years in those locations.
Write to Jesse Drucker at jesse.drucker@wsj.com
URL for this article:
http://online.wsj.com/article/0,,SB1098731...3254889,00.html (http://online.wsj.com/article/0,,SB109873151893254889,00.html)
SERVICE CHANGES
Here's what customers of the merged company can expect:
• Cingular customers could get high-speed Web access.
• AT&T Wireless customers get new Rollover minutes.
• Some Cingular customers could see worse service.