AT&T's buyout of T-Mobile: Good or bad for federal IT?

Trade show operators are working hard to create compelling themes (“The Future Is Now!” or “Even Better Than Last Year”) to market their events and create some buzz among attendees.

The Cellular Telecommunications and Internet Association's Wireless 2011 convention held in Florida at the end of last month did as well as can be expected on that front (“Our Mobile Life Is Growing”), but the show hosts hit a mother lode of instant energy and promotional gold when AT&T, the nation’s second largest wireless carrier, announced on the eve of the confab that it would buy T-Mobile USA from Deutsche Telekom for $39 billion.

Despite concerns about decreased competition leading to price gouging, the deal might actually be good news for agency IT departments. The big four cellular carriers now look like they are going to be the big three — and soon maybe even the big two — if many analysts are correct in predicting an acquisition of Sprint, now potentially the distant laggard behind AT&T and Verizon.

Given the approximately 300 million wireless subscriber connections in the United States and the fast-growing economic importance of wireless broadband and mobile data processing, the blockbuster deal has big implications.

Much of the initial reaction has been fear that the consolidation would hurt market competition, stifle innovation and lead to higher prices. The price concern has been expressed by T-Mobile’s budget-minded customers and was cited by Sprint CEO Dan Hesse during a roundtable discussion with the CEOs of Verizon's and AT&T's wireless divisions at the CTIA conference.

Those potential negative effects are likely to be a prominent theme pushed by opponents while the government weighs regulatory approval for the deal in the coming months.

But for government technology managers, the acquisition could have a silver lining. AT&T’s acquisition will be a home run for wireless customers and the growth of the Internet, writes Bret Swanson on the Forbes website.

“The iPhone, iPad and other mobile devices are pushing networks to their limits, and AT&T literally could not build cell sites (and acquire spectrum) fast enough to meet demand for coverage, capacity and quality,” Swanson writes. “Buying rather than building new capacity improves service today (or nearly today) — not years from now.”

Swanson and many other analysts note that the acquisition would give AT&T access to many more cell sites — somewhere between 20 percent and 40 percent more — than they have now, especially in densely populated cities such as New York, San Francisco and Washington, D.C. That would mean fewer dropped calls and faster data speeds for users in those areas, which is good for agency IT shops and others that are developing new wireless data applications that depend on those services.

AT&T CEO Randall Stephenson told USA Today that the company has seen traffic on its wireless broadband network increase 8,000 percent in the past four years, and acquiring the T-Mobile cell sites would achieve a capacity upgrade that would otherwise take AT&T five years or more to accomplish on its own.

For agency CIOs, there is also the issue of abundant choice not always being a good thing. As smart phone and tablet computer use grows with blinding speed at most agencies, IT leaders are grappling with supporting and securing a variety of wireless services, hardware devices and operating systems. Federal CIO Vivek Kundra’s off-the-cuff idea to give federal employees a $2,000 subsidy to buy their own smart phones prompted lots of criticism from IT managers worried about the support nightmares that would result.

A wireless market consolidated in fewer hands could ease application development and support challenges because there would be fewer variables to address, according to several experts who participated in a virtual roundtable conducted by Unified Communications Strategies.

“With just two major carriers, it can make the applications world simpler to deploy,” said Marty Parker at UniComm Consulting.

The acquisition could take as long as 12 months to complete, pending government approval.

About the Author

John Zyskowski is a senior editor of Federal Computer Week. Follow him on Twitter: @ZyskowskiWriter.

The Fed 100

Save the date for 28th annual Federal 100 Awards Gala.


  • computer network

    How Einstein changes the way government does business

    The Department of Commerce is revising its confidentiality agreement for statistical data survey respondents to reflect the fact that the Department of Homeland Security could see some of that data if it is captured by the Einstein system.

  • Defense Secretary Jim Mattis. Army photo by Monica King. Jan. 26, 2017.

    Mattis mulls consolidation in IT, cyber

    In a Feb. 17 memo, Defense Secretary Jim Mattis told senior leadership to establish teams to look for duplication across the armed services in business operations, including in IT and cybersecurity.

  • Image from

    DHS vague on rules for election aid, say states

    State election officials had more questions than answers after a Department of Homeland Security presentation on the designation of election systems as critical U.S. infrastructure.

  • Org Chart Stock Art - Shutterstock

    How the hiring freeze targets millennials

    The government desperately needs younger talent to replace an aging workforce, and experts say that a freeze on hiring doesn't help.

  • Shutterstock image: healthcare digital interface.

    VA moves ahead with homegrown scheduling IT

    The Department of Veterans Affairs will test an internally developed scheduling module at primary care sites nationwide to see if it's ready to service the entire agency.

  • Shutterstock images (honglouwawa & 0beron): Bitcoin image overlay replaced with a dollar sign on a hardware circuit.

    MGT Act poised for a comeback

    After missing in the last Congress, drafters of a bill to encourage cloud adoption are looking for a new plan.

Reader comments

Fri, Apr 8, 2011

Well if a stock analyst & AT&T's CEO say less competition is a good thing for the America how can it possibly not be true . Yeah less is always more huh ? Another plus will be your bosses will have a reason for taking that AT&T lobby money . Just another added benefit at the rest of the countries expense .

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group