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Cingular "Wins" ATT Wireless

And the benefits for consumers are ...

February 18, 2004
Cingular Wireless, a creature of BellSouth and SBC, plopped down $41 billion to win the bidding for for AT&T Wireless. Whether it can win the loyalty of AT&T Wireless' restless customer base is another question.

Cingular/AT&T • Deal Approved • Consumers Will Pay Big, Study Warns • Another AT&T Wireless? • Cingular "Wins" AT&T Wireless • Cingular, AT&T Wireless In Merger Talks

AT&T Wireless has a long history of network problems and has turned in a particularly dismal performance since the advent of number portability, losing more customers to other companies than it signed. On the other hand, Cingular also has a singularly mediocre reputation for customer service.

By dining on AT&T Wireless, Cingular will be reducing consumers' menu selections from six to five while supersizing its own customer base. The addition of AT&T Wireless' 22 million customers to Cingular's 24 million will create the nation's biggest cellular company with 46 million customers, assuming there's no major spillage.

What does this mean for consumers? Opinions vary but most observers speculated that the decrease in major competitors would not spur any immediate price hikes. Some held out hope that service would improve for AT&T Wireless and Cingular customers after the delicate process of combining their networks was completed.

Cell phone rates have been holding steady for the last few years as companies jockeyed fiercely for market share. That's likely to continue, at least for a while. In fact, Verizon, Sprint, T-Mobile and Nextel are likely to step up their competition for AT&T customers over the next several months, possibly offering hard-to-resist come-ons.

Longterm, some consumer advocates say, the picture is not so bright.

For customers in the South and Southwest, where SBC and BellSouth hold sway, it's possible Cingular and its parent companies will take advantage of their increased concentration to coerce customers into consolidating all of their landline and wireless service if they want the best rates.

On the other hand, Internet telephony shows signs of becoming a force in the market, which might make it difficult for any of the incumbent companies to play too fast and loose with customers.

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