With the blessing of the U.S. Justice Department and the Federal Communications Commission, Cingular today completed its acquisition of AT&T Wireless, creating the nation's largest cellular telephone company.
An immediate advertising blitz is expected as Cingular seeks to bond with AT&T Wireless customers who are being frantically courted by rivals.
In approving the $41 billion deal, the Justice Department said that Cingular and AT&T; Wireless must sell airwave licenses, customer contracts and other assets in 11 states to ensure that rivals can provide competing service.
"Without these divestitures, wireless customers in these markets would have had fewer choices for their wireless telephone service and faced the risk of higher prices, lower-quality service, and fewer choices for the newest high-speed mobile wireless data services," said Hewitt Pate, assistant attorney general in the department's antitrust division.
The government approval permits Cingular and AT&T; Wireless to begin merging operations, which include about 47 million subscribers and licenses to provide service in the top 100 metropolitan areas.
The combined company will replace Verizon Wireless as the leader in the nation's $95 billion wireless industry.
Absent from the celebrations were Consumers Union, the Consumer Federation of America and other consumer organizations, who said the merger could lead to higher prices in some markets. They contended that Cingular has no incentive to compete with its parents, BellSouth and SBC, and thus would be less likely to offer cheaper calling plans in the South.
Cingular says that's absurd. Competition among wireless carriers is "intense" and will remain that way, the company said in a statement.
AT&T Wireless has been practically giving service away lately, trying to hold onto defecting customers. The company has long had the highest customer defection rate of the major wireless carriers.
A Mixed Dowry
Amidst the popping of champagne corks, much remains to be sorted out. Customers of AT&T Wireless, which has had its rocky moments, should see more reliable service and customers of Cingular may expect improved high-speed wireless Web access. AT&T Wireless customers who switch to Cingular's billing plans could enjoy Cingular's rollover minutes, which moves unused minutes to the next month.
But as in any new union, something has to give. While AT&T Wireless customers can stay on their old plans as long as they like, if they want to move to Cingular's plans they'll have to get -- your guessed it -- a new phone.
Cingular's network is largely GSM -- Global System for Mobile Communications -- while AT&T's is mostly TDMA, Time Division Multiple Access. Phones that work on one system won't work on the other and, because of frequency differences, some AT&T Wireless customers with GSM phones will still have to get new phones.
On the other hand, some AT&T Wireless customers have been on both networks for the past several months -- seeing "AT&T" on their phone screens sometimes, "Cingular" at others. In the short term, this will occur in more cities as Cingular allows "home-on-home" roaming as the two networks are reconfigured.
In California and New York City, Cingular service could deteriorate. GSM customers there will be served by the AT&T Wireless network instead of T-Mobile, which has been providing service under contract to AT&T Wireless.
AT&T Wireless customers in parts of Connecticut, Kentucky, Texas and Oklahoma will be sold down the river. As part of the agreement with the Justice Department, subscribers in those areas will be handed off to other carriers. Customers will get a flier in the mail telling them who their new carrier is.
Advice for Consumers
As the happy couple sped off, consumer advisors had a word of caution for customers: pay close attention to your bill until the rice settles and the honeymoon is over. Telephone company billing systems are astonishingly complex and the rough spots in most mergers occur in the attempt to wed two very different systems.