Ask Maggie: Can I cancel T-Mobile post-AT&T merger?

This week Maggie Reardon offers her perspective on whether disgruntled T-Mobile customers will be able cancel their T-Mobile contracts after the AT&T merger is finalized.

The reason some T-Mobile USA customers are with T-Mobile is because they hate AT&T.

But sometime next year, those T-Mobile customers could become AT&T customers. On Sunday, AT&T surprised just about everyone when it announced plans to buy T-Mobile for $39 billion . The merger still has to be approved by regulators, so it's not a done deal. But the announcement has sent many T-Mobile customers into a tailspin, as they try to figure out how to avoid becoming AT&T customers.

In this week's Ask Maggie column, I explain what it would take for AT&T to void existing T-Mobile contracts. I also help another reader decide if he should ditch Sprint's 4G service as Clearwire's future looks fuzzy. And I explain why I don't think that 4G wireless broadband services will ever replace upgraded high-speed broadband.

Ask Maggie is a weekly advice column that answers readers' wireless and broadband questions. If you've got a question, please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header.

Getting out of my T-Mobile contract

Dear Maggie,

The obvious question for those of us with a T-Mobile contract is: What am I committed to if and when the AT&T/T-Mobile merger is approved? I've heard nothing but bad stuff about AT&T customer support , so I would certainly want to look elsewhere for a provider. Will I be able to get out of my contract?

Thanks
Beto

Dear Beto,
This is a great question. At this point it's unclear what AT&T and T-Mobile will do. The merger was announced less than a week ago. Mark Siegel a spokesman for AT&T said that it's "too early comment beyond what we've said. We will be finalizing and sharing these types of details once the transaction is completed."

Luckily for you and every other concerned customer out there, you've got some time. AT&T and T-Mobile have said they don't expect the merger to close for at least a year.

Regulators will be looking at this deal very closely . So it may take more than a year to close the deal, depending on how quickly the Federal Communications Commission and the U.S. Department of Justice are able to get their reviews completed.

If your contract expires before the merger closes, you'll have an opportunity to jump ship before things are signed, sealed, and delivered. But if you just recently started a two-year contract with T-Mobile or your contract will expire more than a year from now, then it's unclear at this point what will happen.

AT&T has the option to do any number of things. The company could decide to allow all T-Mobile customers to cancel their contracts early. But from a legal standpoint, they won't be obligated to do that.

That said, AT&T is legally required to honor any T-Mobile contract that was entered into before the merger. So this means that you will get to keep your T-Mobile plan and your T-Mobile phone until that contract expires.

AT&T is only required to let you out of your contract if there is a "materially adverse" change in your contract. This is the legal requirement that most cell phone companies, including T-Mobile, stipulate in the fine print of your contract. Unfortunately, T-Mobile and AT&T are unlikely to consider the merger as a "materially adverse" change to your contract.

Typically, the only "materially adverse" modification to a cell phone contract is a price increase. So if AT&T decided to raise texting or data rates on T-Mobile customer service plans, then you could get out of your contract.

Once your T-Mobile contract expires, things get a little fuzzy. Again, it's up to AT&T at that point. You may be able to continue using your existing phone and plan if you make no changes to your service or contract. This of course, depends on whether AT&T will allow this. They are not obligated to allow you to keep the plan and/or phone once the contract period is over. And they can increase your service plan at any time.

If you decide to upgrade your service and/or phone after your contract expires with T-Mobile, then it's very likely that AT&T will require you to sign up for an AT&T service plan. I'm not sure if AT&T will continue to sell T-Mobile's line up of devices. But there's a good chance that it won't. In which case, you'd have to choose from one of AT&T's handsets.

I hope this helps.

How much life is left in Sprint's 4G service?

Hi Maggie,
I currently live in the Milwaukee area and own two sprint 4G phones, but we currently don't have access to 4G yet. Sprint continues to tell us that it will be in our area this year, but it seems that the relationship between Sprint and Clearwire is a mess. Will Sprint ever honestly be able to continue to expand or is it time to jump ship to a carrier that is using LTE?

Thanks,
David

Dear David,

I reached out to Sprint to get a handle on their network plans for the Milwaukee area. And here is what a spokeswoman for the company wrote to me:

Sprint hasn't announced when we will roll out 4G in Milwaukee specifically. While we haven't announced our build plans this year, we'll continue to expand the Sprint 4G network. We have a lot of network flexibility and spectrum for doing so. Customers can stay tuned about 4G expansion as well as new devices and services at www.sprint.com/4G. In the meantime, our device portfolio of over a dozen 3G/4G devices and our 3G network allows our customers to have a dependable 3G experience while being future-proofed for 4G.

Rumor and speculation aside, our relationship with Clearwire is the same as it has been: harnessing the power of 4G as the majority shareholder of Clearwire as they build the WiMAX network.

Personally, I have been skeptical of Clearwire's plan to build a 4G WiMax network since Sprint and Clearwire joined forces in 2008 . Building a nationwide network is very capital intensive. And unfortunately for Sprint and Clearwire they bet on a technology that the rest of the major carriers around the world do not plan to use.

Late last year Clearwire said it needed more funding to complete its network. The natural candidate for more funding is Sprint, which owns 54 percent of the company and is Clearwire's largest customer.

But as you noted in your question, there has been some tension between Sprint and Clearwire recently as the two companies disagree over wholesale pricing. Sprint has said that a resolution could be worked out in a matter weeks. But the dispute does call into question Clearwire's ability to raise more cash to pay for its network.

John Stanton, chairman of the board and acting CEO at Clearwire, told The Wall Street Journal on Thursday that "Any conversation on our balance sheet begins with them (Sprint). We have to look at them first, but they've got a lot of priorities as well."

Clearwire has made cuts in its business, and it's considering selling off some used spectrum to fund its network expansion. But Stanton also told the Journal that he hasn't ruled out bankruptcy.

None of this sounds promising for Clearwire. Add in the fact that another company called LightSquared is about to enter the wholesale 4G service market using LTE, and things start to look even more bleak for Clearwire. LightSquared just received a waiver from the FCC to build its new nationwide network using satellite spectrum. The new network will use LTE technology instead of WiMax, the technology Clearwire is using.

LightSquared plans to sell its service to other wireless operators, retailers, and anyone else who wants to offer 4G wireless service. It's already announced that retailer Best Buy and Leap Wireless plan to be among its first customers. And on Thursday, Bloomberg reported that Time Warner Cable, which is a Clearwire partner, is also considering becoming a LightSquared customer. So far neither company is commenting.

Of course, LightSquared will have many of the same challenges as Clearwire. Building a nationwide wireless network is not cheap. But the advantage LightSquared has is that it plans to use LTE. And that is the next-generation technology that every other wireless operator in the U.S. plans to use. This means that the carrier could benefit from a much larger LTE supply chain and ecosystem.

So my advice to you is this: The Sprint 4G phones are great devices anyway. They are the superphones of Sprint's handset portfolio regardless of whether you're using 3G or 4G service. So if you're happy with those phones and the service, then I wouldn't worry about it.

But if 4G speeds are really important to you, I'd seriously consider ditching Sprint. Verizon Wireless just released its first 4G handset, the HTC Thunderbolt. And early reviews suggest the network speeds are terrific.

Good luck!

4G wireless broadband vs. traditional broadband

Dear Maggie,
I like your column and have read a few of your articles, but I have a question that I haven't seen you answer yet: As wireless broadband services surpass speeds of some wired broadband services, will these wireless broadband services replace regular broadband?

Is the day coming soon when we will be getting our Internet from AT&T, Verizon, T-Mobile, or Sprint via wireless instead of the likes of Comcast, Time Warner, and Cablevision?

Thanks,
Timothy

Dear Timothy,
I'm glad you enjoy my column. The answer to your question is yes and no. For customers in rural areas, where broadband speeds tend to be much slower or broadband doesn't exist at all, wireless broadband services can definitely be an alternative to regular broadband.

Verizon Wireless' LTE service delivers average download speeds between 6Mbps and 12Mbps. And many customers on the network say that the speeds are typically higher, up to as much as 20Mbps or 30Mbps downloads. Meanwhile, some customers may only get 1.5 Mbps to 3Mbps downloads on DSL connections.

So for these customers, 4G wireless services are better.

But for people who live in an area where they have access to high-speed broadband it doesn't make as much sense. While Verizon's LTE service is fast, Verizon's Fios service is still much faster. Customers may be able to get 20Mbps to 50Mbps service for the same price that it would cost them to subscribe to a 4G LTE service.

Also most of these 4G wireless services have monthly caps associated with the service. So if you are a heavy data user, it wouldn't make sense to get the wireless broadband offering if there is a faster and comparably priced traditional broadband service. Most wireline broadband services allow unlimited usage. (AT&T just announced it would put a cap in place, but the cap is much higher than a cap for wireless service.)

Verizon Communications CTO Tony Melone said during a panel at CTIA this week, that there is tremendous opportunity for wireless broadband, whether it's LTE or WiMax to serve rural customers.

"But when you talk about replacing coaxial cable and fiber in suburban areas, that is a huge stretch," he said. "We just don't have the spectrum or associated cost structure to make that a viable option."

Related links
• AT&T and T-Mobile: Wireless megamerger
• What does AT&T's T-Mobile merger mean to you? (FAQ)
• LightSquared scores 4G deal with Best Buy
• CTIA day 1: Where's T-Mobile; talk of spectrum crunch

 

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