Consumer Reports says T-Mobile/MetroPCS deal may offer good news for consumers

T-Mobile's plans to merge with AT&T failed, but ton Wednesday, it announced it's teaming up with a new partner.

It's a newcomer for the Northeast Ohio region, but popular in other cities. The company is called MetroPCS and it offers no contracts and cheap phone plans.

Consumer Reports said this potential merger offers promises and threats for consumers.

Many organizations did not support the failed AT&T merger, and it ultimately fell apart due to opposition from federal regulators. There was concern over a decrease in competition, but Consumer Reports said this deal could increase competition among major carriers.

"It positions T-Mobile as a strong competitor to AT&T, Verizon and Sprint. T-Mobile customers could get better service in cities where MetroPCS is available because both carriers have high speed 4G data networks that are highly compatible. On the downside Metro PCS customers could see their low rates go up," Consumer Reports Electronics Editor Paul Reynolds said.

There might be a strong prepaid option for consumers if the merger works. Also, T-Mobile would inherit a promising and compatible data network. Consumer Reports said MetroPCS built its own 4G network in a dozen or so metropolitan areas where it sells service. No other no-contract carrier has done this.

Consumer Reports said the bad news is that T-Mobile is rated lower than most other cell phone providers for contract service. Also, Metro PCS was among the lower scoring prepaid carriers.

While Metro PCS service is cheap, Consumer Reports predicts T-Mobile's pricing structure would be adopted.

T-Mobile is calling this agreement signed with MetroPCS a push toward offering a value carrier for consumers. The combined company would carry the T-Mobile name.

Both board of directors already approved the deal and a definitive agreement was signed. Analysts say the road toward this merger should be easier.