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T-Mobile's phones operate on a different frequency than AT&T. I don't see them merging the two networks. Chances are that T-Mobile's network will be put in maintenance mode, with any new customers receiving phones on AT&T's frequencies, until the LTE transition is complete and AT&T can shut down the T-Mobile network. It may be a boon for existing T-Mobile customers, who will presumably be able to use multi-band GSM phones on AT&T without roaming fees.

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Putting AT&T-frequency radios on previously-T-Mobile towers is a relatively low-cost possibility that would help with AT&T reception/bandwidth, although that will probably have to wait at least a year or so until the back-end routing systems are merged.

That's true. I imagine the regulatory hurdles to add radios to existing towers is orders of magnitude lower than building new towers. Might be a win for AT&T in cities where T-Mobile has good coverage.

I was under the impression that GSM phones support multiple frequency bands - why not just adjust the base station configuration so phones can roam between the two networks?

The 3G bands used by T-Mobile and AT&T are different and generally not supported on the same device. For example there was a T-Mobile version of the N1 and an AT&T version of the N1. They both work on the others 2G network, but not on the 3G network.

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