Photo by Jack Whitsitt

Well, this seems troubling for anyone with a mobile phone on the AT&T Wireless network. (Myself included.)

With the collapse of AT&T’s bid to buy T-Mobile—a deal that would have created the largest mobile carrier in the country—comes the penalty that Ma Bell must pay T-Mobile’s parent Deutsche Telekom, a stipulation that is being described as a “record high breakup fee”.

Talking Points Memo looked at the fallout from the deal gone sour and the resulting $4 billion penalty AT&T now owes Deutsche Telekom. The $3 billion in cash is one thing. Frankly, I’m not going to get choked up over one giant phone company forking over a silo of cash to another. But it’s the other part of the payoff that should have AT&T customers worrying in Washington, Los Angeles, San Francisco, and nine more of the largest U.S. markets.

Besides the cash, AT&T will have to turn over large chunks of the wireless spectrum it owns to T-Mobile’s network. Good for customers of the last major iPhone-less carriers, who will see their coverage area expand to include 280 million U.S. residents, but not so great for AT&T users. And in the long run, it’s probably the most valuable part of the breakup fee.

From TPM:

The spectrum component of the break-up package, worth $1 billion, might not sound as immediately appealing as the liquid cash that AT&T is handing over to Deutsche Telekom for its troubles, but it is arguably far more valuable in the long term: The whole reason AT&T said it needed to acquire T-Mobile in the first place was to obtain T-Mobile’s spectrum licenses, that is, the permission from the Federal Communications Commission to use certain bands of the radio spectrum from mobile phone communications.

AT&T, T-Mobile, and other giant telecom companies — as well as numerous experts, even FCC Chairman Julian Genachowski — agree that the current way of provisioning spectrum — usually via government auctions of unused or old spectrum ranges — will not be enough to accomodate the growing demand by users for more spectrum to support their increasingly hefty data appetites, namely for streaming video and other rich multimedia.

In a statement announcing the settlement, T-Mobile boasted that its expanded presence on the radio spectrum would “allow the company to improve its footprintsignificantly among the U.S. population and offer its customers better broadband coverage for mobile communications services in the future.”

Sounds like it’ll soon be a smoother experience for T-Mobile’s roughly 33 million customers tweeting and watching streaming videos, to say nothing of texting and calling. Meanwhile, the 100 million or so of us under the thumb of AT&T Mobility could see it become even clunkier in crowded areas, or at least not get any better. How many times have you been at a sporting event, packed music club or even a crowded intersection and not been able to get a signal? When a 5.8 magnitude earthquake startled the East Coast on Aug. 23, it took me a good 45 minutes to make contact with anyone by phone. Our phones could have certainly used more breathing room that day, to say nothing of incidents that knock out landlines like, say, hurricanes and snowstorms.

This is not to say the attempted merger was a good thing. The proposed $39 billion deal would have brought with it the effects of any such consolidation—higher prices, layoffs of redundant employees, slower customer service. And T-Mobile, even with its bigger chunk of spectrum, is still in trouble. It only recently started gaining subscribers again after three consecutive quarters of customer flight. It’s still the smallest of the four biggest mobile phone service providers. And since Sprint added the iPhone in October, T-Mobile is now the last of the big four carriers to not carry Apple’s prized device. It stil might be swallowed up by Sprint or Dish.

The more we rely exclusively on mobile devices for telecommunications, the more of the radio spectrum carriers are going to need. But with the traditional model of distributing spectrum—government auctions—being dissed by both the phone companies and the FCC, it suggests that in the future, spectrum license deals will be conducted more between the carriers themselves. But even if T-Mobile is part of a smaller merger than the scuttled AT&T deal, the prospect of further consolidation isn’t that attractive.

In the mean time, T-Mobile customers in D.C. and elsewhere can enjoy quicker access to cat videos and whatnot. Meanwhile, I think my AT&T-connected iPhone just lost a bar.