AT&T is now the country’s second-largest wireless carrier and T-Mobile USA is the fourth largest. The acquisition would give AT&T 129 million subscribers, vaulting it past Verizon Wireless’ 102 million. The combined company would serve about 43 percent of U.S. cellphones.

For T-Mobile USA’s 33.7 million subscribers, the news doesn’t immediately change anything. Because of the long regulatory process, AT&T expects the acquisition to take a year to close. But when and if it closes, T-Mobile USA customers would get access to AT&T’s phone line-up, including the iPhone.

The effect of reduced competition in the cellphone industry is harder to fathom. Public interest group Public Knowledge said that eliminating one of the four national phone carriers would be “unthinkable.”

“We know the results of arrangements like this — higher prices, fewer choices, less innovation,” said Public Knowledge president Gigi Sohn, in a statement.

T-Mobile has relatively cheap service plans compared with AT&T, particularly when comparing the kind that don’t come with a two-year contract. AT&T CEO Randall Stephenson said one of the goals of the acquisition would be to move T-Mobile customers to smart phones, which have higher monthly fees. AT&T “will look hard” at keeping T-Mobile’s no-contract plans, he said.

AT&T’s general counsel, Wayne Watts, said the cellphone business is “an incredibly competitive market,” with five or more carriers in most major cities. He pointed out that prices have declined in the past decade, even as the industry has consolidated. In the most recent mega-deal, Verizon Wireless bought No. 5 carrier Alltel for $5.9 billion in 2009.

Stifel Nicolaus analyst Rebecca Arbogast said the deal will face a tough review by the Federal Communications Commission and the Justice Department. She expects them to look market-by-market at whether the deal will harm competition. Even if regulators approve the acquisition, she added, they are likely to require AT&T to sell off parts of its business or T-Mobile’s business. Verizon had to sell off substantial service areas to get clearance for the Alltel acquisition.

To mollify regulators, AT&T said in a statement Sunday that it would spend an additional $8 billion to expand ultrafast wireless broadband into rural areas. Instead of covering about 80 percent of the U.S. population with its so-called Long Term Evolution, or LTE network, AT&T’s new goal would be 95 percent, it said. That means blanketing an additional area 4.5 times the size of Texas. The network is scheduled to go live in a few areas this summer, but the full build-out will take years.

The offer would help the FCC and the Obama administration meet their stated goals of bringing high-speed Internet access to all Americans. They see wireless networks as critical to meeting that goal — particularly in rural areas where it does not make economic sense to build landline networks.

AT&T said its customers would benefit from the cell towers and wireless spectrum the deal would bring. In some areas, it would add 30 percent more capacity, AT&T said.

“It obviously will have a significant impact in terms of dropped calls and network performance,” Stephenson said.

AT&T would pay about $25 billion in cash to Deutsche Telekom, Germany’s largest phone company, and stock that is equivalent to an 8 percent stake in AT&T. Deutsche Telekom would get one seat on AT&T’s board.

Like Sprint, T-Mobile has been struggling to compete with much larger rivals AT&T and Verizon Wireless, and its revenue has been largely flat for three years. Bellevue, Wash.-based T-Mobile USA’s subscriber count has stalled at just under 34 million, though it posts consistent profits.

Deutsche Telekom has been looking at radical moves to let it get more value out of its U.S. holding, including a possible combination with a U.S. partner.

There was a big hurdle to a T-Mobile USA-Sprint deal: The two companies use incompatible network technologies. The same hurdle would apply in a Verizon Wireless-T-Mobile USA deal. But the networks of AT&T and T-Mobile use the same underlying technology, so to some large extent, AT&T phones can already use T-Mobile’s network, and vice versa.

The deal has been approved by the boards of both companies. Dallas-based AT&T can increase its cash portion by up to $4.2 billion, with a reduction in the stock component, as long as Deutsche Telekom receives at least a 5 percent equity ownership interest in the buyer.

The agreement doesn’t leave room for other buyers to jump in with a higher bid, AT&T said.

AT&T would finance the cash part of the deal with new debt and cash on its balance sheet and will assume no debt from T-Mobile.

AP Technology Writer Joelle Tessler contributed to this report from Washington, D.C.

A petition from TruthWinsOut.org demands that Apple remove Exodus’ program, saying:

Apple doesn’t allow racist or anti-Semitic apps in its app store, yet it gives the green light to an app targeting vulnerable LGBT youth with the message that their sexual orientation is a “sin that will make your heart sick” and a “counterfeit.” This is a double standard that has the potential for devastating consequences.

The group also produced this video highlighting some of Exodus’ practices:

So far the petition has 20,000 signatures. Apple was unavailable for comment at the time of this posting. It does strike us as odd that Exodus has been up for 10 days without the tech company at least releasing a statement defending its decision, considering how quickly it responded and removed the Shaken Baby app. If it’s a matter of free speech, then that needs to be the official position that Apple is willing to stand behind. If not, the app needs to be removed.

Schedule:

9 a.m.: “Crowdsourcing Interactive Strategic Content Design and the Ubiquitous User Experience” (lecture) — Learn this year’s hottest empty buzzwords to use in presentations to possible investors of your start-up from the leading self-proclaimed experts in the industry, none of whom you’ve ever heard of.

10:30 a.m.: “Malcolm Gladwell: Genius or over-rated hack who has no idea what he’s talking about?” (panel) – Several professors and more experts you’ve never heard of will tell you exactly why it’s not cool to like “The Tipping Point” anymore.

12:00 p.m.: Lunch – Use your FourSquare, GroupMe and GroupOn apps to make the most out of your dining experience and piss off everyone else in your friend network who happen not to be in Austin right now but still have to receive updates on how you’re now the mayor of a coffee kiosk. (Tip: Try the coffee! Bring 10 friends and get a 25 percent discount on your next cup!)

1:30 p.m.: Five-hour nap because nothing interesting is happening until tonight’s parties anyway.

6:30 p.m.: Wake up, check Twitter. Find out that while you were asleep, Google and Apple announced they were joining forces to create world’s first sentient iPad with GPS locators for everyone in your social network and, additionally, not in your social network. Shit.

8:00 p.m.: Mobile Showcase of Something on 6th Street — Everyone else was lining up outside this van and you heard that Dennis Crowley might be involved with whatever’s happening inside, so may as well check it out. Turns out to be Porta Potty sponsored by Miller Lite. It’s still worth it, as someone hands you a free USB drive with the Miller logo on a lanyard as you exit. Free shwag!

9:30 p.m.: Party time! — Check out the awesome, open-bar events thrown by everyone from Gizmodo to Vimeo to Wired Magazine to Funny or Die. Wait in line for an hour before being told at the door that you’re wearing the wrong colored wristband. It’s OK, these guys are just looking for the secret code phrase that will allow you to gain entrance to this year’s hottest tech parties. (The phrase is, “Wow, I guess guys who make iPhone apps for a living really are the next rock stars!” or, if you’re attending a Gawker party, “Brett Favre’s penis.”) Definitely do not use the word “amazing” at these events, since the Guardian has declared that adjective officially “over” at South by. (And if you don’t know to call it South by, you don’t deserve to be there.)

12:00 a.m.: Stumble home after making out with a guy who you thought was Digg founder Kevin Rose, but was actually a local high school student who sneaked in with his dad’s press pass. Your pants pockets are heavy with the weight of hundreds of business cards given to you by strangers, all of who have promised to add you to their social network feed. Your iPad blinks once, red and ominous.

(Photo via Flickr)

Brilliant? Dangerous? Is this even real? According to the user who uploaded the video, BITcrash44, the whole process was relatively simple:

the way it works is pretty simple: plug in my transmitter into the iphone 4 and play back any video clip. you can play it through the ipod feature or through the camera roll. the transmitter instantly sends the video signal to the video repeater and the video repeater overrides any video screen that it’s being held next to. it doesn’t matter what shape or size the hacked screen is because the hack video will simply keep its correct dimensions and the rest of the hacked space will stay black.

Of course, since this is the Internet, people were immediately skeptical. Joe Coscarelli of The Village Voice writes:

DesignYouTrust.com, one site that posted the YouTube video, is currently down, but when one Twitter user saw the clip, he automatically doubted it, based largely on the surrounding website (see update below). “As cool as that looks, it’s a hoax,” he wrote. “The focus on video effects on the rest of the site is pretty sufficient proof.”

If this was a hack though, it was done with some amazing special effects. Sending this video around to colleagues at Salon, we finally received confirmation: there was no way this video could be real. Salon TV writer Matt Zoller Seitz spotted the hoax immediately.

This is fake.

To make it real you would have to be an unsecured wireless network that you could intercept with your magical video hack sparkplug transmitter thingy.

He was right. Video advertising billboards can be changed through wireless technology, but that they have to go through a billboard computer first, which would require security codes at the very least. It is possible someone could hack into those computers, but it would require more than just a transmitter and a balloon.

Still, it was a sophisticated hoax, which is almost as good as a clever hack. At the very least, someone should give this guy a job doing post-production work.

The results were similar to what Consumer Reports found in its original iPhone 4 tests last year. Apple had changed the way it designed the smart phone’s antenna starting with the iPhone 4, incorporating it into that band on the phone’s outer edges. User complaints and Consumer Reports’ tests showed that holding the phone in a way that covered up a spot on the antenna would cause the number of “bars” shown on the display to fall.

Apple denied problems with its antenna, instead blaming the way the phone’s display calculates how many bars of service are available. But the company still gave out free cases last year to mitigate the problem.

When the iPhone 4 for Verizon was announced, Apple specifically noted its work on the antenna. On Friday, Apple spokeswoman Natalie Kerris reiterated Apple’s claim.

“The iPhone 4 has a great antenna that allows it to have an amazingly thin design, great battery life and reception,” Kerris said. “We designed the iPhone 4 external antenna to work great on Verizon’s CDMA/EVDO network.”

As it did with the original iPhone 4, Consumer Reports said it will not include the Verizon iPhone on its list of recommended smart phones due to the reception problem.

Apple’s shares gained $5.13, or 1.5 percent, to $348.01 in afternoon trading.