Justice Department moves to block AT&T's T-Mobile merger

By on August 31, 2011, 1:30 PM

The United States Department of Justice has filed a federal antitrust lawsuit to block AT&T’s planned acquisition of T-Mobile. The DOJ claims that the $39 billion merger would lessen competition for wireless services across the country, resulting in higher prices, poorer quality service and fewer innovative products for all Americans.

The lawsuit was filed in US District Court for the District of Columbia today and cites several other reasons why the deal shouldn’t be allowed to go through.

T-Mobile is one of four providers that make up more than 90 percent of mobile wireless connections in the US. An acquisition would eliminate T-Mobile, a company that offers aggressive pricing and introduced several “firsts” to the industry. T-Mobile was the first to introduce an Android-based handset, BlackBerry wireless email, national Wi-Fi hotspots, HSPA+ and several unlimited service plans.

In an emailed statement to CNET, AT&T senior executive vice president and general counsel Wayne Watts said he was shocked by the DOJ’s decision.

"We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated," Watts said. "At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will help solve our nation's spectrum exhaust situation and improve wireless service for millions; allow AT&T to expand 4G mobile broadband to another 55 million Americans, or 97 percent of the population; [and] result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most."

In March, AT&T announced that they had entered into a definitive agreement to acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The acquisition of T-Mobile, the fourth largest carrier in the US, would enable AT&T, currently the second largest US mobile service, to leapfrog the leader of the US market, Verizon Wireless.

Sprint Nextel CEO Dan Hesse has been one of the most outspoken critics of the merger, as the deal would put the company in last place among the top US mobile carriers.




User Comments: 9

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Win7Dev said:

"This merger will help solve our nation's spectrum exhaust situation and improve wireless service for millions; allow AT&T to expand 4G mobile broadband to another 55 million Americans, or 97 percent of the population; [and] result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most."

It may improve the signal strength and quality, but prices would go up or less service for the same amount of money. Of course AT&T wants to expand coverage to 97 percent of the population, because they are essentially monopolizing their service over verizon and sprint.

Zilpha Zilpha said:

This is just a big show. The merger will go through, whether we want it to or not. All this is going to do is put a brief delay on the acquisition.

Guest said:

what really bothers me is that they claim that they will improve service for millions and expand 4g broadband(which I feeling like is just under their portfolio and not in general seeing that the availability is already there through t-mobile) and also with that said doesnt that mean previous t-mobile customers will see a decline in quality of service considering that AT&T will be using t-mobiles existing network to improve their's, or am I missing something here where somehow merging both networks improves quality for everyone?

Guest said:

Let's look at the economic effects if the merger were to occur....

There is less competition so increased price to consumers, overall loss in jobs due to consolidation--redundant positions being eliminated (i.e. corporate wouldn't need two accounting departments, IT). The winners? I suppose the remaining CEO and other corporate executives, and shareholders, because they now control a bigger company. It's clear then the Mergers and Acquisitions generally result in a higher concentration of wealth, so personally I think it should be avoided. Am I missing something here?

- Jason Lee, Silver Spring MD

thewind said:

I don't get what everyone is complaining about! The merger is a great Idea! If you don't like their service or their prices there is always sprint (which I have) or Verizon. Not to mention all the pre pay phones like tracfone and others that walmart has. I have a friend who has a tracfone and it works just fine and is 1/3 of the cost I pay. So why don't I switch? I like my android phone! Just ten years ago most people didn't have a cell phone, now it seems everyone and everyone's kids has one. Its not a necessity people its a luxury that's why you have to pay taxes on it. If you dont like it do what tracfone did and start up a company of your own. Or switch to sprint and let my stock prices go up! either way I'm happy.

Guest said:

TheWind Wrote: "I don't get what everyone is complaining about! The merger is a great Idea! If you don't like their service or their prices there is always sprint (which I have) or Verizon. Not to mention all the pre pay phones like tracfone and others that walmart has. I have a friend who has a tracfone and it works just fine and is 1/3 of the cost I pay. So why don't I switch? I like my android phone! Just ten years ago most people didn't have a cell phone, now it seems everyone and everyone's kids has one. Its not a necessity people its a luxury that's why you have to pay taxes on it. If you dont like it do what tracfone did and start up a company of your own. Or switch to sprint and let my stock prices go up! either way I'm happy."

Do you know that T-Mobile and AT&T have 99.9% of the GSM mobile market, which is the WORLD standard. This means that if you have to travel anywhere outside of U.S. then if this merger will go through, you have NO CHOICE but go AT&T.

As for the TracFone and other pre-paid providers, they actually use the AT&T/Verizon/Sprint networks, meaning that if there is less competition since the big boys will have more pricing power.

P.S. Sprint and Verizon use CDMA technology, which is not compatible with AT&T and T-Mobile.

Guest said:

Sometimes, even the Greed Monster stalls on his quest for world domination...

Indiglo5597 said:

i feel there can be a simple solution to not only cell phone providers calling the shots in general but just price gouging and all the negative things that come along with a big cooperate company. A law should be passed to ban contracts all together and still have hand sets sold at subsidized prices while also throttling service cost.

If this happened then that would put the ball in the consumers court as if they didn't like the company and or service they could just jump ship and go to other providers with out having to wait for years or pay a hefty fine bail right away. If that were the case then it would be a quality of service driven industry rather then a bait and switch as the way it is now once you sign up they have to locked in for two years even though the service sucks for whatever reason ie where you live, lack of infrastructure capacity etc.

Like previous posters have said it wasn't that long ago where not that many people had cell phone and things were good but now that everyone and there brother needs/wants/has to have a cell phone like with anything that becomes popular with the masses there is going to be changes weather for better or worse and more regulation that's just what happens when everyone gets wind and wants to come to the party.

i feel my idea although far from a total solution would really help put things pointed in the right direction

Tanstar said:

Guest: Anytime I go out of the country I give Verizon a call and they send me a GSM phone to use for free for one month (the phone is free, not the minutes).

Indiglo: Pass a law forcing companies to subsidize phones??? That's stupid on so many levels. For one, it wouldn't be legal to force companies to subsidize the phones. Secondly, that means I could buy a phone that I want cheap from Verizon, then screw them and send my money to AT&T every month for service. Thirdly, how would new companies ever get started if they were required by law to subsidize phones?

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