U.S. Moves to Block Merger Between AT&T and T-Mobile

**Prince** · 08-31-2011, 01:10 PM

U.S. Moves to Block Merger Between AT&T and T-Mobile
By EDWARD WYATT
Published: August 31, 2011

WASHINGTON — The Justice Department filed a lawsuit on Wednesday to block the proposed $39 billion merger between AT&T and T-Mobile USA on antitrust grounds, saying a deal between the nation’s second- and fourth-largest wireless phone carriers would substantially lessen competition, result in higher prices and give consumers fewer innovative products.
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Stephen Crowley/The New York Times

James M. Cole, the Justice Department's deputy attorney general, said the merger would result in "higher prices, fewer choices and lower quality products."

The lawsuit sets up the most substantial antitrust battle since the election of President Obama, who campaigned with promises to revitalize the Justice Department’s policing of mergers and their effects on competition, which he said declined significantly under the Bush administration.

AT&T said it would fight the lawsuit. “We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed,” the company said in a statement. “The D.O.J. has the burden of proving alleged anti-competitive effects and we intend to vigorously contest this matter in court.”

AT&T said it had no warning that the government was going to file to block the merger, because it has been actively involved in discussions with both the Justice Department and the Federal Communications Commission since the proposal was announced in March. AT&T has indicated that it would consider some divestitures or other business actions to allow the deal to go forward.

But Justice Department officials said that those discussions led it to believe that it would difficult to arrange conditions under which the merger could proceed. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer,” said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department’s antitrust division.

The Justice Department has broad authority to influence proposed deals. On rare occasions, the agency takes the aggressive step of suing to block a deal altogether, as it is doing with AT&T and did earlier this year with H&R Block’s bid for the owner of TaxAct tax-preparation software.

Sometimes just the threat of legal action is enough to stymie a deal, as in May when Nasdaq dropped its rival bid for the New York Stock Exchange’s parent company. In other cases, the Justice Department will remain silent, blessing a deal by default.

AT&T’s promise to fight the suit could mean a potentially lengthy fight.

Consumer advocacy groups cheered the announcement. “This announcement is something for consumers to celebrate,” said Parul P. Desai, policy counsel for Consumers Union. “We have consistently warned that eliminating T-Mobile as a low-cost option will raise prices, lower choices and turn the cellular market into a duopoly controlled by AT&T and Verizon.”

Harold Feld, legal director of Public Knowledge, a nonprofit group, said that “fighting this job-killing merger is the best Labor Day present anyone can give the American people.” But labor groups had generally supported the merger, in part because a substantial number of AT&T employees are members of the Communication Workers of America, while T-Mobile is a largely nonunion company.

Deputy Attorney General James M. Cole said the department decided that among those adversely affected would be wireless customers in rural areas and those with lower incomes. He said he also believed that an independent T-Mobile would be more likely to expand its business and add jobs, while mergers often result in the elimination of jobs.

The future of an independent T-Mobile is more of a question today, however, than before the merger with AT&T was announced. Its parent company, Deutsche Telekom, has said it does not want to continue to invest in the American wireless market, preferring to focus on the growth of its telecommunications business in Europe.

Before AT&T announced its intention to buy T-Mobile, there was consistent speculation in the wireless industry that a merger between T-Mobile and Sprint Nextel, the third-largest provider, was in the works. But such a deal looks unlikely in light of the arguments mustered by the Justice Department against the AT&T deal.

Those arguments include the assertion that a combination that took the number of nationwide wireless phone providers down to three from four would harm competition, because the four nationwide service providers already account for more than 90 percent of the mobile wireless connections nationwide.
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The proposed merger has been a topic of robust debate in Congress, where both houses have conducted committee hearings on the merger. At one of them in May, Randall L. Stephenson, the chief executive of AT&T, tried largely unsuccessfully to convince lawmakers that AT&T and T-Mobile should not even be considered as competitors.

In subsequent congressional appearances, he abandoned that assertion, going back to the company’s main talking point: While the two companies are competitors, plenty of other competition exists in local wireless markets, with most potential customers having a choice among at least five providers.

“Certain critics may attempt to create a myth that only a few national competitors exist, but wireless competition occurs primarily on the local level,” Mr. Stephenson said.

But the Justice Department, in its filing in the United States District Court for the District of Columbia, cited AT&T’s own arguments in earlier merger cases in favor of national competition.

“As AT&T acknowledged less than three years ago during a merger proceeding, it aims to ‘develop its rate plans, features and prices in response to competitive conditions and offerings at the national levels — primarily the plans offered by the other national carriers,’ ” the Justice Department said in its lawsuit. “As AT&T recognized, ‘the predominant forces driving competition among wireless carriers operate at the national level.’ That remains the case today.”

The F.C.C. is also reviewing the proposed merger, considering how competition and the public interest would be affected by the transfer of licenses for wireless airwaves that the merger would entail.

“Competition is an essential component of the F.C.C.’s statutory public interest analysis,” said Julius Genachowski, the F.C.C. chairman, in a statement. “Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition.”

Both the F.C.C. and the Justice Department have to approve the merger, and they usually coordinate their independent reviews in a way that results in the same conclusion. For an antitrust case to fully wind its way through the court system could take years, maybe more than a decade. But AT&T would have to weigh the cost of that action against what it might cost it to get out of the T-Mobile deal.

The F.C.C. and the Justice Department have different standards by which they weigh the merger. The F.C.C. must consider whether a deal is in the public interest, given the public assets – wireless airwaves, or spectrum – that would be transferred from one company to another. The Justice Department must determine whether a deal violates the federal antitrust statutes, which focus on whether a merger substantially reduces competition.

**LAM** · 08-31-2011, 01:11 PM

Wow...i'm surprised that they are actually stepping up to fight this. this merger would have also cost a lot of jobs on the t-mobile side.

**Gregzs** · 08-31-2011, 01:14 PM

My brother has T-mobile. He used to have AT&T. Since he hated AT&T, he will be glad to hear this.

**Chrisotpherm** · 08-31-2011, 01:47 PM

This will be interesting to see how this plays out. This merger would begin a monopoly move for AT&T and basically shut out any possibilities of others to grow. However because of AT&T's high prices this could also be a risky move where users might begin to look else where for deals. Very interesting.

V/R
Chris

**LAM** · 08-31-2011, 01:52 PM

Originally Posted by Chrisotpherm

This merger would begin a monopoly move for AT&T and basically shut out any possibilities of others to grow.

Chris

AT&T already owns the lions share of the long haul wired copper infrastructure from coast to coast. adding the wireless market on top of the wired would just about make them untouchable in terms of competition. when there is no more competition capitalism ceases to exist.

**Chrisotpherm** · 08-31-2011, 06:36 PM

Originally Posted by LAM

AT&T already owns the lions share of the long haul wired copper infrastructure from coast to coast. adding the wireless market on top of the wired would just about make them untouchable in terms of competition. when there is no more competition capitalism ceases to exist.

I agree bro, and the politics want to worry about aas. How about a total business over throw that will put more folks out of a job and will see them go to over seas clowns!

**lnvanry** · 09-01-2011, 12:10 AM

TMobile customer here....sooooo glad

**yurrdownfall** · 09-01-2011, 05:08 AM

This merger would definitely have killed Sprint and any others. Glad someone is stepping in.

**min0 lee** · 09-01-2011, 08:03 AM

I wanted the Iphone a while back but I heard of all the horror stories about AT&T and the fact they charge you for data.

Never had a problem with T-Mobile, they don't charge me for Data and I have free WiFi tethering....so I can use my laptop anywhere and not get charged for making my own hot spot.

**min0 lee** · 09-01-2011, 08:04 AM

I settled for the Nexus one which they recently used as a sattelite(sic) up in space.

**VikingWarlord** · 09-01-2011, 08:13 AM

AT&T needs this. T-Mobile has spent more (relatively) on its infrastructure over the last few years than any other carrier and so have one of the more advanced networks in place. In contrast, AT&T's wireless infrastructure hasn't changed substantially in a long, long time. This was going to be their ticket to getting the network updated without having to actually do much.

There were a lot of formerly unhappy AT&T customers who switched to T-Mobile and I'm pretty sure its entire subscription base would jump ship and go to Verizon or Sprint just to disassociate themselves with the horrible service of AT&T.

I'm a U-Verse customer and love it but I've never heard anything good about their wireless.

**OnPoint88** · 09-01-2011, 08:16 AM

Funny the DOJ was mum on the Haliburton and Boots & Coots merger.

**min0 lee** · 09-01-2011, 08:45 AM

Originally Posted by VikingWarlord

There were a lot of formerly unhappy AT&T customers who switched to T-Mobile and I'm pretty sure its entire subscription base would jump ship and go to Verizon or Sprint just to disassociate themselves with the horrible service of AT&T.

.

In a heartbeat.

**LAM** · 09-01-2011, 11:12 AM

Originally Posted by VikingWarlord

AT&T needs this. T-Mobile has spent more (relatively) on its infrastructure over the last few years than any other carrier and so have one of the more advanced networks in place. In contrast, AT&T's wireless infrastructure hasn't changed substantially in a long, long time.

here's a novel idea, they can take some of those record profits and actually re-invest some money back into the company vs returning those profits back to shareholders to fuel stock by backs which is really nothing more than artificially pumping up the share price.

**Chrisotpherm** · 09-01-2011, 08:23 PM

Has anyone ever used or heard of straight talk that Walmart offers?

V/R
Chris

**min0 lee** · 09-01-2011, 08:53 PM

Not here.

**VikingWarlord** · 09-02-2011, 12:21 PM

Originally Posted by LAM

here's a novel idea, they can take some of those record profits and actually re-invest some money back into the company vs returning those profits back to shareholders to fuel stock by backs which is really nothing more than artificially pumping up the share price.

That's crazy talk right there.

**Gregzs** · 09-02-2011, 12:40 PM

This does have a potential downside for T-Mobile financially:

http://www.nytimes.com/2011/09/02/te...ines&emc=tha25

**min0 lee** · 09-02-2011, 01:16 PM

AT&T still finds a way to screw people, please stop stalking me!!!

**sofargone561** · 09-02-2011, 01:36 PM

i lived in Germany for a while ATAT will rule Germany, THE ONLY cell phone provider over that worked was T-mobile, like stated above this will be a huge monopoly move for them....scary scary

**Chrisotpherm** · 09-03-2011, 09:54 AM

AT&T folks are terrible. I am waiting my contract out with them now and going to switch ASAP!

V/R
Chris

**Gregzs** · 09-03-2011, 03:30 PM

AT&T plans to fight.

http://www.nytimes.com/2011/09/03/te...ines&emc=tha26

**lnvanry** · 09-03-2011, 11:50 PM

Originally Posted by Gregzs

AT&T plans to fight.

http://www.nytimes.com/2011/09/03/te...ines&emc=tha26

AT&Ts strategy should be to prolong the legal argument of the matter...and wait for a new President. They will not be given a green light under Obama.

**LAM** · 09-04-2011, 12:26 AM

only fascist governments allow the formation of the monopoly. they are already one of the most profitable company's in the US and the world...

**min0 lee** · 09-04-2011, 03:55 PM

AT&T Divesting 25% of T-Mobile Wouldn't Help Anyone: Here's What Would | News & Opinion | PCMag.com

AT&T and Deutsche Telekom, desperate to rescue AT&T's purchase of T-Mobile, are reportedly offering to get rid of up to 25% of T-Mobile's assets to get the Department of Justice off the companies' backs.

Divestiture worked in past telecom mergers, but this isn't like those mergers, and I don't think selling off 25% of T-Mobile would help competition. Here's why.
The Department of Justice identified the core problem as AT&T eliminating a low-cost, national competitor.

So any divestiture would have to address this issue, helping to bulk up a low-cost, national competitor.

Verizon Wireless has the money to buy divested markets and convert them from GSM to CDMA, but that would just concentrate more power in AT&T's and Verizon's hands, driving up prices.

For Sprint, MetroPCS, U.S. Cellular and Cricket, a T-Mobile sale is a bit of a poisoned apple. Sprint doesn't have the money to build out the Clearwire spectrum it already controls. None of them need the huge financial burden of integrating a totally incompatible GSM network with their existing CDMA systems. In fact, that could damage the smaller carriers as much as it helps them, becoming a gigantic time and money suck.

**cg89** · 09-04-2011, 05:16 PM

fucking gay i want the iPhone faggot justice dept

**min0 lee** · 09-04-2011, 06:12 PM

Originally Posted by cg89

fucking gay i want the iPhone faggot justice dept

Not from AT&T, they are actually doing you a favor this time.
Iphones are great but Androids are just as good.

**cg89** · 09-04-2011, 07:39 PM

Originally Posted by min0 lee

Not from AT&T, they are actually doing you a favor this time.
Iphones are great but Androids are just as good.

i got a android had the g1 and now the vibrant there are too many flaws in it..

**sofargone561** · 09-04-2011, 07:48 PM

Originally Posted by cg89

i got a android had the g1 and now the vibrant there are too many flaws in it..

i have a lg flip phone thingyive had for a out 4 years, lmao no internet shitty ass pictures no cool aps just phone calls piture/text/video messaging and super fast dieing battery from it being so old and also me Mctexting away at it and ocaasiiopnally it shuts up for no reason! best couple bucks ive spent in a long time!

P.S. it verizon

**Chubby** · 09-04-2011, 10:12 PM

Why not sign up with quest home phone and use pay phone when you are out? I guess people are too spoiled to us payphone

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