Justice Department Sues To Stop AT&T T-Mobile Deal - InformationWeek
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8/31/2011
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Justice Department Sues To Stop AT&T T-Mobile Deal

AT&T's planned acquisition of T-Mobile has met with some fierce resistance, now DOJ antitrust complaint could leave deal dead in the water.

AT&T's planned acquisition of T-Mobile has met with some fierce resistance in recent months, but now that the U.S. Department of Justice is moving to block the merger, this deal could be dead in the water.

In a press conference in Washington, D.C. this morning, DOJ deputy attorney general James M. Cole explained that the federal agency has filed an antitrust complaint against AT&T, arguing that the deal would hamper competition within the industry, diminishing price, quality, and innovation.

"We all reap the benefits of this incredible technology because there has been fierce competition in this industry, which has brought all of us innovative and affordable products and services," said Cole. "In order to ensure that competition remains and that everyone--including consumers, businesses, and the government--continues to receive high quality, competitively priced mobile wireless products and services, the Department of Justice today filed an antitrust lawsuit in U.S. District Court in Washington, D.C. to block AT&T's acquisition of T-Mobile."

Cole argued that because only four wireless carriers account for more than 90% of the U.S. wireless market at present, reducing that number to three carriers would hurt not only customers, but the industry.

"As can be seen in the Department's complaint, AT&T felt competitive pressure from T-Mobile," Cole said. "One example cites an AT&T employee observing that '[T-Mobile] was first to have HSPA+ devices in their portfolio ... we added them in reaction to potential loss of speed claims.'"

News of the lawsuit has already created ripples in the wireless sector, as Sprint stock hit a big surge just after the DOJ press conference. While the moves of the stock market don't generally hold much bearing on the realities of the technology industry, the bump for Sprint appears to represent some confirmation from tech investors that the AT&T/T-Mobile merger would have hurt other wireless competitors.

This is not the first legal effort to block the merger. Earlier in August, a New York-based law firm sought to halt the deal by bringing arbitration cases on behalf of AT&T customers.

In addition to the complaints mentioned by James M. Cole of the DOJ, there are compelling reasons why business customers should be wary of the merger of AT&T and T-Mobile. Potential data service limitations, roaming restrictions, exclusive handset lock-ins, and harm to the backhaul providers that build out wireless infrastructure could all result from a merger of these two major carriers.

Robert Strohmeyer has been covering tech since before Google existed, and spent a few years in IT before ascending his ivory tower. Reach him at robert@strohmeyer.org.

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