Justice Department Files Antitrust Suit to Block AT&T Acquisition of T-Mobile
- August 31, 2011
- Posted by: Brandon Matheson
- Category: Electronics, Entrepreneurship, News Articles, Retail
Source: NoozhawkOriginal Article here
The Justice Department said in its filing in U.S. District Court that the deal would especially impact consumers in rural areas who benefit from the current competition.
“Were the merger to proceed, there would only be three providers with 90 percent of the market and competition among the remaining competitors on all dimensions — including price, quality and innovation — would be diminished,” Deputy Attorney General James Cole said in the filing.
AT&T reached a deal with Deutsche Telekom earlier this year to acquire T-Mobile for about $39 billion, potentially making it the largest carrier in the nation. It would have 125 million subscribers compared with Verizon’s 93 million.
Andy Seybold, a globally recognized mobile computing consultant and founder of Andrew Seybold Inc., said he’s confident the merger will still happen. He said adding 30 percent more cell sites through the merger is the only efficient way to solve the increasing demand.
“If you look at it by each market (rather than nationwide), there are still four to six operators per market,” Seybold told Noozhawk. “There’s still plenty of competition in every market.”
He said he expects to see the Justice Department and AT&T come to a compromise, similar to when Verizon was forced to sell areas of Alltel coverage in its merger.
Wayne Watts, AT&T senior executive vice president and general counsel, argued that the proposed buyout posed no danger because the U.S. wireless market features declining prices, innovation, product differentiation and increasing output.
“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,” he said in a statement.
Jacques Habra, founder of SBClick.com and general manager of Noospheric, said that although the merger is likely to go through because of its potential to create jobs and reduce the cost of products and services, the Justice Department needed to act.
“The Justice Department can’t be swayed by the situation of the economy. They needed to respond to stop a monopoly,” Habra said. “This is a major deal-changer in terms of choices the consumer would have regarding mobile devices.”
If the deal doesn’t go through, AT&T would have to pay Deutsche Telekom $3 billion in cash. It would also provide T-Mobile with wireless spectrum in some regions and reduced charges for calls into AT&T’s network, for a total package of about $7 billion.