Government sues to block AT&T, T-Mobile merger, despite pledge to bring 5,000 jobs to US
A T-Mobile store is shown in Palo Alto, Calif. The federal government has sued to block the merger between AT&T and T-Mobile.
AP Photo/Paul Sakuma
WASHINGTON (AP) — The Justice Department filed suit Wednesday to block AT&T's $39 billion deal to buy T-Mobile USA on grounds that it would raise prices for consumers.
The government contends that the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition.
At a news conference, Deputy Attorney General James Cole said the combination would result in "tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services."
The lawsuit seeks to ensure that everyone can continue to receive the benefits of competition, said Cole.
AT&T said it would fight the lawsuit, announcing that it plans to ask for an expedited court hearing "so the enormous benefits of this merger can be fully reviewed."
The Justice Department "has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court," said the AT&T statement.
Four nationwide providers account for more than 90 percent of mobile wireless connections — Verizon, AT&T, T-Mobile and Sprint.
T-Mobile has been an important source of competition, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network, Sharis Pozen, acting chief of Justice's antitrust division, said at the news conference.
Mobile wireless telecom services play an increasing role in day-to-day communications, with more than 300 million smart phones, data cards, tablets and other mobile wireless devices in use.
Deutsche Telekom, the owner of T-Mobile, had no immediate comment.
AT&T and T-Mobile compete nationwide, in 97 of the largest 100 cellular marketing areas, according to the government lawsuit which was filed in U.S. District Court in Washington.
The lawsuit says AT&T's acquisition of T-Mobile would eliminate a company that has been a competitive factor through low pricing and innovation.
This comes after AT&T Inc. had pledged to bring 5,000 wireless call center jobs, currently based abroad, back to the U.S. if it is allowed to proceed with its proposed $39 billion acquisition of T-Mobile USA.
The company is also promising that the merger would not result in any job losses for AT&T and T-Mobile USA wireless call center employees who are on the payroll in the U.S. when the deal closes.
AT&T's commitment to repatriate jobs comes as antitrust regulators at the Federal Communications Commission and the Justice Department ramp up their reviews of a combination that is certain to reshape the wireless industry's landscape.
Although AT&T said it has not yet determined where the new U.S.-based jobs would be located, it promised they would offer "highly competitive wages and benefits." The company hopes this message will carry weight in Washington, where job creation is a top priority for the Obama administration as the nation faces the possibility of a recession heading into the 2012 election.
"At a time when many Americans are struggling and our economy faces significant challenges, we're pleased that the T-Mobile merger allows us to bring 5,000 jobs back to the United States and significantly increase our investment here," AT&T Chairman and Chief Executive Randall Stephenson said in a statement.
Beyond the call center operations, AT&T has said it does anticipate some workforce duplication after the deal closes, but expects to make reductions largely through natural attrition.
Opponents of the proposed merger, including public interest groups and Sprint, insist it will lead to fewer choices and higher prices for consumers by eliminating a carrier that offers lower rates and less expensive plans than competitors. They also fear the deal could jeopardize Sprint's future as an independent company and ultimately lead to a wireless industry duopoly.
AT&T and T-Mobile argue that the acquisition would benefit consumers. They say it would lead to fewer dropped and blocked calls and faster mobile Internet connections for subscribers by allowing the companies to combine their limited wireless spectrum holdings at a time when both are running out of airwaves to handle mobile apps, online video and other bandwidth-hungry services.
They also say the transaction would position AT&T to cover more than 97 percent of the U.S. population with its new high-speed, fourth-generation wireless service.
Finding more airwaves to keep up with the explosive growth of wireless broadband services and ensuring that all Americans have access to high-speed Internet connections are both top priorities of the FCC and the Obama administration.