AT&T defends T-Mobile deal, cites ‘innovative upstarts’ as healthy competition

13 Sep 2011

US mobile operator AT&T has hit back at the Department of Justice (DoJ), claiming that, if allowed to proceed, its USD39 billion takeover of rival cellco T-Mobile USA would usher in more competition, improve wireless services and ultimately lower prices. The comments – filed in federal court in Washington, DC – represent AT&T’s first formal response to the government’s attempts to block the contentious deal. As previously reported by TeleGeography’s CommsUpdate, at the end of August the DoJ filed a civil antitrust lawsuit to prevent AT&T from acquiring T-Mobile from Germany’s Deutsche Telekom. At the time Deputy Attorney General James M Cole commented: ‘The combination of AT&T and T-Mobile 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 … This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition’.

AT&T’s argument – which in effect signposts the telco’s legal strategy – centres on the idea that T-Mobile is too insubstantial to be a truly effective competitor, and its removal from the market would not actually harm consumers. AT&T’s filing explains: ‘T-Mobile’s business model remains stuck in the middle between larger providers like Verizon, AT&T and Sprint, and lower-priced competitors like MetroPCS and Cricket. Blocking this transaction will not help T-Mobile or its customers, but the transfer of T-Mobile’s network capacity and infrastructure to AT&T, a healthy competitor, will enhance competition for all, now and in the future. T-Mobile is not a unique or material competitive constraint on AT&T. T-Mobile has not been a meaningful or unique innovator in terms of network development and deployment, nor is it likely to become one in the foreseeable future’. Further, the court filing argues that, far from being dominated by the main players, the US wireless sector faces stern competition from ‘innovative upstarts’ MetroPCS and Leap Wireless, as well as regional carriers such as US Cellular and Cellular South. AT&T’s lawyers continued: ‘The [DoJ] does not and cannot explain how, in the face of all these aggressive rivals, the combined AT&T/T-Mobile will have any ability or incentive to restrict output, raise prices, or slow innovation’.

United States, AT&T, AT&T Wireless (Defunct), T-Mobile US