US government files antitrust suit to block AT&T purchase of T-Mobile

Posted:
in iPhone edited January 2014
AT&T's planned purchase of carrier T-Mobile hit a snag on Wednesday when the U.S. government filed an antitrust lawsuit to block the proposed deal, saying it would hurt competition in the American wireless industry.



The government believes the $39 billion deal with "substantially lessen competition" in the wireless market, according to Bloomberg. The U.S. Justice Department filed the complaint in federal court on Wednesday in Washington.



"AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market," the filing reads.



AT&T announced in March that it hopes to acquire Deutsche Telekom's American T-Mobile subsidiary in a cash and stock deal worth $39 billion. The deal would give the German carrier an 8 percent stake in AT&T.



T-Mobile and AT&T share similar GSM and UMTS/HSPA networks, and AT&T has claimed that the addition of T-Mobile would allow it to offer faster network performance and better coverage for its customers.



One of the largest opponents to the deal has been Sprint, the third largest carrier in the U.S., ahead of only T-Mobile in terms of subscribers among the "big four." Sprint has formally petitioned the merger with the U.S. Federal Communications Commission, accusing AT&T of wasting spectrum it already owns, and attempting to convince the government that a deal with T-Mobile would hurt the profitability of Sprint.







AT&T and T-Mobile executives were grilled by members of the U.S. Senate in May during a hearing on the proposed deal. Members of the Senate Judiciary subcommittee expressed skepticism over alleged benefits to consumers from the deal that have been portrayed by the two companies pitching the deal.



Since the launch of the original iPhone in 2007, AT&T has faced skyrocketing data traffic, which the carrier has said shot up 8,000 percent in the last four years. The significant bandwidth consumed by active iPhone users led one high-profile report from The New York Times to refer to Apple's handset as the "Hummer of cellphones," referring to the gas-guzzling vehicle.



AT&T has argued that the U.S. wireless industry will remain "vibrantly competitive" if the T-Mobile purchase were to gain federal approval. In expanding its 4G long-term evolution network and merging the two companies' wireless networks, AT&T has asserted that the deal would create jobs and generate economic growth.



Earlier this month, it was reported that AT&T is also considering the sale of some $8 billion in network assets to gain regulatory approval to purchase T-Mobile. From the beginning, AT&T was characterized as facing a "steep climb" to receive approval from the Federal Communications Commission.
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Comments

  • Reply 1 of 126
    tallest skiltallest skil Posts: 43,399member
    *APPLAUSE*



    Our government still works! A little!



    Screw you, AT&T.
  • Reply 2 of 126
    gatorguygatorguy Posts: 20,698member
    Agree, Tallest Skil. ATT's claim that the acquisition increases competition is simply ridiculous.

    Kudos to the Justice Dept.
  • Reply 3 of 126
    lamewinglamewing Posts: 742member
    Quote:
    Originally Posted by Tallest Skil View Post


    *APPLAUSE*



    Our government still works! A little!



    Screw you, AT&T.



    My AT&T contract ended two days ago! Now I feel safer about switching to T-Mobile. (repeated but worth saying)... SCREW YOU AT&T!!!
  • Reply 4 of 126
    everyone can stand behind this decision. or should at least.
  • Reply 5 of 126
    diddydiddy Posts: 282member
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    everyone can stand behind this decision. or should at least.



    So long as the government actually makes a good case. The US government went after Microsoft for anti-trust as well and basically let them off with what amounts to a slap on the wrist. I worry that out anti-trust laws lack any teeth.
  • Reply 6 of 126
    It's ABOUT TIME



    This actually makes my day. How it got this far is beyond me.



    Agreed with above statements and good on Sprint for leading the pack.
  • Reply 7 of 126
    Quote:
    Originally Posted by diddy View Post


    So long as the government actually makes a good case. The US government went after Microsoft for anti-trust as well and basically let them off with what amounts to a slap on the wrist. I worry that out anti-trust laws lack any teeth.



    doesn't help that these "people" (corporations) pretty much control the government.
  • Reply 8 of 126
    tulkastulkas Posts: 3,754member
    Quote:
    Originally Posted by Gatorguy View Post


    Agree, Tallest Skil. ATT's claim that the acquisition increases competition is simply ridiculous.

    Kudos to the Justice Dept.



    Yeah, I never understood how AT&T could claim the the elimination of a competitor would strengthen or at least not reduce competition. I guess logic isn't their forte.
  • Reply 9 of 126
    For this to be accepted, AT&T would need to show how this will improve service to its customers, lower costs to the customers, and create jobs (no layoffs). Otherwise, no deal.
  • Reply 10 of 126
    What are you all smoking? Pretty much ALL mobile operators in the US are together in a cartel.



    This is why in the US of A, we have the worst packages of any other country.



    Even a small country like The Netherlands, with a faction of the US population, offers a 10 Euro per week unlimited internet package, and that's for prepaid customers!! I mean COME ON?!



    The American people are being "played", and this move by the US Government is almost meaningless, whether or not it actually goes through.
  • Reply 11 of 126
    tenobelltenobell Posts: 7,014member
    My question about this is the fact that T-Mobile Germany wants to sell its American company.



    T-Mobile as a company is not doing well and if they simply go out of business, how is that any better for the consumer?
  • Reply 12 of 126
    paxmanpaxman Posts: 4,602member
    Quote:
    Originally Posted by AbsoluteDesignz View Post


    doesn't help that these "people" (corporations) pretty much control the government.



    Yup - This decision must have cost somebody a big wad of cash.
  • Reply 13 of 126
    tenobelltenobell Posts: 7,014member
    Quote:
    Originally Posted by Skaag View Post


    This is why in the US of A, we have the worst packages of any other country.



    That's not true.



    Quote:

    Even a small country like The Netherlands, with a faction of the US population, offers a 10 Euro per week unlimited internet package, and that's for prepaid customers!! I mean COME ON?!



    You do realize once they leave the Netherlands that rate no longer applies. How big is the Netherlands again?



    Quote:

    The American people are being "played", and this move by the US Government is almost meaningless, whether or not it actually goes through.



    We do get to travel the third largest country in the world with our phones. We don't have to swap sim cards, the rates stay the same, there are no additional fees or charges for doing so.
  • Reply 14 of 126
    gwlaw99gwlaw99 Posts: 134member
    Quote:
    Originally Posted by Skaag View Post


    What are you all smoking? Pretty much ALL mobile operators in the US are together in a cartel.



    This is why in the US of A, we have the worst packages of any other country.



    Even a small country like The Netherlands, with a faction of the US population, offers a 10 Euro per week unlimited internet package, and that's for prepaid customers!! I mean COME ON?!



    The American people are being "played", and this move by the US Government is almost meaningless, whether or not it actually goes through.



    My Verizon unlimited internet plan costs the equivalent of 5 euros per week.
  • Reply 15 of 126
    richlrichl Posts: 2,213member
    Quote:
    Originally Posted by TenoBell View Post


    My question about this is the fact that T-Mobile Germany wants to sell its American company.



    T-Mobile as a company is not doing well and if they simply go out of business, how is that any better for the consumer?



    Deutsche Telekom isn't going anywhere. Like most players in the telecoms market, it's had its fair share of problems but it's still a profitable company.



    And even if Deutsche Telekom did go bust, someone could come in and buy their infrastructure.
  • Reply 16 of 126
    shrikeshrike Posts: 494member
    If the US gov't wants more competition in the cellular market, they should standardize the spectrum that carriers can use for cell phones, and outlaw locked phones and subsidization. As it stands today, even LTE handsets between ATT and VZW won't be compatible.



    This opposition to the ATT - T-Mobile merger is some weird sop to politics or something. As it stands today, there really isn't a cellular market. It's really 4.5 separate kingdoms with well defined boundaries. It's more like the cable company market, than the auto/car company market.
  • Reply 17 of 126
    oc4theooc4theo Posts: 294member
    This is a JOB KILLER. Many offices will be closed in consolidation process.



    Thank heavens, someone is finally paying attention to merger-mania.
  • Reply 18 of 126
    rot'napplerot'napple Posts: 1,839member
    Quote:
    Originally Posted by Tallest Skil View Post


    Our government still works! A little!.



    VERY LITTLE!

    /

    /

    /
  • Reply 19 of 126
    Quote:
    Originally Posted by TenoBell View Post


    My question about this is the fact that T-Mobile Germany wants to sell its American company.



    T-Mobile as a company is not doing well and if they simply go out of business, how is that any better for the consumer?



    You are very right.



    T-Mobile has been (quietly) looking for a way out of the US market for a while now. They are stuck as the "cheap" option for consumers, and their profits have been on a downward trend for awhile. The main way for them to reverse that is to raise their prices, which would of course hurt their standing with their customer base.



    They also are at a great disadvantage when it comes to buying US wireless spectrum, since they are fully owned by Deutsche Telekom (a German company), which is of course appropriate (US based companies and government should own the majority of something so valuable, not a foreign interest) - which is why you see them running their 3G/4G on such an odd frequency (1700Mhz), and why, along with not having the cash to compete with US giants, they did not have a strong showing in the spectrum auction where Verizon and AT&T bought a majority of their 700Mhz spectrum for their LTE networks.



    I think the story that is getting overlooked here is that T-Mobile recognizes that the path they are on is not sustainable, and they want a way out. They after all agreed, and have been staunch defenders of the sale. Preventing this merger in no way guarantees that T-Mobile will stay around as a competitor for years to come.



    Now how much AT&T is overstating their need for the spectrum is another story all together.
  • Reply 20 of 126
    tenobelltenobell Posts: 7,014member
    Quote:
    Originally Posted by RichL View Post


    Deutsche Telekom isn't going anywhere. Like most players in the telecoms market, it's had its fair share of problems but it's still a profitable company.



    I don't think you understand that Deutsche Telekom itself offered to sell T-Mobile to AT&T. Because T-Mobile is an ailing company.



    Deutsche Telekom Quarterly Profit Declines on T-Mobile USA







    Quote:

    And even if Deutsche Telekom did go bust, someone could come in and buy their infrastructure.



    What then happens to T-Mobile's customers?
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