The U.S. Department of Justice moved to deny AT&T and T-Mobile USA (owned by Deutsche Telekom) by filing an antitrust lawsuit claiming that such a purchase on AT&T’s behalf disregards U.S antitrust law and would significantly reduce competition in the wireless market.
‘AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,’ states the Department of Justice in its complaint against AT&T.
As it currently stands, AT&T and T-Mobile are the second and fourth (out of four) largest wireless networks and would combine to overthrow the current first, Verizon Wireless, and third, Sprint Nextel.
Critics of the merger between AT&T and T-Mobile are quick to note that a post-merger wireless market could easily fall into a duopoly between current giants Verizon and AT&T. Sprint and T-Mobile captured the low-cost markets and would continue to be so after a post-merger market. AT&T currently ranks last in customer service, a concern for many of us wasting our cell phone batteries on such service; the reputable service provided by the low-cost market would give the playing field a decent balance.
In the post-merger market, Sprint’s CEO Dan Hesse expresses worries about being unable to compete with the possible duopoly posed by AT&T and Verizon; but also promises many ‘new plans’ to close the gap.
Just before the antitrust lawsuit was filed, AT&T announced that the pending merger with T-Mobile would bring 5,000 call center jobs to the United States. Earlier this month, AT&T hired bankers from Bank of America Merrill Lynch to help sell an estimated $8 billion in assets in order to appease the government with its planned $39 billion purchase of T-Mobile. AT&T is currently looking for an expedited court hearing ‘so the enormous benefits of this merger can be fully reviewed.’
The world of wireless tech is has been on a see-saw ever since plans of the merger became publicly known. Could the merge be a stroke of genius and a boost to our turbulent economy? Or will the events regarding AT&T and T-Mobile’s merger cause consumers to suffer decreased innovation in mobile technology coupled with higher carrier rates and fees as many critics, including the U.S. Department of Justice, hold true? Can a call be dropped using a cell phone hands-free kit?
It is uncertain what will become of this matter. AT&T has to pay Deutsche Telekom a package total of an estimated $8 billion if the merger falls through. Both companies stocks fell as a result of the DOJ’s complaint. Deutsche Telekom also expressed that it did not wish to invest more into T-Mobile USA. With the FCC still working on their final review of the merger, AT&T is awaiting a future it did not seem to expect.