WASHINGTON – The Department of Justice today filed a civil
antitrust lawsuit to block AT&T Inc.’s proposed acquisition
of T-Mobile USA Inc. The department said that the proposed $39
billion transaction would substantially lessen competition for
mobile wireless telecommunications services across the United
States, resulting in higher prices, poorer quality services,
fewer choices and fewer innovative products for the millions of
American consumers who rely on mobile wireless services in their
everyday lives.
The department’s lawsuit, filed in U.S. District Court for
the District of Columbia, seeks to prevent AT&T from
acquiring T-Mobile from Deutsche Telekom AG.
“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,” said Deputy Attorney General James M.
Cole. “Consumers across the country, including those in rural
areas and those with lower incomes, benefit from competition
among the nation’s wireless carriers, particularly the four
remaining national carriers. This lawsuit seeks to ensure that
everyone can continue to receive the benefits of that
competition.”
“T-Mobile has been an important source of competition among the
national carriers, including through innovation and quality
enhancements such as the roll-out of the first nationwide
high-speed data network,” said Sharis A. Pozen, Acting Assistant
Attorney General in charge of the Department of Justice’s
Antitrust Division. “Unless this merger is blocked, competition
and innovation will be reduced, and consumers will suffer.”
Mobile wireless telecommunications services play a critical role
in the way Americans live and work, with more than 300 million
feature phones, smart phones, data cards, tablets and other
mobile wireless devices in service today. Four nationwide
providers of these services – AT&T, T-Mobile, Sprint and
Verizon – account for more than 90 percent of mobile wireless
connections. The proposed acquisition would combine two of those
four, eliminating from the market T-Mobile, a firm that
historically has been a value provider, offering particularly
aggressive pricing.
According to the complaint, AT&T and T-Mobile compete head
to head nationwide, including in 97 of the nation’s largest 100
cellular marketing areas. They also compete nationwide to
attract business and government customers. AT&T’s
acquisition of T-Mobile would eliminate a company that has been
a disruptive force through low pricing and innovation by
competing aggressively in the mobile wireless telecommunications
services marketplace.
The complaint cites a T-Mobile document in which T-Mobile
explains that it has been responsible for a number of
significant “firsts” in the U.S. mobile wireless industry,
including the first handset using the Android operating system,
Blackberry wireless email, the Sidekick, national Wi-Fi
“hotspot” access, and a variety of unlimited service plans.
T-Mobile was also the first company to roll out a nationwide
high-speed data network based on advanced HSPA+ (High-Speed
Packet Access) technology. The complaint states that by January
2011, an AT&T employee was observing that “[T-Mobile] was
first to have HSPA+ devices in their portfolio…we added them in
reaction to potential loss of speed claims.”
The complaint details other ways that AT&T felt competitive
pressure from T-Mobile. The complaint quotes T-Mobile documents
describing the company’s important role in the market:
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T-Mobile sees itself as “the No. 1 value challenger of the
established big guys in the market and as well positioned in
a consolidated 4-player national market”; and
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T-Mobile’s strategy is to “attack incumbents and find
innovative ways to overcome scale disadvantages. [T-Mobile]
will be faster, more agile, and scrappy, with diligence on
decisions and costs both big and small. Our approach to
market will not be conventional, and we will push to the
boundaries where possible. . . . [T-Mobile] will champion
the customer and break down industry barriers with
innovations. . . .”
The complaint also states that regional providers face
significant competitive limitations, largely stemming from their
lack of national networks, and are therefore limited in their
ability to compete with the four national carriers. And, the
department said that any potential entry from a new mobile
wireless telecommunications services provider would be unable to
offset the transaction’s anticompetitive effects because it
would be difficult, time-consuming and expensive, requiring
spectrum licenses and the construction of a network.
The department said that it gave serious consideration to the
efficiencies that the merging parties claim would result from
the transaction. The department concluded AT&T had not
demonstrated that the proposed transaction promised any
efficiencies that would be sufficient to outweigh the
transaction’s substantial adverse impact on competition and
consumers. Moreover, the department said that AT&T could
obtain substantially the same network enhancements that it
claims will come from the transaction if it simply invested in
its own network without eliminating a close competitor.
AT&T is a Delaware corporation headquartered in Dallas.
AT&T is one of the world’s largest providers of
communications services, and is the second largest mobile
wireless telecommunications services provider in the United
States as measured by subscribers. It serves approximately 98.6
million connections to wireless devices. In 2010, AT&T
earned mobile wireless telecommunications services revenues of
$53.5 billion, and its total revenues were in excess of $124
billion.
T-Mobile, is a Delaware corporation headquartered in Bellevue,
Wash. T-Mobile is the fourth-largest mobile wireless
telecommunications services provider in the United States as
measured by subscribers, and serves approximately 33.6 million
wireless connections to wireless devices. In 2010, T-Mobile
earned mobile wireless telecommunications services revenues of
$18.7 billion. T-Mobile is a wholly-owned subsidiary of Deutsche
Telekom AG.
Deutsche Telekom AG is a German corporation headquartered in
Bonn, Germany. It is the largest telecommunications operator in
Europe with wireline and wireless interests in numerous
countries and total annual revenues in 2010 of €62.4 billion.
