Apr 21, 2011 7:33 PM

AT&T Files to Buy T-Mobile Amid Objections

AT&T filed its official paperwork with federal regulators Thursday to buy the fourth-place wireless carrier T-Mobile for $39 billion, saying the merger fits in with the national broadband plan, will create new jobs and will benefit citizens with better mobile coverage. Critics quickly fired back that the merger should be denied because it will create […]

Critics quickly fired back that the merger should be denied because it will create a virtual duopoly in the market, leaving AT&T and Verizon with more than 80 percent of the U.S. wireless market. That they say will lead to a slowing of innovation and rising prices for mobile phone users.

AT&T is trying to make the case that T-Mobile, a subsidiary of Deutsche Telekom, is lagging in the market and is basically wasting its spectrum that AT&T could use to enhance its taxed network (.pdf) that's notorious for dropped calls, in its filing.

This transaction will thus benefit consumers by reducing the number of dropped and blocked calls, increasing data speeds, and dramatically expanding deployment of next-generation mobile technology. Indeed, the transaction will give the combined company the scale, resources, and spectrum that will enable it to deploy LTE to more than 97 percent of Americans -- approximately 55 million more Americans than under AT&T's current plans.
That deployment will help fulfill this Administration’s pledge to "connect [...] every part of America to the digital age," and it will create new jobs and economic growth in the small towns and rural communities that need them most. This transaction will leave the wireless marketplace fiercely competitive; indeed, AT&T's massive LTE deployment will intensify broadband competition throughout the United States.

The nation's third largest carrier,Sprint, has been vociferously critical of the purchase since AT&T announced it in late March. On Thursday, Sprint's Senior Vice President Vonya B. McCann blasted the deal and called on the FCC and the Justice Department to block it, not just approve it with conditions.

"This kind of leverage could strangle competition and give AT&T the power to increase prices, threaten innovation critical to this industry and eliminate American jobs," McCann wrote. "We believe the facts and the law dictate that this transaction must be blocked, and are confident that the Department of Justice and FCC will determine that this takeover is not in the interest of the American public."

Consumer group and net neutrality backer Free Press also came out blazing.

"No matter how many high-priced lobbying firms AT&T hires, it won't be able to fool Americans into thinking the reconstitution of the Ma Bell monopoly is a good thing," Free Press Research Director S. Derek Turner said in a written statement. "Make no mistake, this deal is about eliminating a competitor and nothing more. AT&T has chosen the marketing slogan 'Mobilize Everything' to sell this competition-killing deal, but it's clear their real goal is to 'Monopolize Everything.'"

The deal would also give AT&T a virtual monopoly over GSM-based phones in the United States, as T-Mobile is the only other national carrier to use that technology.

T-Mobile has long been known for being innovative and having good customer service; while AT&T's customer service ranks lowest among the big carriers and the company is also locking down its Android devices.

The FCC and the Justice Department will both have to approve the deal before the purchase can be finalized, and citizens and outside groups can file statements in support or opposition to the deal.