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Posted at 05:52 PM ET, 09/09/2011

AT&T hits back at DOJ’s move to block T-Mobile merger


Pedestrians pass by an AT&T Inc. store in New York (Stephen Yang - BLOOMBERG)
AT&T on Friday launched a defense against the Justice Department’s suit to block its merger with T-Mobile, arguing in federal court that consumers won’t get faster and more reliable service from the provider without the deal.

AT&T reiterated that it will ask for an expedited trial while it also tries to reach a settlement with federal officials to resolve differences on whether the merger is anticompetitive.

“We remain confident that we’ll reach a successful conclusion,” said AT&T spokesman Michael Balmoris, who added that settlement talks with Justice will be private.

But the differences appeared large. In its lawsuit filed Aug. 31 in the U.S. District Court of the District of Columbia, Justice had argued that T-Mobile was a unique lower-cost competitor in the wireless market that has challenged AT&T and other providers to develop faster services. It argued that the merger between the second and fourth largest wireless providers would violate competition laws in local and national markets.

AT&T rejected those claims on Friday, saying T-Mobile isn’t particularly special but is “stuck in the middle” between large providers and smaller providers such as Metro PCS and Cricket.

“For the past two years, T-Mobile has been losing customers despite growing demand,” AT&T said in its filing. It warned that Justice’s action could harm consumers.

“It will severely set back growth and competition in the wireless industry,” the company said. “Without this merger AT&T will continue to experience capacity constraints, millions of customers will be deprived of faster and higher quality service, and innovation and infrastructure will be stunted.”

AT&T wants to use T-Mobile’s spectrum to enhance its own services.

Sprint Nextel, a staunch opponent of the deal, has also filed a separate lawsuit to block the merger. U.S. District Court judge Ellen Huvelle was assigned to both cases and may choose to consolidate them, antitrust experts say.

This could help Justice’s case as Sprint Nextel is likely to bring arguments against the deal that it has brought to the Federal Communications Commission. The FCC is evaluating the merger on its ”public interest” merits — a much broader mandate than Justice, which must analyze it for antitrust implications.

“AT&T’s court filing does not change the facts,” said John Taylor, a spokesman for Sprint. “This proposed takeover would create a clear wireless duopoly that could raise prices, stifle innovation and cost American jobs.”

Related:

AT&T, T-Mobile merger in hands of Judge Huvelle

Verizon to end unlimited wireless plans

By  |  05:52 PM ET, 09/09/2011

 
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