AT&T asked a federal court Friday to dismiss lawsuits by rivals who want to block its $39 billion merger with T-Mobile, alleging that one competitor had tried to pressure AT&T for business favors in exchange for supporting the deal.
In a filing with the U.S. District Court of the District of Columbia, AT&T asked judge Ellen Huvelle to dismiss lawsuits by Sprint Nextel and Cellular South that seek to prevent the wireless mega-merger. The lawsuits were filed after the Justice Department sued Aug. 31 to block the deal, citing potential harm to consumers if the wireless market concentrates into the hands of too few carriers.
In its court filing Friday, AT&T said Cellular South, a Mississippi area carrier recently renamed C Spire, is unreliable as a plaintiff and had tried to secretly strike up a business agreement with AT&T to stop the wireless giant from building out a competing high-speed Internet network in its coverage area.
AT&T said Sprint wants to prevent the merger to stop competitors from getting more airwaves for better networks to compete against theirs. Sprint dismissed the claims, saying it will respond to the court with its own filing next Friday.
“Such an extraordinary and inappropriate proposal simply confirms that what Cellular South fears is competition, not an alleged lack of competition,” AT&T General Counsel Wayne Watts said in a statement.
Cellular South immediately refuted the claims, saying comments by its chief executive are being distorted.
In a March 21 e-mail, the day after the merger was announced, CEO Hu Meena wrote AT&T Mobility chief executive Ralph de la Vega to say that the deal looked anticompetitive.
“On the other hand, we believe that AT&T is also capable of alleviating these issues for Cellular South through an internet working agreement,” Meena wrote.
He then outline several proposals that included Cellular South leasing its network in the Southeastern United States to AT&T.
Specifically, Meena said:
“Utilizing spectrum from the current holdings of ATT, T-Mobile and/or Cellular South (CS) and the band class or band classes that ATT chooses, CS will build, operate and own an LTE network in the entire state of Mississippi and any other area of southeast that ATT desires. Accordingly, CS will provide network services to AT&T via attractive MVNO arrangement in the areas in which it builds,” according to the March e-mail.
Watts said in a statement Friday that Meena appeared to be blocking competition by asking the giant not to build out its own network.
Cellular South disagreed, saying it never tried to prevent AT&T as a competitor.
“As the emails attached to AT&T’s motion make clear, Mr. Meena never suggested that AT&T not compete in Mississippi or anywhere else,” said Eric Graham, vice president of regulatory affairs for Cellular South. “In the days surrounding the announcement of AT&T's takeover of T-Mobile, AT&T approached us in an effort to gain our support. Mr. Meena raised the same issues that we have articulated for years.”
Also in the e-mail, Meena asked that his company receive access to all devices AT&T runs on its network and that Cellular South customers get full roaming rights on AT&T’s national network. He asked for the parties to agree to a written contract by April 7, 2011, and for the agreement to be confidential and last for 10 years.
The companies never reached an agreement, and AT&T is now revealing the e-mail.