Consumer groups cheer DOJ's move to block AT&T acquisition

But industry groups question if the DOJ's opposition will cost jobs

Several consumer and digital rights groups applauded the U.S. Department of Justice's opposition to AT&T's proposed acquisition of rival mobile carrier T-Mobile USA, with critics of the deal saying it would have hurt consumers.

Even after AT&T spent millions of dollars to lobby the U.S. government in favor of the deal, the DOJ on Wednesday filed a lawsuit opposing the proposed US$39 billion acquisition.

AT&T spent $11.7 million lobbying U.S. officials during the first half of the year, with lobbying expenses in the second quarter up 58 percent from a year earlier, according to news reports.

"Today, the facts have trumped the politics," said Derek Turner, research director at Free Press. "When AT&T first announced this takeover in March, our initial reaction was, the elimination of a low-price national provider is unthinkable. But we were worried that AT&T's political power would be enough to turn the unthinkable to the possible."

The DOJ's opposition to the deal is a "big win for consumers" who already struggle to pay their mobile bills, added Parul Desai, communications policy counsel for Consumers Union. The merger would have reduced mobile choice for consumers, likely resulting in higher prices, she said.

Leaked AT&T documents accidentally posted by its lawyers to the U.S. Federal Communications Commission's website earlier this month showed AT&T projections that it would cost $3.8 billion to bring LTE (Long-Term Evolution) mobile broadband service to 97 percent of the U.S. population. AT&T had argued the merger would allow it to expand its LTE service from 80 percent to 97 percent of the country.

"The facts show that AT&T doesn't need to kill off a competitor to improve its network quality, it just needs to remedy the years of its own under-investment in its network," Turner said. "So we think the case here is airtight, and look forward to the courts affirming that and tossing this bad idea onto the dust bin of history, where it belongs."

Several other groups expressed disappointment over the DOJ's decision. The DOJ's opposition is a jobs killer, said Mike Wendy, director of MediaFreedom.org, a free-market advocacy group.

"Carriers large to small would have more fiercely competed for customers, presenting new offerings, plans, coverage, technology and other consumer-friendly innovations to capture their business," Wendy said. "Consequently, this competitive maelstrom would have resulted in bringing more broadband productivity tools to more Americans, helping them better compete, and companies produce more jobs here in the U.S."

The DOJ opposition harms the U.S. mobile industry's efforts to address upcoming spectrum shortages, added Morgan Reed, executive director of the Association for Competitive Technology, a tech trade group.

"Our nation is facing a mobile bandwidth shortage that threatens one [of] our most successfully innovative industries," he said in an e-mail. "The massive growth in the mobile internet marketplace may find its hub of innovation uprooting from our shores if we can't provide the necessary infrastructure improvements to support its continued development."

But the consumer groups questioned whether the merger would create jobs. Some estimates had the merged company laying off 20,000 workers, Turner said. AT&T's promise to preserve call-center jobs in the U.S. was a "desperate attempt" to sway regulators, he said. AT&T also said Wednesday it would bring back 5,000 outsourced call-center jobs to the U.S. if the merger is approved.

T-Mobile executives have questioned whether their U.S. division would be viable in the long run, but AT&T will have to pay T-Mobile a reported $3 billion breakup fee if the deal doesn't go through.

By the time the FCC finishes its own review of the deal, "T-Mobile would have certainly taken its breakup fee and gone and built an entirely new network," said Harold Feld, legal director of Public Knowledge.

T-Mobile could merge with several other companies, including cable and satellite providers, consumer representatives said. "T-Mobile just became a lot more attractive," Feld said.

Others questioned T-Mobile's future without the merger. "T-Mobile and its German parent, Deutsche Telekom AG, believe further cash investment in T-Mobile would be futile," said Maureen Martin, senior fellow for legal affairs at the Heartland Institute, a free-market think tank. "By filing its suit, DOJ is essentially saying T-Mobile has a future as an AT&T competitor. Thus, DOJ is substituting its business judgment for that of T-Mobile and its parent."

The DOJ is doing nothing to preserve competition by "dooming a competitor," Martin said in an e-mail.

AT&T will have "every reason" to fight the DOJ because of a large financial penalty if the deal fails, Martin added.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Tags antitrusttelecommunicationConsumers UnionMaureen MartinMergers and acquisitions4glegalU.S. Federal Communications CommissionHarold FeldAssociation for Competitive Technologydeutsche telekomgovernmentbroadbandbusiness issuesU.S. Department of JusticeParul Desaifree pressDerek TurnerregulationHeartland InstituteMike WendyT-Mobile USAmobilePublic KnowledgeMorgan ReedMedia Access Project3gat&t

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service

Comments

Comments are now closed.

Most Popular Reviews

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest News Articles

Resources

Best Deals on GoodGearGuide

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?