7 states join fight against ATT/T-Mobile merger, P.R. stance unclear

Written by  //  September 19, 2011  //  Telecommunications/Technology  //  No comments

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The movement against the proposed merger between AT&T and T-Mobile USA gained greater momentum late last week, when seven state attorney generals, including New York’s, joined the U.S. Justice Department’s lawsuit to block the deal.

The cavalcade of AG’s also includes Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania. While it is not clear if Puerto Rico’s Department of Justice will follow suit, the Telecommunications Regulatory Board has already expressed its opposition before the Federal Communications Commission on the deal that would marry the island’s number 1 and number 3 players.

In their individual statements, the state attorneys cited competitive concerns over fewer choices and possibly higher prices as a result of the transaction.

“This proposed merger would stifle competition in markets that are crucial to New York’s consumers and businesses, while reducing access to low-cost options and the newest broadband-based technologies,” said New York Attorney General Eric Schneiderman, upon publicly opposing the $39 billion deal.

The U.S. Department of Justice filed the original suit at a Washington, D.C court Aug. 31 and amended the complaint Friday to include the named states.

“In a merger this large, the potential results could be detrimental to consumers,” said Ohio Attorney General Mike DeWine. “The proposed transaction threatens to substantially lessen competition for mobile wireless providers across the United States, resulting in poorer quality services, fewer consumer choices and ultimately, higher prices.”

Earlier this year, AT&T announced plans to buy T-Mobile USA from Deutsche Telekom for $39 billion in cash and stock. The merger would make AT&T the largest wireless carrier in the country and leave only Verizon and the much smaller Sprint-Nextel — which has also voiced its opposition to the deal — as major competitors.

“This merger will result in less competition, fewer choices and higher prices for Washington state consumers,” Washington State Attorney General Rob McKenn said. “If the deal goes through, two companies will control roughly three quarters of mobile subscribers in the U.S. Antitrust laws exist to prevent such strangleholds over products and services.”

The deal will add 34 million customers to AT&T’s current 96 million, giving it a combined market share of 43 percent, well ahead Verizon’s 34 percent, he said.

McKenna added that if the companies merge, wireless customers in the most populated parts of Washington state – including Seattle, Tacoma and Spokane – will be particularly impacted, as market concentrations reach levels normally viewed as uncompetitive.

The same could happen in Puerto Rico, where a combined AT&T and T-Mobile could add up to about 1.2 million subscribers, giving the unified company a commanding hold of the market ahead of Claro, Sprint and Open Mobile.

In response to the concerns expressed by the AGs, Tom Sugrue, T-Mobile senior vice president of government affairs, said: “Given the numerous benefits the merger will bring to consumers, businesses, and the US economy in the form of greater innovation, enhanced competition, and increased jobs, we remain confident that the facts will prevail and the acquisition will proceed.”

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