DOJ: AT&T Felt Competitive Pressure from T-Mobile

AT&T told the Federal Communications Commission earlier this year that it didnt consider T-Mobile USA a close” competitor.

In a filing seeking FCC approval to acquire T-Mobile, AT&T asserted that other providers already fill or could easily move to fill the competitive role T-Mobile USA occupies today.”

The lawsuit filed this week by the U.S. Department of Justice in a bid to block the $39 billion deal clearly shows that the feds strongly disagree with AT&T.

AT&T and T-Mobile USA, Deputy Assistant General James M. Cole said this week, compete in 97 of the largest 100 cellular marketing areas (CMAs).  Those markets include more than half of the U.S. population, according to the DOJ lawsuit filed in the U.S. District Court for the District of Columbia.

As can be seen in the Departments complaint, AT&T felt competitive pressure from T-Mobile,” Cole said.    

In several areas, AT&T and T-Mobile USA would control more than 40 percent of the market, according to the lawsuit. And in at least 15 CMAs, including such major markets as Dallas, Houston and Seattle, the companies would control more than half of the market, the DOJ asserted.

They also compete nationwide to attract business and government customers,” Cole said.

An internal AT&T document last year acknowledged that a “more immediate threat to AT&T is T-Mobile ., ‘” the Justice Department wrote in its complaint.  And an AT&T employee noted early this year that the company added HSPA+ devices after T-Mobile was the first to do so, according to the complaint.

The DOJ described T-Mobile as a company that has outlined a disruptive pricing strategy to attract 150 million consumers who may want a smartphone but dont yet possess one.

T-Mobiles CEO Phillip Humm defined as disruptive a rate plan that Verizon/ATT cant match,” the DOJ noted in the lawsuit. T-Mobile has designed its new aggressive pricing plans to offer services, including data access, at rates lower than those offered by AT&T and Verizon, and it projects that the new plans will save consumers several hundred dollars per year as compared to similar AT&T and Verizon plans.”

Justice Department officials also seemed to dismiss AT&Ts repeated assertions that competition is plentiful given the number of smaller providers in the U.S. wireless market.

The DOJ noted in its complaint that none of the smaller carriers’ voice networks cover even one-third of the U.S. population, and the largest of these smaller carriers has less than one-third the number of wireless connections as T-Mobile.”

Similarly, regional competitors often lack a nationwide data network, nationally recognized brand, significant nationwide spectrum holdings, and timely access to the most popular handsets,” the DOJ stated.

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