AT&T defends T-Mobile deal in response to DOJ suit

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

WASHINGTON (AP) — AT&T is countering the U.S. government’s

attempt to block its $39 billion acquisition of T-Mobile by

depicting the deal as a way to provide consumers with better cell

phone service at lower prices.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

The argument, submitted in a Friday court filing, is AT&T

Inc.’s first legal response to a lawsuit that the Department of

Justice filed last week in an effort to ensure T-Mobile remains

independent. AT&T’s 25-page document echoed the company’s

previous contention that buying rival T-Mobile will enable it to

expand its mobile communications network so there are fewer dropped

connections in a world where constant online access is becoming the

norm.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

The Justice Department believes there wouldn’t be enough

competition if AT&T devours T-Mobile, creating a void that

would increase prices and reduce the incentive to develop new

technology.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

AT&T’s lawyers contend that the Justice Department’s analysis

reflects a misunderstanding of the market. They say T-Mobile, the

fourth largest cell phone carrier with 33.6 million customers,

isn’t a significant competitive threat to AT&T, the No. 2

carrier with nearly 100 million customers. T-Mobile has been losing

market share in recent years, a trend that AT&T argues will

discourage its German parent, Deutsche Telekom, from investing to

improve its own wireless network.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

In contrast, AT&T says it spent more than $30 billion in

network upgrades from 2008 through 2010, yet still can’t keep up

with customers’ growing demand to transfer data over phones and

other wireless devices, according to the court documents. But if it

can snap up T-Mobile, AT&T believes the added capacity will put

it in a better position to deliver better services. AT&T

already has pledged to invest at least $8 billion and transfer

5,000 jobs currently in overseas call centers back to the U.S. if

the T-Mobile purchase goes through.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

The court filing also seeks to counter the Justice Department’s

theory that the U.S. cell phone market would be dominated by just

three carriers – AT&T, Verizon Wireless and Sprint Nextel Corp,

if T-Mobile disappears from the market. AT&T’s filing cites

“innovative upstarts” MetroPCS and Leap/Cricket and regional

carriers such as US Cellular and Cellular South as viable

alternatives for most consumers.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

“The (Justice) Department does not and cannot explain how, in the

face of all these aggressive rivals, the combined AT&T/T-Mobile

will have any ability or incentive to restrict output, raise

prices, or slow innovation,” the AT&T’s lawyers

wrote.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

It’s unusual for the Justice Department to challenge a proposed

acquisition in court. Most companies back out of deals to avoid

tangling with the government. But AT&T has a huge incentive to

fight: It will have to pay a $3 billion termination fee if its

agreement with T-Mobile unravels.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

The first hearing in the case is set for Sept. 21 in Washington

before U.S. District Court Judge Ellen Huvelle.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“font-family: Arial, Helvetica, sans-serif; font-size: 13px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px;”>

AT&T, which is based in Dallas, is seeking a quick resolution

to the case.

“font-family: Verdana, Times, serif; font-size: 12px; text-decoration: none; line-height: 13px; color: #000000; font: normal normal normal 12px/normal verdana, helvetica, arial;”>

“text-decoration: none; color: #000066;” rel=”item-license” name=

redistributed. Learn more about our

“text-decoration: none; color: #000066;” href=

Policy and 

href=”http://hosted2.ap.org/APDEFAULT/terms”>Terms of Use.