Feds Seek to Block AT&T|Purchase of T-Mobile

(CN) - The Obama administration hopes to stop AT&T from buying T-Mobile with an antitrust lawsuit filed Wednesday that claims the $39 billion merger would weaken competition, causing higher prices and poorer service for consumers.

AT&T and T-Mobile are two of only four cellphone companies in the United States with nationwide networks and what the government called "a variety of competitive attributes associated with that national scale and presence."

In March, AT&T entered into an agreement to purchase T-Mobile from its German parent company Deutsche Telekom AG.

If the merger goes through, the government says customers "likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest."

AT&T would be the largest wireless carrier in the country, with around 132 million connections and $72 billion in revenues, the complaint says.

The government said T-Mobile has been a "value option for wireless service, focusing on aggressive pricing, value leadership, and innovation."

In one T-Mobile document, the company calls itself "the No. 1 value challenger of the established big guys in the market and as well positioned in a consolidated 4-player national market," according to the complaint. T-Mobile says it is responsible for many wireless "firsts"- including the Android phone, Wi-Fi hotspots and a variety of unlimited service plans.

"Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers," Deputy Attorney General James M. Cole said in a statement.

"This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition."

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