Senator opposes AT&T's acquisition of T-Mobile

The deal would harm consumers and mobile competition, Kohl says in a letter to the DOJ and FCC

A senior U.S. senator has urged two federal agencies to reject AT&T's proposed US$39 billion acquisition of T-Mobile USA.

Senator Herb Kohl, a Wisconsin Democrat and chairman of the Senate Judiciary Committee's antitrust subcommittee, on Wednesday called on the U.S. Department of Justice and the U.S. Federal Communications Commission to reject the deal between the nation's second-largest and fourth-largest mobile carriers.

"I have concluded that this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies," Kohl wrote in a letter to the DOJ and FCC.

The deal would reduce the number of national carriers from four to three and would give AT&T and Verizon a combined market share of nearly 80 percent, Kohl said, repeating frequent criticisms of the merger. The deal would eliminate T-Mobile as a low-cost competitor to other carriers, he said.

The changes in the mobile industry caused by the acquisition would be "highly dangerous" to consumers, Kohl wrote.

T-Mobile USA said it was disappointed with Kohl's opposition to the deal.

"While we have a great deal of respect for Senator Kohl, we strongly disagree with his analysis of this transaction, which will bring significant benefits to American consumers," Tom Sugrue, T-Mobile's senior vice president of government affairs, said in a statement. "We are confident that the review process will demonstrate that the merger is fully consistent with the antitrust laws and significantly advances the public interest."

AT&T and T-Mobile have said the deal will allow AT&T to roll out mobile broadband services to a larger geographical area. T-Mobile executives have said they don't have the resources or spectrum to offer 4G LTE service, although the company now offers the slower HSPA+ quasi-4G service.

Several minority groups and labor unions have voiced support for the deal.

Kohl questioned AT&T's promises that the deal would allow it to expand its 4G LTE rollout from 80 percent of the U.S. population to 97 percent. Much of the T-Mobile spectrum AT&T would require doesn't cover rural areas, he said.

The expansion of a "new generation of cell phone service not yet deployed six years from now is plainly too speculative and uncertain to justify this merge under antitrust laws," he wrote.

Kohl also questioned if Sprint Nextel could remain in business if the deal is approved.

Three Democratic members of the House of Representatives, John Conyers Jr. of Michigan, Ed Markey of Massachusetts and Anna Eshoo of California, also wrote a letter to the DOJ and the FCC Wednesday, calling on the agencies to carefully review the deal.

"We believe that AT&T's acquisition of T-Mobile would be a troubling backward step in federal public policy -- a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace," they wrote.

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.

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Tags business managementMergers and acquisitionslegaltelecommunication3g4gantitrustat&tsprint nextelU.S. Department of JusticeU.S. Federal Communications CommissionU.S. Senate Judiciary CommitteeVerizon CommunicationsT-Mobile USAEd MarkeyAnna EshooHerb KohlJohn Conyers Jr.Tom Sugrue

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