Sprint Nextel legally joined the growing chorus of objections to AT&T’s plans to acquire T-Mobile today when it filed a lawsuit in U.S. District Court in Washington, D.C.
The company, which is the third largest wireless carrier in the United States, reiterated its concerns over the deal, primarily that it would push the wireless industry toward a duopoly controlled by AT&T and Verizon, limiting innovation and consumer choice. The proposed merger, which the lawsuit calls “brazenly anticompetitive” would make life harder for smaller carriers like Sprint, who would be in less of a position to competitively challenge the two dominant players.
The lawsuit came a week after the U.S. Department of Justice sued to block the $39 billion merger over antitrust concerns. The lawsuit marked the most significant setback for the proposed acquistion, which was already being questioned by consumers and some U.S. lawmakers.
In response to Sprint’s lawsuit, AT&T accused the plaintiff of being “more interested in protecting itself than it is in promoting competition that benefits consumers.” AT&T has argued that the merger would help expand 4G wireless coverage nationwide and create jobs.
Of course, Sprint is indeed concerned about the impact a potential merger would have on its own business. As the lawsuit charges, the deal would result in AT&T and Verizon collectively controlling 90% of wireless industry profits and 75% of customers nationwide. As a result, the companies would have “exclusive early access to iconic handsets” like the iPhone and “preferential access to the other products and services that make wireless services attractive to consumers.”
The lawsuit also expresses concern over AT&T’s ability to “directly raise the costs that their rivals must incur for backhaul and roaming” which would “ensure that Sprint and the smaller fringe carriers would be injured in their businesses and would be unable to restore the competition lost by the elimination of T-Mobile.
In addition to being harmful to smaller competitors, the merger would hurt other companies in “connected markets” like those for things like mobile operating systems and application development and present issues for consumers, who would face higher prices, the lawsuit charges.
In making its case against the merger, the Sprint lawsuit draws heavily on history and is quick to point out that prices remained high and innovation minimal during the Bell System monopoly in the wireline telephone industry, which was broken up by the Department of Justice in 1984.
