BUSINESS -- August 31, 2011 at 2:52 PM ET
Government Moves to Block AT&T, T-Mobile Merger
T-Mobile USA and AT&T signage is seen in New York, U.S., on Wednesday. Photo by Stephen Yang/Bloomberg via Getty Images.
The Department of Justice has filed an anti-trust lawsuit to block a planned merger between telecom giants AT&T and T-Mobile, a $39 billion deal that would have created the largest wireless company in the country.
The government claimed that, when combined, the new AT&T and its main competitor, Verizon, would dominate the majority of the mobile market. Together, they would have a total of 130 million customers.
Deputy Attorney General James Cole said that the "combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services."
The NewsHour's Mike Melia spoke with Washington Post technology reporter Cecilia Kang, who said the suit will begin a long road in court. "This is not the end. There are many more steps to come. AT&T will try its hardest to succeed eventually, challenging the DOJ and the administration in court," she said. "The implications are huge. We rely so much on our cell phones, so this is very much a merger that will impact pocketbooks."
In a statement Wednesday, the Consumers Union, which publishes Consumer Reports, called the suit "something for consumers to celebrate."
"We have consistently warned that eliminating T-Mobile as a low-cost option will raise prices, lower choices, and turn the cellular market into a duopoly controlled by AT&T and Verizon," the group said.
Despite the government's antitrust suit, Kang said that AT&T has invested a lot in the deal and will likely mount a strong legal battle.
"They have a lot at stake. There is $6 billion they will have to turn over to T-Mobile if this merger does not happen by September 2012...At this point, they have to continue to fight for this," she said.
We'll have more details about what the proposed merger and the efforts to block it mean on Wednesday's NewsHour broadcast.